Financial Data and Key Metrics Changes - The company achieved record second quarter results with top line revenue more than doubling year-over-year, reaching BRL3.9 billion, which is 50% above pre-pandemic levels [12][13] - EBITDA for the quarter reached BRL615 million, representing a margin of almost 16%, and would have been BRL880 million if hedge accounting was applied, which is 20% above the same period in 2019 [13][14] - Immediate liquidity increased by BRL530 million during the quarter, totaling BRL4 billion in immediate liquidity, while total liquidity remains strong at BRL7 billion [15] Business Line Data and Key Metrics Changes - Azul Cargo's revenue almost tripled compared to 2019, while TudoAzul maintained a strong growth pace with gross billings ex-Azul up 60% year-over-year [17] - Azul Viagens had a remarkable quarter with revenue increasing 70% compared to 2019, benefiting from the expansion of dedicated flights [17] Market Data and Key Metrics Changes - The company reported a 43% increase in productivity measured in ASKs per full-time employee compared to the same period last year [14] - The average fare for bookings in the last two weeks was the highest in the company's history, indicating strong demand across both corporate and leisure segments [22][24] Company Strategy and Development Direction - The company continues to focus on strengthening Brazil's largest network, having added 35 new destinations since 2019 and being the only carrier on 80% of the routes served [8] - The fleet transformation program is aimed at increasing efficiency and profitability, with a commitment to a more fuel-efficient fleet [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future of Brazil's aviation market, highlighting strong demand and the ability to grow profitably while enhancing customer experience [10] - The company anticipates continued positive trends in yields and bookings, with expectations for higher average fares in the second half of the year [16][40] Other Important Information - The regulatory agency ANAC's decision regarding slot distribution at Congonhas Airport is expected to benefit Azul by increasing daily departures significantly [18] - The company is positioned to maintain a strong cash position, potentially ending the year with cash levels above pre-pandemic figures [56] Q&A Session Summary Question: Could you share any color on the corporate demand recovery side and the health of leisure demand? - Management reported strong performance in both corporate and leisure segments, with corporate revenue over 100% compared to pre-pandemic levels and leisure bookings showing positive trends [22][23] Question: Any updates on EBITDA expectations? - Management refrained from providing specific EBITDA numbers but emphasized strong revenue performance and cash flow generation, indicating confidence in business fundamentals [26][27] Question: What are the expectations for lease payments and funding options? - The company expects to pay around BRL3.8 billion in lease payments for 2022 and 2023, with flexibility to adjust capital expenditures based on EBITDA performance [50][51] Question: How do you see the competitive environment? - Management noted that the industry is competitive but disciplined, with Azul's unique network advantages allowing for independent pricing strategies [52][53] Question: What are the expectations for capacity in 2023? - The company anticipates similar growth in capacity for 2023 compared to 2022, leveraging fleet transformation to increase efficiency [42][45] Question: How do you plan to use the additional Congonhas slots? - The company plans to connect large business markets and strengthen its network by flying to hubs, enhancing connectivity for customers [72][74] Question: What are the expectations for non-ticket revenue growth? - Management expects cargo and loyalty programs to grow faster than the airline overall, with significant engagement and new opportunities in the market [78][80]

Financial Performance - Net revenue more than doubled compared to 2Q21 and increased by 50% compared to 2Q19[12] - The company achieved a 26% increase in RASK (Revenue per Available Seat Kilometer) despite a 19% growth in capacity[12] - EBITDA reached R$880 million, a 20% increase compared to 2Q19, including fuel hedge gains[17] - Azul shipped approximately 3 million packages in 2Q22, which is more than 80% above 2Q19 levels[30] Operational Efficiency - The airline reported an average on-time performance of 65.7% in June 2022[11] - Employee productivity increased by 10% compared to 2Q19[11] - Fuel consumption decreased by 10% compared to 2Q19 due to fleet transformation[11] Strategic Advantages - The company highlights its unparalleled network, flexible and fuel-efficient fleet, and fast-growing, high-margin businesses as sustainable competitive advantages[7] - Next-generation aircraft account for 30% of ASKs (Available Seat Kilometers)[10] - TudoAzul, the company's loyalty program, saw gross billings increase by 60% compared to 2Q19, and redemptions also increased by 60% compared to 2Q19[30] Market Position - Azul is the only carrier in approximately 80% of its routes[11] - The company anticipates fares to increase with favorable seasonality and expects lower jet fuel prices in Brazil due to a drop in international oil prices[29] - Azul is expected to more than double its presence in Congonhas Airport due to new slot distribution rules, increasing from 41 to 80+ slots[31]

Financial Data and Key Metrics Changes - The company reported an all-time first quarter record revenue of BRL 3.2 billion, an increase of 75% compared to Q1 2021 and almost 26% up compared to the same period in 2019 [13] - EBITDA reached BRL 593 million, representing a margin of 18.6% in the quarter, with an estimated EBITDA of BRL 900 million if excluding the impact of Omicron [14][20] - Cash flow generated during the quarter was BRL 500 million, with immediate liquidity at BRL 3.3 billion, well above Q1 2019 levels [21] Business Line Data and Key Metrics Changes - Cargo revenue tripled compared to Q1 2019, reaching almost BRL 300 million, highlighting the strong performance of the logistics business [11] - Azul Viagens saw record domestic sales with bookings increasing more than 70% compared to 2019, and over 900 dedicated flights planned for July, more than double compared to 2019 [12] Market Data and Key Metrics Changes - Corporate revenue recovered to more than 120% of 2019 levels, with corporate volumes still 29% below pre-pandemic levels, indicating potential for further recovery [15] - The company experienced strong booking trends, with record booking days in March and April, leading to expectations of record unit revenue in Q2 [42] Company Strategy and Development Direction - The company aims to leverage its unique network and diversified fleet to support growth in Brazil, which is viewed as a growth market due to its commodity economy [8][9] - Azul's strategy includes focusing on margin expansion and cost reduction while maintaining a disciplined approach to capacity deployment [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the Brazilian aviation market's future, anticipating a generation of BRL 4 billion in EBITDA for 2022 and BRL 5.5 billion in 2023, which would triple EBITDA compared to pre-IPO levels [22] - The company noted that the operational challenges from Omicron were behind them, and they are optimistic about sustained demand growth [13][14] Other Important Information - The company has no significant debt repayments over the next two years and has reduced gross debt by 13% compared to December 31, 2021 [21] - Azul's loyalty program has grown to 14 million members, with active customers doubling compared to 2019 [17] Q&A Session Summary Question: What components of corporate demand have not yet recovered? - Management noted that finance and government sectors are still recovering but are accelerating, with finance performing better than 2021 but not yet reaching 2019 levels [24] Question: What assumptions are baked into the 2022 and 2023 outlook regarding fuel prices? - The company is using the forward curve for fuel and FX, with expectations of slightly lower fuel prices in 2023 but still above historical levels [26][27] Question: Can you provide details on your deleveraging strategy? - The majority of the company's debt consists of capitalized leases, with plans to pay down deferred rents next year as EBITDA returns to pre-pandemic levels [31][33] Question: What has changed structurally in the Brazilian market regarding leisure demand? - Seasonality has flattened, leading to sustained demand at higher levels, with weekend bookings indicating a new normal rather than pent-up demand [50][51] Question: Is there still more upside in pricing? - The company is seeing more opportunities to increase prices without resistance from customers, supported by a disciplined capacity environment [52]

Financial Data and Key Metrics Changes - The company achieved a record net revenue of BRL 3.7 billion in Q4 2021, surpassing pre-pandemic levels by 15% compared to Q4 2019 and more than doubling Q4 2020 revenue [7][12] - EBITDA for the quarter exceeded BRL 1 billion, with an operating income of BRL 525 million, representing a margin of 14.1% and an EBITDA margin of 27.5% [8][14] - CASK reached 33.91 cents, up 33% compared to Q4 2019, primarily due to a 51% increase in jet fuel prices and currency depreciation [13] Business Line Data and Key Metrics Changes - Azul Cargo generated BRL 1.1 billion in net revenue in 2021, significantly surpassing the target to double cargo revenue compared to 2019 [15] - The loyalty program, Tudo Azul, saw a 34% increase in gross billings in Q4 2021 compared to Q4 2019, with nearly 14 million members [16] - Azul Viagens, the vacation business, sold nearly 30% more travel packages in 2021 compared to 2019, leveraging the unique network and fleet flexibility [17] Market Data and Key Metrics Changes - The domestic market showed over 100% recovery in leisure travel, while corporate recovery was around 70% of 2019 levels, with small and medium businesses exceeding 100% recovery [22][24] - The company is now flying to almost 150 destinations, adding more than 30 destinations since 2019, indicating significant market expansion [10] Company Strategy and Development Direction - The company is focused on fleet transformation to reduce fuel consumption and unit costs, having already achieved a 20% reduction in fuel consumption per ASK since the transformation began [11][13] - The strategy includes maintaining a disciplined approach to capacity deployment and fare management to enhance profitability [12][20] - The company aims to leverage its logistics and loyalty businesses for margin expansion, with a strong emphasis on sustainable development and ESG commitments [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of corporate and international demand, anticipating exciting opportunities in passenger loyalty and logistics businesses [20] - The company acknowledged challenges from rising fuel prices and currency fluctuations but emphasized its ability to pass through cost increases to fares [28][40] - Management remains optimistic about the resilience of the Brazilian market, expecting a strong recovery post-Omicron [25] Other Important Information - The company ended Q4 2021 with immediate liquidity of BRL 4.1 billion, up 41% compared to the same period in 2019, ensuring a strong cash position for future opportunities [18] - The company has been included in the corporate sustainability index of the B3 Stock Exchange, highlighting its commitment to ESG initiatives [19] Q&A Session Summary Question: Can you provide more granularity on the domestic market in terms of leisure and business before and after Omicron? - The domestic market saw leisure travel over 100% recovery, corporate recovery at around 70%, and small-medium businesses exceeding 100% recovery, with average fares significantly higher than 2019 levels [22][24] Question: How many F-Class freighters does the company plan to add to the fleet? - Currently, there are four F-Class freighters, with plans to add more as the company showcases them to potential customers [26][27] Question: What can be expected for yields in 2022 and the ability to pass through higher fuel prices to customers? - The company expects to continue recovering yields, with corporate fares significantly higher than 2019 levels, and anticipates a disciplined market response to rising fuel prices [28][30] Question: What are the assumptions behind the $4 billion EBITDA guidance for 2022? - The company remains confident in achieving the $4 billion EBITDA target, despite recent volatility, and emphasizes the importance of managing fuel and FX costs together [35][40] Question: What is the CapEx estimate for 2022 and 2023? - The recurrent level of CapEx is expected to be around BRL 1.5 billion, similar to 2019 levels, with flexibility to adjust based on demand and currency fluctuations [74][75]

Azul SA (NYSE:AZUL) Q3 2021 Earnings Conference Call November 11, 2021 10:00 AM ET Company Participants Thais Haberli - IR Manager David Neeleman - Founder, CEO and Chairman, Azul Linhas Aéreas Brasileiras S.A Abhi Shah - Chief Revenue Officer John Rodgerson - CEO Alexandre Malfitani - CFO & IR Officer Conference Call Participants Joshua Milberg - Morgan Stanley Savanthi Syth - Raymond James & Associates Michael Linenberg - Deutsche Bank Alejandro Zamacona - Credit Suisse Bruno Amorim - Goldman Sachs Group ...