Azul(US:AZUL)2023-08-11 00:00Financial Data and Key Metrics Changes - In Q2 2023, the company achieved record revenues of BRL 4.3 billion, a 9% increase compared to Q2 2022 and a 63% increase compared to Q2 2019 [9] - EBITDA grew 88% year-over-year, reaching BRL 1.2 billion, with an EBITDA margin of 27%, which is 11.4 percentage points higher year-over-year [9][10] - Average fares increased by 6% year-over-year, while fuel prices decreased by 24% year-over-year [10] Business Line Data and Key Metrics Changes - The loyalty program saw gross billings more than double compared to 2019, with sign-ups increasing over 80% since the launch of the expanded schedule [7] - The vacation business experienced over 40% growth in gross billings compared to Q2 2022, now being four times the size in net revenue compared to 2019 [7] - Azul Cargo, the logistics business, maintained a 34% domestic market share, with net revenues more than doubling compared to 2019 [8] Market Data and Key Metrics Changes - The company is the only carrier on 81% of its routes and leads in over 90% of its routes, supporting its industry-leading profitability [6] - Domestic demand has recovered to 100% of corporate volumes compared to 2019, with average fares up 40% to 50% [45] - The domestic logistics business continues to grow at mid-to-high single digits, while international cargo has softened [48] Company Strategy and Development Direction - The company successfully concluded its capital optimization plan, which included agreements with lessors and a new capital raise of $800 million in bonds [12][14] - The focus is now on expanding operational efficiency and optimizing the utilization of the fleet, with significant improvements expected in the coming years [29][37] - The management team is dedicated to building a strong airline with a unique business model and significant upside potential [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of international capacity, which is expected to be larger than in 2019, with strong partnerships enhancing market reach [21][22] - The company anticipates a strong second half of the year, with expectations for EBITDA to reach BRL 5.5 billion, driven by improved operational leverage [34][35] - The management team is optimistic about returning to pre-pandemic EBITDA margins, with expectations for further growth in 2024 and beyond [36] Other Important Information - The company has reduced annual lease payments by BRL 1.5 billion in 2023 and over BRL 1 billion in 2024, optimizing cash flow for future growth [15] - The leverage ratio decreased from 5.2x to 4.2x, with expectations to further reduce it to 3.5x by the end of the year [16] Q&A Session Summary Question: Opportunities in International Corridors - Management noted that international capacity in 2023 will exceed 2019 levels, with strong performance in both European and U.S. markets [21][22] Question: Adjustments Made in EBITDA - Adjustments were primarily related to the capital optimization plan, including costs from early aircraft redelivery and restructuring fees [23][24] Question: Fleet Plan and Utilization - The fleet plan includes significant improvements with new aircraft deliveries, and management expects to return to pre-COVID utilization levels [28][30] Question: Profitability and EBITDA Margins - Management is confident in achieving BRL 5.5 billion EBITDA for the year, with expectations for margin recovery in 2024 [34][36] Question: Domestic Market Trends - Domestic demand is strong, with corporate volumes fully recovered to 2019 levels, and pricing environment remains favorable [45][46] Question: Cargo Business Outlook - The domestic logistics business continues to grow, while international cargo faces challenges; however, the focus remains on domestic growth [48][49] Question: CapEx Plans - CapEx for maintenance is projected between BRL 1.8 billion to BRL 2 billion, with no new aircraft purchases expected this year [52][71]