MIAMI – After reaching an agrement with Embraer, Azul Brazilian Airlines (AD) defers 59 E2 aircraft deliveries planned for 2020 to 2024 and further.

Prior to the COVID-19 crisis, the company expected to withdraw and replace its E1 aircraft in next two years with the E2 deliveries, according to its five-year fleet strategy plan.

Back in January, the Brazilian airline closed the deal to sub-lease 53 Embraer E195E1 to Poland’s LOT and to Breeze Aviation—David Neeleman’s newest aviation venture in the USA.

No aircraft acquisitions in the short term

As the airline is adjusting its operations due to the COVID-19 scenario, the aircraft delivery halt worth in R$24.5b is part of a 90% capacity reduction in April and its 50% reduced payroll costs actions the company is applying to face the crisis. In 2019, its fleet had 140 aircraft, which will now remain the same number.

According to AD’s CEO, John Rodgerson, the plan to gain and save cash in addition to the support from the Brazilian aircraft corporation will allow AD to ensure the liquidity and resources required to optimize the company for the future.

By the end of 2019, the Brazilian-based airline had a network of 249 non-stop routes, in which it offered 916 daily flights to 116 destinations along with a payroll of 13,000 workers.

Photo: Embaer

Government help may come for the industry

A bailout agrement in the form of loans granted by the Brazilian government and private banks is set to be ready, according to local media Brazil Journal. The announcement may come next week with attached conditions such as extended payment terms with aircraft lessors and debt warrants.

With Brazil’s state-owned National Bank of Economic and Social Development (BNDES) as the principal loan agent alonside private banks, the bailout would start in June with the amount of R$6b, as reported by Reuters. AD, LATAM Brasil (LA) and GOL (G3) expect to receive R$3b in loans.

According to Brazil Journal, Embraer would also receive a R$500m loan and R$500m in export finance credit lines as it has been hit hard by several deferrals the likes of the AD agreement.