Of the dozens of smaller and mid-range airlines that filed for bankruptcy over the last year, one of the most high-profile names is Spirit Airlines.

The future of the Florida-based budget carrier known for its bright yellow livery is looking increasingly uncertain as it struggles under a second Chapter 11 filing less than a year after the first.

Another major carrier to face bankruptcy is Azul Linhas Aereas, or Azul Airlines in English.

Launched out of São Paulo in 2008, the budget carrier quickly grew into the third-largest airline in Brazil by offering lower fares on domestic flights within the large South American country and to select destinations in Argentina, Portugal, and the U.S.

But rapid expansion, as well as a changing market driven by new competitors and rising operating costs, quickly led to a heavy debt load. In May 2025, Azul filed for Chapter 11 bankruptcy after failed efforts to raise additional funding and get lenders to wipe out $550 million in loans in exchange for equity.

Azul Airlines announces exit from Chapter 11 bankruptcy

As the majority of its investors were foreign, the bankruptcy petition was filed in the U.S. Bankruptcy Court for the Southern District of New York.

After nine months in bankruptcy proceedings, Azul revealed that it has officially emerged from the Chapter 11 process. It successfully reduced debt and lease obligations by approximately $2.5 billion USD and raised an additional $1.4 billion in debt and $950 million in equity from new investors, Reuters reported.

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American Airlines put in approximately $100 million in new funds. The partnership is one of the main reasons other investors felt confident in Azul’s ability to turn around and continue as a major player in the Latin American market. Analysts have also been alluding to the eventual possibility of a shared network and codeshare partnership.

According to Azul’s securities filing, the bankruptcy court has officially approved the reorganization plan. The airline has not commented on the bankruptcy emergence beyond the filing with the Securities and Exchange Commission (SEC).

Azul Linhas Aereas is one of the biggest airlines in Brazil.

American Airlines partnership key to Azul bankruptcy exit

Image source: Shutterstock “These approvals, along with the strong support of our key financial stakeholders, including United Airlines, American Airlines, and AerCap, enable us to continue our accelerated transformation plan for the future,” Azul said in a statement immediately after filing for bankruptcy in May 2025.

“This process will allow Azul to significantly reduce its leverage and continue to generate cash, putting it on par with its global partners.”

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More Travel News: “Azul’s plan to strengthen its future will be extremely positive for the Brazilian aviation market and travelers to, from, and across Brazil,” Stephen Johnson, vice chair and chief strategy officer of “big three” U.S. carrier American Airlines, previously said.

“American has served Latin America since 1942 and is proud to fly to 14 destinations in South America,” Johnson said further. “Our service, including that of our partners GOL and JetSMART, combined with the strength and breadth of Azul’s network, will provide our customers another unique option for traveling between the Americas and even more connectivity in Brazil and throughout South America.”

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