Why Azul Stock Is Flying High Today

Azul S.A. AZUL shares are trading higher on Monday after the company announced a deal to reduce the immediate cash it must expend for leased property.

What Happened: Azul said it has successfully reached commercial agreements that represent more than 90% of its lease obligations. The Brazilian airline company has entered into agreements with its lessors to reduce lease payments and eliminate Covid-related deferrals.

The agreements are part of a comprehensive plan aimed at strengthening the company's cash generation and improving its capital structure. In exchange for the reduced lease payments, lessors will receive a tradeable note maturing in 2030 and equity priced to reflect Azul's new cash generation, improved capital structure and reduced credit risk.

“Lessors represent 80% of our nominal gross debt.  Reaching these agreements demonstrates tremendous success in our approach ... Negotiations continue with lessors and other stakeholders such as OEMs, and we are very optimistic about reaching agreements with all of them,” said Alex Malfitani, Azul’s CFO.

Azul primarily operates passenger and cargo flights to more than 100 destinations in Brazil. The company generates revenue primarily through its aircraft, as well as other sources such as cargo operations, interest on installment sales, luggage fares, excess luggage and penalties for ticket cancellations.

See Also: Why Is Vistra Stock Trading Higher Today?

AZUL Price Action: Azul has a 52-week high of $16.89 and a 52-week low of $3.82.

Azul shares are up 40.9% at $5.86 at the time of writing, according to Benzinga Pro.

Photo: Gerhard from Pixabay.