BRAZIL Trends and Developments Contributed by: Marcelo Mello and Bruna Toniolo, Nantes Mello Advogados
Nantes Mello Advogados R. Arizona, 491 - 7º andar Cidade Monções São Paulo SP, 04567-001 Brazil Tel: +55 (11) 5052 9515 Web: www.nantesmello.com/en/
Background: A Turning Point for Brazil’s Aviation Sector Brazil’s aviation sector is entering a new phase of maturity and recalibration in 2025. After years of turbulence caused by the COVID-19 pandemic and its prolonged economic ripple effects, Brazil’s major carriers and aviation stakeholders are now signalling recovery – and in many respects, transformation. Despite filing for Chapter 11 in the United States in May 2025 to resolve historical obligations accumulat - ed during the crisis years, in 2024, Azul Linhas Aéreas (Azul) reported record financial results, with over BRL6 billion in EBITDA and a meaningful reduction in net leverage, emphasising the company’s strong cash generation abilities and positioning it among the top- performing airlines in Latin America (Azul S.A.). Gol Linhas Aéreas (Gol), despite a difficult year marked by its January 2024 Chapter 11 filing in the United States, has made notable strides toward financial restructur - ing, underscoring the role of in-court restructuring processes as mechanisms for long-term recovery in the airline industry. Beyond the balance sheets, however, lies a more dynamic picture: Brazil continues to be Latin Ameri - ca’s largest and most sophisticated aviation market, with a large domestic customer base, complex and versatile fleets, Embraer as a global Original Equip - ment Manufacturer (OEM) leader, and a growing appe - tite among international lessors and financiers to par - ticipate in structured aircraft transactions. With the legal framework increasingly aligned with international standards – particularly due to Brazil’s adoption of the Cape Town Convention and the pro -
gressive modernisation efforts led by local aviation authority Agência Nacional de Aviação Civil (ANAC) – the jurisdiction is proving both resilient and adapt - able. Brazil in 2025 stands at a pivotal moment: a mix of macroeconomic uncertainty, regulatory innovation, and operational resilience is shaping the next genera - tion of aviation finance and leasing in the region. Macroeconomic and Policy Backdrop Inflation and currency volatility: financing in a fragile landscape In 2024, Brazil’s inflation rate reached 4.87% (Brazil, BCB), reflecting a continued struggle by the Central Bank of Brazil to rein in consumer prices amidst per - sistent structural pressures. While more stable than in previous years, this level still complicates long-term aircraft finance planning, especially for airlines with heavy exposure to floating-rate debt or United States dollar-denominated lease obligations. More critically, the Brazilian real (BRL) depreciated up to 21% against the United States dollar (USD) in 2024 (Langoni and Lowe), significantly impacting operator cash flows going into 2025. Because most aircraft leases and pre-delivery payments (PDPs) financings are denominated in USD whilst revenues are mostly denominated in BRL, BRL volatility remains a core structuring challenge. Lessors have responded by demanding stronger covenants, enhanced security packages, and in some cases, partial prepayment mechanisms to hedge against FX-related distress. Financing costs and Central Bank policy The Central Bank of Brazil began cautiously lowering its benchmark interest rate, the Selic, in late 2023, but inflation concerns have led to hesitancy in further cuts.
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