With news emerging this week that United Airlines plans to increase its stake in Azul Linhas Aereas, fellow US carrier American Airlines is also closing in on a similar investment package with the Brazilian carrier. United was recently cleared by Brazilian regulators to make a $100 million investment in Azul as part of the latter’s Chapter 11 restructuring process.

As the third-largest domestic airline in Brazil and its second-largest international carrier, Azul was founded in 2008 by David Neeleman, who also established WestJet, JetBlue, and Breeze Airways. The carrier has generally been popular with airlines and has a unique business model of connecting smaller cities with the purpose of stimulating demand via its low fares.

US Investment In Azul Progresses

As Simple Flying reported earlier this week, United Airlines has been cleared by the Brazilian Administrative Council for Economic Defense to invest $100 million in Azul, clearing the path for American Airlines to make a similar commitment. Both airlines have previously agreed to invest up to $300 million in the airline, which is popular with passengers but has also been experiencing financial struggles.

In May 2025, Azul declared Chapter 11 bankruptcy and proceeded to restructure its financials, while continuing normal operations. United’s investment in Azul has long been assured, as the two have been airline partners for over a decade. However, American has held a longstanding partnership with GOL — an airline Azul was once in talks with over a merger — so AA’s involvement with Azul is a little more complicated.

For Azul, funding is a key part of the carrier’s overall need to raise equity to increase liquidity and meaningfully reduce debt. It is hoping to rid itself of upwards of $2 billion in debt, which will be achieved through airline investor funding and a public equity offering, the latter valued at around $650 million.

The US-Brazil Connection

While United and Azul have a longstanding partnership that will ensure their close cooperation, American is hoping to capitalize on the Brazilian airline’s financial predicament. United has been a minority investor in Azul since 2015, and the two carriers have long been commercial partners. United and Azul have an active codeshare agreement, while also providing reciprocal frequent flyer benefits, and Azul also has a codeshare agreement with JetBlue.

The US is also the largest aircraft market for Brazilian planemaker Embraer, which counts several US carriers among its customer base for its regional aircraft portfolio. With around 45% of Embraer’s commercial aircraft sold in the US, the company also sells 70% of its executive jet range to US customers.

Brazil is the largest aviation market in South America. As such, a stronger foothold in the country is considered highly valuable for US airlines. American and United’s investment in Azul is especially important when considering that rival Delta Air Lines has a joint venture with LATAM, the largest airline in Brazil and South America as a whole.

Looking At Azul’s Strategy And Financials

Azul is a low-cost carrier that has only been around for less than 18 years, and yet, it’s been able to grow rapidly due to its unique strategy as well as its strong reputation among the public. It primarily focuses on offering services on low-demand routes with no competition. It tends to stay away from the country’s largest cities, such as São Paulo, and instead concentrates on Belo Horizonte, Campinas, and Recife.

The carrier’s strategy is to induce demand via convenient nonstop flights on routes with no competition while offering low prices. While this is a sound business tactic, the carrier has been experiencing financial difficulties due to volatile currency exchange rates, high debt incurred from the COVID-19 pandemic, and increasing operating expenses.

Several other Latin American airlines have faced significant financial struggles since the pandemic, and Azul declared Chapter 11 bankruptcy in May 2025. It is currently expected that it will exit the bankruptcy restructuring process in February 2026, with a more streamlined balance sheet.