🧾 What This Document Is

This is a Form 6-K, a special report that foreign companies listed on U.S. stock exchanges must file with the SEC. Think of it as a "current report" for international companies. This specific filing from Azul S.A. (AZSAY) announces their fourth-quarter 2025 financial results and details their successful emergence from a major financial restructuring. It's a big deal because it shows how a leading Brazilian airline reset its finances to start 2026 on stronger footing.

🏢 What The Company Does

👉 In simple terms, Azul is Brazil's largest domestic airline by number of cities served. They operate over 800 daily flights to 137 destinations with a fleet of about 180 aircraft. What makes them special is their unique network—80% of their routes have no direct competition—and their "beyond-the-metal" business units like a loyalty program (Azul Fidelidade), cargo services (Azul Cargo), and a travel platform (Azul Viagens). These extra businesses are a major source of profit and make them less dependent just on selling plane tickets.

💰 Financial Highlights: Record Quarter

Azul had an outstanding fourth quarter. Here are the key numbers:

• Total Operating Revenue: A record R$5.8 billion (up 4.6% year-over-year).
• Operating Income: A record R$1.42 billion (up 14.7%), with a 24.5% operating margin.
• EBITDA: A record R$2.14 billion (up 9.6%), with a 36.9% EBITDA margin.

👉 Why it matters: These are all-time records for the company. The strong performance, even while growing capacity only 1.1%, shows excellent pricing power and demand. Their "beyond-the-metal" business units contributed 21% of their revenue per seat (RASK), proving that diversification strategy is working.

🚀 The Major Move: Emerging from Restructuring

The biggest news is that Azul successfully completed its U.S. Chapter 11 restructuring process in February 2026. This wasn't a liquidation; it was a strategic reset to fix their balance sheet. They entered the process with key stakeholders already on board, which allowed for a quick exit in less than nine months.

👉 Key Restructuring Wins:

• Massive Debt Reduction: Cut loans/financing by ~R$6.7 billion and lease liabilities by ~R$9.8 billion vs. 2024.
• Lower Annual Bills: Reduced annual interest payments by ~50% and recurring lease payments by ~30%.
• Stronger Liquidity: Raised US$1.375 billion in new Senior Notes and US$850 million in equity.
• Healthier Leverage: Post-restructuring net leverage dropped to below 2.5x (from 4.8x in Q4 2025).

📦 Financial Position: A Healthier Balance Sheet

The restructuring dramatically cleaned up Azul's balance sheet. As of December 31, 2025, before the full effects were applied, they still had "Immediate Liquidity" (cash + receivables) of R$3.7 billion, up 22.4% from the prior year.

The filing includes a "pro-forma" table showing what their debt looks like after the restructuring adjustments. The big takeaway: Total debt is projected to fall from R$35.8 billion to roughly R$21.0 billion. This lighter debt load is the foundation for their future growth.

💸 Cash Flow Story: Improved Generation

The company uses a "Managerial View" to show underlying cash flow. For Q4, their Recurring Free Cash Flow was R$159.2 million. More importantly, the restructuring is expected to increase annual cash generation by over US$400 million in 2026 and beyond through lower interest and lease payments. This frees up cash for reinvestment and further debt reduction.

🔮 What's Next: A Stronger Azul for 2026

With the restructuring complete, management is focused on disciplined growth and leveraging their competitive advantages. They highlight their unique network, corporate-focused hubs, and fleet covered by "power-by-the-hour" agreements (which make maintenance costs predictable). They are confident they can handle challenges like recent fuel price increases better than peers due to their lower committed growth and now-lighter debt burden.

⚖️ Big Picture: Strengths & Risks

👍 Strengths:

• Successful Restructuring: Emerged with a world-class, sustainable balance sheet.
• Industry-Leading Profitability: Record operating and EBITDA margins.
• Unique Network & Model: Largely uncontested routes and profitable "beyond-the-metal" businesses.
• Operational Efficiency: High productivity (ASKs per employee up 5.7%) and fuel efficiency.

⚠️ Risks:

• Fuel Price Volatility: An increase in jet fuel prices is a noted challenge.
• Execution Risk: Must successfully implement the post-restructuring plan and growth strategy.
• Economic Sensitivity: As an airline, demand is tied to the health of the Brazilian economy.
• Legal Claims: The company notes an increase in legal claims related to past irregular operations.

🧠 The Analogy

Imagine a homeowner who was struggling with massive mortgage and credit card payments. They successfully negotiated with their lenders to reduce their total debt by 40% and cut their monthly interest payments in half. They also took out a smaller, more manageable new loan to pay off the old debts and had family members invest fresh cash. Now, with much lower monthly bills and a healthier financial position, they can finally focus on maintaining and improving their home instead of just surviving. That's what Azul just accomplished.

📇 Key Contacts & People

Investor Relations:

• Tel: +55 11 4831 2880
• Email: [email protected]

Media Relations:

• Tel: +55 11 4831 1245
• Email: [email protected]

CEO: John Rodgerson

🧩 Final Takeaway

Azul didn't just have a record quarter; it completely reset its financial foundation through a swift restructuring. The company enters 2026 with significantly less debt, lower annual costs, and stronger liquidity, positioning it for more sustainable and profitable growth. The focus now shifts from surviving a heavy debt burden to executing on its unique competitive advantages.