Azul(US:AZUL)2023-03-07 02:58Financial Data and Key Metrics Changes - In Q4 2022, the company achieved record revenue of BRL4.5 billion, a 37% increase compared to Q4 2019, with an operating income of BRL525 million and an EBITDA margin of 25% [13][16] - For the full year 2022, total revenue reached BRL16 billion, up 40% from 2019, with unit revenue at a record $40.29, a 26% increase from 2019 [8][9] - The company expects total revenue of BRL20 billion and EBITDA above BRL5 billion for 2023, indicating a strong recovery trajectory [9][18] Business Line Data and Key Metrics Changes - Azul Cargo, the logistics business, saw a remarkable 153% increase in revenue, becoming Brazil's largest domestic air logistics provider [8] - The loyalty program TudoAzul nearly doubled its gross billing compared to 2019, while Azul Viagens, the travel business, grew 90% to BRL1.3 billion in gross bookings [8] Market Data and Key Metrics Changes - The company serves 158 destinations, with a market leadership position in over 90% of its routes, and is the only carrier on 80% of its routes [10] - The company plans to expand its network significantly, including new international destinations such as Paris and Curacao, enhancing its competitive position [10] Company Strategy and Development Direction - The company has developed a comprehensive plan to improve its capital structure and cash flow, focusing on negotiating with lessors to reduce lease payments and eliminate COVID-related deferrals [20][22] - The management emphasizes a long-term strategy to optimize cash flow and strengthen the balance sheet, with a focus on sustainable growth and profitability [25][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery of corporate travel volumes, currently at 85% of pre-pandemic levels, and expects continued growth in this segment [45] - The management highlighted the disciplined approach of the industry in maintaining pricing power despite fluctuations in fuel prices, indicating a strong demand environment [38][39] Other Important Information - The company ended 2022 with leverage below 6, consistent with its guidance, and has made significant progress in its deleveraging process [16][17] - The management noted that the company did not receive any government financial support during the pandemic, which underscores the resilience of its business model [17] Q&A Session Summary Question: Can you provide additional color regarding the terms agreed with the lessors, especially in terms of the equity portion? - Management indicated that the strike price for lessors will be higher than current market prices, reflecting the company's true value and minimizing dilution [29][31] Question: What can you comment on the unit revenue assumption for the year? - Management stated that the industry remains disciplined, and Azul intends to maintain pricing power despite falling jet fuel prices, aiming for a strong EBITDA margin [37][39] Question: Can you confirm that the 2030 note will not be convertible? - Management confirmed that the 2030 note is not convertible and will provide further details on cash outflows in the coming years [44] Question: How do you see long-term consolidation in Brazil? - Management acknowledged the possibility of consolidation but emphasized focusing on Azul's core business and growth opportunities [50][51] Question: How is the pilot supply situation in Brazil? - Management reported no constraints in pilot hiring, leveraging partnerships with flight schools to ensure a steady pipeline of qualified pilots [53]