Azul(US:AZUL)2022-05-09 18:57Financial 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]