AZUL's Q1 Earnings and Revenues Fall Short of Expectations

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]