Azul Airlines, a Brazil-based carrier, received an injection proposal from the Brazilian government that could dilute its stock by up to 15%.

The offer proposed by the Brazil Development Bank and a bank syndicate would aim to raise $376 million (R$ 2 billion) for Azul (AZUL) through debentures and stock warrants. The banks would subscribe to up to 70% of the sum while the remainder would be raised from qualified public investors, the airline’s statement read.

However, the carrier noted that the stock issuance required for the deal would result in a potential dilution of Azul (AZUL)’s shares. The company also stated that the current customer demand recovery and its cash position are both “stronger than originally expected.”

According to the statement, Azul (AZUL) would discuss the proposal from the Brazil Development Bank as well as consider alternative ways to raise capital, an area where the company had already proven its resilience before.

Amid financial losses of $1.65 billion (R$ 9 billion) in the first half-year of 2020, Azul (AZUL) managed to surprise everyone by raising $186 (R$ 1 billion) in cash, bulking its total liquidity to $1.2 billion (R$ 6.6 billion) during the global crisis.

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Brazilian airline Azul revealed a net increase in cash during Q2 FY2021 while avoiding any new loans.
 

According to the company’s statement back in May, the airline managed to reduce its salary expenses by more than 50%, as 78% of its workforce took unpaid leave. At the same time, Azul (AZUL) stated that approximately 90% of its fleet was under an operational lease, which further improved its financial standing.

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After falling in the red for the first quarter of 2020, Azul, Brazil’s third-biggest airline, entered negotiations with Embraer to defer 59 195-E2 deliveries.