SAO PAULO (Reuters) -Brazilian airline Azul said on Tuesday it has finalized a debt restructuring process regarding financial obligations with bondholders, suppliers and plane lessors, according to a securities filing.

Azul said the process included the termination of almost $1.6 billion in debt from its balance sheet, while it also raised $525 million in fresh money. The firm said that, with the conclusion of the talks, its financial leverage measured by a net debt to EBITDA ratio falls to 3.4 times from 4.8 times.

A planned merger between Brazilian airlines Gol and Azul would strengthen the sector and prevent either company from failing, Brazil's ports and airports minister told Reuters, giving the potential move a key government nod.

Azul and Gol merger to boost Brazilian aviation industry, add routes, and improve efficiencies, with potential impact on competition and fares.

Gol and Azul propose to maintain separate brands while coordinating their finances, networks and product offerings.