03:05 PM EDT, 08/29/2024 (MT Newswires) -- (Updates with Azul ( AZUL ) and Citi responses starting in the fourth paragraph.)

Azul ( AZUL ) is contemplating a Chapter 11 filing and a potential follow-on offering to address approaching debt obligations, Bloomberg reported Thursday, citing people familiar with the matter.

The Brazilian carrier is also looking at a potential merger with GOL Airlines, with an aim to convince creditors that a unified entity would result in lower debt levels and better growth prospects, the report said.

Azul ( AZUL ) has tapped Citigroup ( C ) in weighing the equity offering option and as an adviser on the potential merger deal with GOL, Bloomberg said.

Azul ( AZUL ) clarified its plans to improve its profitability and liquidity position, saying it "favors amicable, commercial solutions that maximize value to all of its stakeholders."

The company said it is in active talks with its main stakeholders to "optimize the equity structure agreed upon in our capital optimization plan last year."

"Stakeholders have been generally supportive, and negotiations are progressing towards improved outcomes for all parties," it said in a statement to MT Newswires.

Azul ( AZUL ) also said the Brazilian Congress has approved the bill that allows airlines to access recurring credit lines backed by the National Civil Aviation Fund.

Citi declined to comment.

Shares of Azul ( AZUL ) were down about 22% in recent trading on the New York Stock Exchange.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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