(Bloomberg) -- Azul SA’s shares jumped after the Brazilian airline inked an agreement with its bondholders, allowing a crucial deal to move forward with its lessors and parts suppliers that reduces the airline’s debt and boosts its cash position.

Most Read from Bloomberg

• Inside NYC’s Playbook for Getting Federal Grant Funds

• The Tartarian Candidate

• A Courtyard Apartment Building Designed for Southwest Sprawl

• There Will Soon Be No Meatpackers Left in NYC’s Historic Meatpacking District

• Booming Cambridge Exposes England’s Widening Wealth Gap

The deal allows for existing creditors to provide as much as $500 million in new senior secured debt, with $150 million to be provided this week and $250 million by the end of the year, according to a regulatory filing Monday. Another $100 million could be unlocked at a later date, Azul said.

The agreement also eases some obligations the carrier has with lessors and parts suppliers in the next 18 months, which should improve Azul’s cash flow by more than $150 million, it said. The parties agreed on a “collaborative effort” to improve cash flow by $100 million per year. If that goal is reached, as much as $800 million of existing debt may be converted into shares, according to the filing.

Azul’s shares jumped as much as 11% in Sao Paulo on Monday following the news. Still, the stock has underperformed peers this year, falling 63%.

“It was a fundamental agreement for them to finalize these liabilities that were left over from the pandemic,” said Ygor Araujo, an analyst at Genial Investimentos. “The stock is also strongly driven by the drop in oil prices in the international market.”

Azul, one of Latin America’s largest airlines, was struggling to shore up its balance sheet and deal with the impact of a weak Brazilian real, despite having renegotiated with lessors and carrying out a debt swap that pushed back maturities.

“The announcement marks another completed stage for Azul to address the issue of liquidity and capital structure, and when completed we will analyze what the resulting capital structure will look like to see if there is an improvement in the credit profile,” said Carolina Chimenti, an analyst at Moody Ratings.

Bloomberg reported last week that the company was focused on negotiations with its bondholders to secure financing after attempts led by Jefferies Financial Group to raise money with new investors hit a snag.

--With assistance from Leda Alvim and Philip Sanders.

(Updates pricing starting with headline, adds quotes, chart)

Most Read from Bloomberg Businessweek

• Private Equity Hipsters Are Coming for Your Favorite Apps

• Meg Whitman’s Mission in Africa: American Tech Over Chinese

• The Influencer Bros Selling More Baseball Bats Than the Pros

• Dog Man Movie Is Here to Swoop In and Rescue the Children’s Book Business

• The Print Magazine Revival of 2024

?2024 Bloomberg L.P.