3Q25 Results November 14, 2025 Disclaimer The information contained in this presentation is only a summary and does not purport to be complete. This presentation has been prepared solely for informational purposes and should not be construed as financial, legal, tax, accounting, investment or other advice or a recommendation with respect to any investment. This presentation does not constitute or form part of any offer or invitation for sale or subscription of or solicitation or invitation of any offer to b ...

Core Insights - Abra Group has officially ended negotiations for a potential merger between its controlled Brazilian carrier Gol and rival Azul, indicating a shift in strategic direction for the company [1] Company Summary - Abra Group's decision to cease merger talks with Azul suggests challenges in aligning interests or terms between the two airlines, which could impact competitive dynamics in the Brazilian aviation market [1] - Gol, as a controlled entity of Abra Group, will continue to operate independently, which may affect its market positioning and growth strategies moving forward [1] Industry Summary - The Brazilian airline industry remains competitive, with significant implications for market share and operational strategies following the halted merger discussions between Gol and Azul [1] - The cessation of merger negotiations may lead to increased focus on organic growth strategies among Brazilian carriers, as they navigate the complexities of the post-pandemic recovery [1]

Core Viewpoint - Abra Group has terminated merger talks between Gol and Azul, ending the possibility of creating a dominant airline in Brazil that would control approximately 60% of the domestic market [1][2]. Company Developments - Abra Group, which controls Gol and is a major investor in Avianca, initially signed a memorandum of understanding in January to combine Gol and Azul, but discussions stalled due to Azul's Chapter 11 bankruptcy filing in May [2][4]. - Gol emerged from its own bankruptcy proceedings in June, while Azul expects to exit bankruptcy by early 2026 [2][6]. Market Reaction - Following the news of the terminated talks, Azul's shares increased by 18% and Gol's shares rose by 5% in early afternoon trading in Sao Paulo [3]. Industry Context - Both airlines sought bankruptcy protection due to significant debt burdens, a sharp decline in traffic during the COVID-19 pandemic, and delays in aircraft deliveries [4]. - The initial memorandum for the merger was established under different market conditions, and both companies have also ended their 2024 codeshare agreement, which was under scrutiny from antitrust authorities [5]. Future Outlook - Abra Group remains open to future discussions regarding a potential business combination, emphasizing the merits of merging Azul and Gol [6]. - Azul has reaffirmed its commitment to strengthening its capital structure despite the end of merger talks [6]. Competition Concerns - The proposed merger raised competition issues, with LATAM Airlines expressing concerns, although some experts viewed it as a necessary step for a financially viable airline sector in Brazil [7].

Operational Performance - Azul was the second most on-time airline in July [8] - Average Aircraft On Ground Time decreased by 53% and 2025 IROPs Expenses decreased by 81% [12] - Aircraft Utilization increased by 2% from 11.3 to 11.5 block hours per day [34] Financial Results - 2Q25 Revenue reached R$4.9 billion, an increase of 18.4% compared to 2Q24 [19] - 2Q25 EBITDA was R$1.1 billion with a 23.1% margin [20] - 2Q25 EBIT was R$380 million with a 7.7% margin [21] - RASK increased by 0.8% to R$38.53 cents [19] Strategic Initiatives - Business units accounted for 23% of RASK and R$429 million of EBITDA in 2Q25 [27] - Ancillary Revenues increased by 21% [32] - Productivity increased by 20.5% [34] - CASK decreased by 5.6% from 1Q25 to 2Q25 [37]

Core Insights - Payara and Azul have formed a strategic partnership aimed at enhancing Java application performance and facilitating codeless migrations, which will help enterprises modernize their Java applications while reducing costs [2][4][5] - The joint solution integrates Payara Qube with Azul Platform Prime, providing a high-performance environment for Java applications without requiring code changes [3][4][5] Company Overview - Payara specializes in cloud-native solutions for managing Java applications, offering enterprise-grade platforms that support Jakarta EE, Quarkus, and Spring applications [9] - Azul is solely focused on Java, providing a high-performance Java platform that is trusted by numerous leading organizations, including 36% of the Fortune 100 [8][9] Product Features - Payara Qube offers automation, pre-configured Kubernetes environments, and built-in observability, enabling rapid and secure deployment of enterprise Java applications [3] - Azul Platform Prime enhances Java runtime performance, ensuring applications run faster and more reliably in production environments [3][5] Market Impact - The partnership is particularly beneficial for companies in regulated sectors, allowing them to modernize applications efficiently while maintaining control over their cloud environments [4] - The combined solution is designed for teams managing extensive portfolios of Java applications across hybrid and multi-cloud environments, simplifying the modernization process [4]

Core Points - Azul S.A. has filed for voluntary Chapter 11 petitions in the United States to restructure its financial situation [1][2] - The company has received interim court approvals for its "First Day" motions, allowing it to access US$250 million of its US$1.6 billion debtor-in-possession financing [2][3] - The CEO of Azul stated that these approvals are crucial for the company's long-term success and will help reduce leverage while generating cash [3] Company Operations - Azul continues to operate normally, honoring all tickets, loyalty points, travel packages, and customer benefits during the restructuring process [1] - The company operates over 900 daily flights to more than 150 destinations with a fleet of over 200 aircraft [6] Financial Support - The company is supported by various legal and financial advisors, including Davis Polk & Wardwell LLP and Guggenheim Securities, LLC [5] - Key financial stakeholders such as United Airlines, American Airlines, and AerCap are backing Azul during this restructuring [3] Future Plans - A "Second Day" hearing is scheduled for July 9, 2025, to consider the company's requested relief on a final basis [3] - The restructuring process aims to position Azul for an accelerated transformation and improved financial health [3]

Core Insights - Brazilian airline Azul is seeking bankruptcy protection [1] Company Summary - Azul is facing financial difficulties, prompting the decision to file for bankruptcy protection [1]

Core Viewpoint - Azul S.A. has initiated a pre-arranged restructuring process under Chapter 11 in the United States, aiming to secure approximately US$1.6 billion in debtor-in-possession financing and eliminate over US$2.0 billion in debt, positioning the company for long-term success in the aviation industry [1][3][5]. Financial Restructuring - The restructuring process includes Restructuring Support Agreements with key stakeholders, including bondholders and major lessors like AerCap, as well as strategic partners United Airlines and American Airlines [3][6]. - The financing structure involves up to US$950 million in equity investments, which will facilitate an accelerated emergence from the restructuring process [1][3]. - The company plans to utilize the Chapter 11 process to optimize its capital structure, reduce lease obligations, and enhance fleet efficiency, ultimately leading to improved cash flow generation [5][10]. Operational Continuity - Azul will continue its operations normally, honoring all customer commitments, including tickets and loyalty points, throughout the restructuring process [2][4]. - The company has filed motions to support ordinary-course operations, ensuring that crewmember compensation and benefits programs remain intact [9]. Stakeholder Support - Key stakeholders, including AerCap, United Airlines, and American Airlines, have expressed confidence in Azul's restructuring plan, highlighting the collaborative approach taken to strengthen the airline's future [6][8][9]. - The support from these partners is expected to reinforce Azul's financial position and operational efficiency, allowing the company to emerge stronger post-restructuring [10]. Company Overview - Azul S.A. is the largest airline in Brazil by flight departures and destinations, operating over 900 daily flights to more than 150 locations with a fleet of over 200 aircraft [13]. - The airline has been recognized for its operational excellence, being named the most on-time airline in the world in 2023 [13].

Core Viewpoint - Azul S.A. reported lower-than-expected first-quarter 2025 results, with both bottom line and top line lagging behind the Zacks Consensus Estimate, leading to a 9.3% drop in share price following the earnings release [1][2]. Financial Performance - The company incurred a loss of $2.18 per share in Q1 2025, contrasting with the Zacks Consensus Estimate of earnings of 4 cents per share, and a loss of 57 cents in Q1 2024 [3]. - Total revenues were $920 million, falling short of the Zacks Consensus Estimate of $925 million, despite a 15.2% year-over-year growth in passenger revenues, which accounted for 93% of total revenues [4]. - Cargo revenues and other grew by 17.3% year-over-year, with international cargo revenues increasing by 62% year-over-year [5]. - Consolidated traffic, measured in revenue passenger kilometers (RPKs), rose 19.4% year-over-year, with domestic and international traffic increasing by 14.7% and 38.3%, respectively [6]. - Total revenues per available seat kilometer (RASK) were R$42.14 cents, down 0.2% year-over-year, while passenger revenues per available seat kilometer (PRASK) decreased by 0.4% year-over-year [7]. Business Growth and Customer Satisfaction - Significant improvements in customer satisfaction were noted, with scores recovering by over 30 points in March 2025 compared to December 2024, leading to AZUL being ranked as the best airline in Brazil for the third consecutive year [8]. - The loyalty program, Azul Fidelidade, has nearly 19 million members, with active users increasing by 12% year-over-year, and gross bookings for Azul Viagens increased by 57% year-over-year [9]. - The logistics business, Azul Cargo, saw total revenue increase by 18% year-over-year, primarily driven by a 62% increase in international revenues [10]. Cost Management and Operational Efficiency - Despite macroeconomic challenges, cost reduction initiatives and productivity improvements have been effective, with productivity measured in ASKs per full-time equivalent increasing by 19% year-over-year [11]. - Fuel efficiency improved, with consumption per ASK dropping by 2.5% from the previous year [11]. - Operating expenses rose to R$4.82 billion, a 24.4% increase year-over-year, influenced by various factors including currency depreciation and fuel price increases [14]. Valuation and Market Position - AZUL is trading at a discount compared to the industry based on its forward 12-month price-to-sales ratio, with a Value Score of A [13]. - The company's shares have declined by 66.5% year-to-date, underperforming the Zacks Airline industry and other airline operators [18][20]. Investment Considerations - While AZUL stock is attractively valued and benefits from strong air travel demand, investors are advised to monitor the company's developments closely before making investment decisions [21][23].

Core Insights - Azul S.A. reported a loss of $2.18 per share in Q1 2025, significantly missing the Zacks Consensus Estimate of earnings of 4 cents per share, compared to a loss of 57 cents per share in Q1 2024 [1] Financial Performance - Total revenues for Q1 2025 were $920 million, slightly below the Zacks Consensus Estimate of $925 million, with passenger revenues, which account for 93% of total revenues, increasing by 15.2% year over year due to strong demand [2] - Cargo revenues and other sources grew by 17.3% year over year, with international cargo revenues experiencing a substantial 62% year-over-year growth, contributing to a healthy EBITDA that more than doubled year over year [3] Operational Metrics - Consolidated traffic, measured in revenue passenger kilometers (RPKs), rose by 19.4% year over year, with domestic traffic increasing by 14.7% and international traffic surging by 38.3% [4] - Consolidated available seat kilometers (ASK) increased by 15.6% year over year, with domestic capacity rising by 10.2% and international capacity by 39.2%, leading to a load factor increase of 2.6 percentage points to 81.5% [4] Cost and Expenses - Total revenues per ASK (RASK) were R$42.14 cents, down 0.2% year over year, while passenger revenues per ASK (PRASK) decreased by 0.4% year over year [5] - Cost per ASK (CASK) increased by 7.6% year over year, influenced by an 18% depreciation of the Brazilian real against the US dollar, 5.5% inflation, and higher costs associated with international operations [6] - Operating expenses reached R$4.82 billion, up 24.4% year over year, driven by increased capacity and fuel prices, although offset by productivity improvements and cost-reduction initiatives [7] Liquidity and Debt - At the end of Q1 2025, Azul had total liquidity of R$6.66 billion, down from R$7.49 billion at the end of the previous quarter, while gross debt rose to R$34.6 billion from R$33.6 billion [8]