- Earnings call transcript Q3 2022

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Operator

Hello, everyone, and welcome to Azul's Third Quarter 2022 Results Conference Call. My name is [Fabio] and I will be your operator for today. This event is being recorded and all participants will be in a listen-only mode until we conduct a question-and-answer session, following the Company's presentation. [Operator Instructions] I would like now to turn the presentation over to Thais Haberli, Head of Investor Relations. Please, Ms. floor. the have you Haberli, Proceed, please.

Thais Haberli

and for you, welcome our quarter the to we Presenting be of David Azul, CEO; and Rodgerson, call Founder Chairman; third Neeleman, and call. President today Thank will audio website. Shah, are Malfitani, the our Azul's The on the this are Alex John morning, all earnings this results Azul's announced that CFO; Fabio, that IR Q&A here session. available and slides also the of reference we and Abhi

subject constituent over turn the matters call, I based are are David, I not detail Also and but the in the caution and of in company regarding Before reasonable, that, discuss not isolation. range which forward-looking to a that be With call future CPM considered on turn should that performance you in during and today our call historical assumptions statements. our are to Any David. to SEC statements. slides. David? These non-IFRS Company's that I'd reforms to we are comments a particularly objectives, the course discussed forward-looking statements over like of measures, will facts, are uncertainties regarding plans, believes will the discussed expected risks

David Neeleman

crew would Thais. everyone, to XX,XXX by to like Thanks I earnings start for than and Once joining thanks call. us our them, Thanks, of again, Welcome, another great members. quarter quarter to our Azul third thanking results. delivered more

were airlines other the the an and July airline dedication Through world's world's run and on-time XXXX. amongst August, -- and months service. we most in their world's most crew exceptional passion, incredible deliver the on-time operation the March, members in of we're customer we're most and Our

domestic. in Azul another satisfaction or operating hit and all among In recently that airlines to reported industry. in metrics October our crew member Brazil, the continue has highest lead satisfaction the record foreign ANAC addition, customer

less competitor. than had complaints any customer other also half of We the of

only Our all that us but to industry. world-class giving other not amongst tops fly scores, well NPS customers airlines, love as of Azul, are outside our incredibly high companies

is of we XXX flying we network continue Brazil. more one million and good serve sustainable is delivering ever, about XX good and We the emissions down growth, that was transformation of are and network to XXXX compared At that in than over more In do conducted our crew Azul destinations recently an an year, than be time, to XXX-plus to now to we help serve in we consumption especially XX as plan. we X% opportunities have and down and not our flexible incredible powered competitive triple Brazil our are such fleet. to it more same the as to largest years, our optimistic customers. than commitment see our and growth X% unique other impacting our breast for grow ASK awareness in cancer that campaign. as celebrated every of access neighborhoods education in these, future know X doing can destinations With per destinations, in more care. are it's is carbon work more their three any any as I serve, and with fleet the to Brazil. touches fact of continues plane they that anchored efficient All community crew our we our carrier and and by which now growth in has doing our jobs, our as alone, Furthermore, could advantages destinations we sustainable if for improve communities. Whenever ASK Slide X, health registered way last we fundamentally we volunteers, ever customers. we that the that economic down quality on you'll members members over life X,XXX that our per fuel of more This the develop October, the year, and Azul

on Moving to Slide X.

advantages limited competitive network. our to fleet Our or are not

is Our Azul generate compared in track the to QX ToduAzul and business billings benefiting million to and units, bookings ToduAzul this continues also positive QX ended in growth BRLX trajectories and compelling Viagens, Cargo performance, trend Azul on members My XX% to margins. is more key on Viagens, billings continue from XXXX. travel. gross are billion gross outstanding to 'XX than with up our over double track Azul contributors XX leisure from their and industry-leading year. its It baby,

We in relevance than are we capacity downtown this in increased We'll have when the excited Paulo. in downtown Sao about XXXX, double of program. airport, starting Congonhas very -- in more the

by Our in our revenue under logistics growth. in logistics of our a profitable driven over network truly I delivery business, strong end-to-end with Brazil. to and for our Cargo, Azul in demand times has hours to and cities quarter X,XXX sustainable exclusive the -- believe solution 'XX, compared XX third doubled our

promoting We for Brazil's our significantly tourism all best members contributing crew experience the and to and development by creating opportunity, employment over providing are customers and Brazil.

in of which what what I'm to to cash give even ahead and proud team great that, explain, results. the pass we billions lies excited business, details the ahead, from the upon us. over you of is have flow With built, has on operations. John John? I'll which I'm will John word billions more As more generates a about quarterly

John Rodgerson

promoted express our delivered results I'm proud quarter. in in And the their to again internally would to X,XXX great than that of providing growth for I the XXXX them families. alone, more fact once members, opportunities we gratitude my and David. crew who Thanks, and life-changing like crew members also career

quarter. had around period X, In in growth generating another and in revenue delivered once capacity factor same third we quarter, XX% unit XX% with year all-time as last higher the again XXXX, in than forward, X.X% a the load XX% in on the up record Slide see of XX% a BRLX.X can capacity. revenue billion delivered while more Moving versus you we quarter, the of

As grows, capacity goes revenue unit you normally know, down. when

fact unit in demand So load factor we the the reached environment grew X Also percentage the demonstrates network strong in discipline. XX%, our higher our quarter revenues that capacity and year-over-year. points XX%

with in more arrangements, demand We positive expect for new the continue devaluation trends reached levels, of just with at records reached given BRLXXX XX%. this a Brazilians Brazil. economic them travel the in strong quarter recovered in fuel more to pre-pandemic are also the third only prices, in States. to XXXX, flexible has allowing line from United in leisure activity like benefiting We with often, XX% traffic for quarter XXX% work even the a increase while this in ended corporate months continued consecutive unique our This million, XXX% market, three model not is showing pent-up above XX% and levels, clearly inflation Brazil the XXXX complementing the leisure in over XX flexible Corporate was September network, fairs earnings which is demand. leisure low This sustainable of and of demand. over the recovery our cost strength years. of Brazilian demand the with of clearly business demonstrates currency structure. and fleet our past power EBITDA advantage

X. Moving to Slide

the fares XXXX, a the allowed we're our strong capacity demand flat while combined sign for at raise Our network clear right that right with to us in allocating to markets services XX%, by stage advantages the time. remained length

more On fuel know, prices. overcome strong currency you on up Slide for XX% and Slide our is RASK challenge capacity the generation. devaluation the fuel our dollars to environment us and cost high X, ASKs next-generation increase to and our our today and and XX The by to see operator shows in demand from This cash As and aircraft number critical shown also can versus trends remain to allowed pressures Slide deployment are challenge in to us yield XXXX, you continue presented in reason with X. steep region, take how margins clearly by at in fares is be in strong yields. the the to expanding flown of demand advantage increase improve one clearly leading one aircraft. continue next-generation the it of disciplined

are fuel-efficient that young, transformation per prices fleet that compared so here. flying our competitors fact The ahead States, competitive fuel our than United is Brazil the far crucial about in is to a $X advantage. is clear higher fleet Given gallon a

than we can XXXX, XX. impact the When XX% fuel generated is see period same and exchange rate as sense, also a ASK, since down emissions an making it's carbon way with more our third clearly down financial and addition grow per the Slide incredible quarter in to consumption XXXX. BRLX.X EBITDA sustainable we quarter in the to billion, XXXX, for to third X% In risk, fuel foreign compared compare of you on more the

of However, actually the line environment, continue expect economic Brazil, activity with thanks in able we're in EBITDA to we demand trends the to given to XXXX. strong which generate positive

Slide to most you Moving charge combination the highest the fares. revenue network fly of aircraft the capacity clearly stage XX, the see design efficient shortest and and We generation. deployment, over can

optimized in directly results. stark our network the environment We competitors, contrast have our cost industry-leading clearly for fleet and to leading current our to

the exit transformation have advance have delivery XXXX, we We announced next-generation expand the giving end most through and shortest length fleet to accelerate the EXs highest plan from our margins. again, further process us and of the stage fleet the to fares, fuel-efficient passenger an the have our of opportunity significant aircraft made of our Once on airplanes. XX

billion, value. outflows the our BRLX.X and the least growth billion and in to continued We repayments to immediate commitment transformation. our be of with BRLXXX operating see totaling XX, current fleet and sustainable that XXXX, On billion. strongest by deferred period BRLX.X leases liquidity in our BRLX.X million are debt. in Slide to competitors process years of in long-term and the quarter payments higher same in inflows surpassed of our Cash region, our compared at we could the deleveraging five building cash ahead reflecting continues you

around that repeat our in run billion cash operations from rate Let billion an from BRLX over annualized annually. operations $X cash or me inflow generates on

you of X.X X.X the on the quarter with turns year-to-date, our more year beating schedule. As leverage X.X ahead below we leverage see by than of to reduced can finishing and turn our in Slide XX, six, guidance quarter one a

region is the Xx in when the even leverage using lowest Our rent.

capital of position pandemic, cash, and ability a billions still assets. we'll now a access our variety Moving delever and ever, access are generating in business. we with and crisis better to operations demonstrated the continue exiting unencumbered billions than to forward, having valuable the have Throughout to in our

Azul for to Finally, to all our of moving Day see year, and like our support great December advantage to the all competitive to Paulo. Airport Slide ahead opportunities are special confident a we thank the excited optimistic very X. continued of invitation finish, would and stakeholders like our take This model on a To would sustainable is advantages. in and our one, business I Sao of their XX, for we location extend downtown special the I we're Congonhas in us.

all we and received we have our questions. are before, Day presence of our forward next I'm within here sale As few had to Abhi your Investor and had expanded to know that, pleased mentioned on put look our any you to Azul that things X. the answer slots David, more expected I the more the Alex, let airport. and talking and weeks for With December airport about at to than this We'll we double at officially at network XX

Operator

Credit go Suisse. our Mr. Serrano from Instructions] Let's now [Operator first to question, Diego

Diego Serrano

Just a couple my from side.

increase was could I to quarters? we could for they also fourth could in to normalize? wondering Or fuel assume high this started the I have expect given the yield, seasonality? prices regarding we peaked quarter, First from could forward XXXX? the upcoming during expect we have going mean may what sequential what third into yields usual quarter we expect And

Abhi Shah

Yes, here. Diego, Abhi

pricing market are XXX% is We're The What combination. as XXXX. as in similar Kirby, we're U.S. We well. be about U.S. that continues in and well. to talked to are over demand. Demand terms to what seeing the in we Corporate continue. to Airlines, of Leisure the revenue in strong. Brazil expect trends demand and strong. seeing Scott seeing we business The here United is leisure is

frankly, advantage our how I revenues of no, take is in as well. continue seasonality, And continue and the September. achieved path. intention to yield will unit on this do take record So progression, the demand industry believe that's we've advantage of

much is unit I focused maximize November in another the to we terms make record to of yields and going revenue. we're think be sure revenues, on

Diego Serrano

reasonable low market to you for a you XXXX, would I mentioned I yet upside XXXX. Perfect. Okay. And teen expected capacity from one I recall coming second Congonhas. plans share you your at potentially if I may. the had mean know increasing growth wanted plans but year-over-year be not for about as closed that

So any have in that sense, early do you expectations?

Abhi Shah

planning the mostly Diego, think the with that's around Yes, domestic teens that I are market. low we consistent what focusing on

some have well. as We international

we end mentioned, coming of in early as you March, Congonhas April. As have well

only You Omicron by conversions will first the network see basically our because But January, EXs it's year in higher EXs. this and February. with year, quarter were growth impacted in full we coming current between

put EXs we service. more into So will

We out part will of low terms but ASKs sounds about take as EXs teens transformation, our some in fleet right. around of

John Rodgerson

EX it's than important exiting. the has are think I seats every XX EXs And more highlight to that that

revenue. more they generate not much aircraft, So only more are fuel-efficient they

an so effect, not And our departures certainly because which it's are upgauging help up down drive cost. that will unit much going

Operator

with Bank. analyst sell-side Linenberg, Michael from question a have Deutsche now We

Michael Linenberg

the at amount? Or that that talked XX two the So trips? guess offering we I I guess get And just you want you to those of about incremental as size. of one-way John, currently what to sense slots are XX a your have? Is flights, total I should you think questions slots, round just XX Congonhas. here. right? is

Abhi Shah

Yes.

Mike, departures a of about day we'll day. XX current operation, In departures our from a terms XX go to

we double. slightly were more So than

John Rodgerson

highlight And important I for Mike, to think it's investors.

more Brasil think actually us everything right? And up Avianca to Brasil, from us the was drama prevent Avianca had. than that to disguise, a We company. it's blessing didn't done it. I trying been that in everybody We actually buying watched end buying got buy slots of

thing. great assume assume have to liability. a of to debt. have it's that didn't that been didn't We We So all

of it so acquired actually in airline. we Azul ended out that better up for And working purchase than run slots long much had the via those

Michael Linenberg

good update that of start years, billion It's a I you know a I of couple billion, -- was we it flows billion over paying the no maybe we lease is? Yes. BRLX.X I number per some And repayments it think cash Alex. over recall, then you significant No, some the have about just deferrals. was was know absolutely. it year. debt deal. to And next that but modeling year? just as these start for And on years, BRLX.X BRLX what I think us Can of of next four as like total you

John Rodgerson

enormous right? operating You're that business and The is pass I'm it of talking about to Mike, number a amount front going to of of to cash right? next off EBITDA jump have in Alex key great him, BRLX flows, generates an year billion.

And And partners. between been take so at that's we've got great partners and and managed you And our months if at Azul you we've of at how right? the nine this, stakeholders. a revenue, think our look thrown everything pandemic, look without

a we we But through a a over have I'll And let But and then right? specific have of that of our period, of most flexibility walk off operation so forward. Or cash going financeable more the it we two-, do a with is partners a numbers. I Alex we have three-year is And everything to kind thing five-year run fantastic four-, think so the generates period? pay important that business. lot

Alex Malfitani

why is from recollection deferrals started What's that going of but remember deferrals. think So in that's rents a -- are an of XXXX, in in had sort in -- Yes. XXXX, start going important, in XXXX, in a increase to I happen, XXXX. and not there going right? I deferrals the the you're is for reason cash is XXXX think happening second wave right outflow a So second sort is you The is effect to there increase but deferrals, for because right? paying they that XXXX, the XXXX. we already that wave first see of already to your paid in we're And 'XX, we there between

if no negative number that from EBITDA of and So look rent not increased last XXXX. be every will for you're the debt, lowest cash it CapEx, negative been has XXXX interest, Actually, But It in minus into beginning since been terms free with pressure minus XXXX, you you going rent, shrinking If to minus in years in XXXX. flow, dealing at we've of assume negative in fact minus right? see negative the has three the been financing, number deferrals pandemic, right? the will be was has it been It in That in year. negative in XXXX. slightly gap XXXX.

right fourth over we've So is last when smallest and So said, that a right is we a necessary. highly right? as good of get profitable so a the just years need time. deal the is is the the the needed, that problem, over to three everything right? right four been cost and through right? with But deal at very you And it the for with that And financial news sort XXXX years do at we'll capital the cumulative cash So dealt of plus the we We'll John in can pandemic. sort as the of XX% we've the with had as dealing that this calculation as cash-generating XX we we we've operation, the that demonstrated have the the when beauty XXXX lowest business had far. we of have all the year, because last have out gap months, the cash access capital of

John Rodgerson

easy. we'll XXXX. in side, on The has for EBITDA XXXX we're performance and XXXX, months than up that made fuel that the first look drove six were and We that well XXXX the more But above revenue levels. similar prices. And the prices clearly, had that to fuel revenue had war now the We Ukraine be In up at shared XXXX. not right? compared Omnicon of the in doubled in we delivering

itself care run great flow. cash financing we the company operating and of as so a will And generate take

Operator

Global. next the question with And Daniel from comes analyst sell-side McKenzie, Seaport

Daniel McKenzie

That's operating a reais place to flow. great cash of up, billions actually pick and

getting look you And sustained profitability? the -- to the for what capacity making is seems pieces you thinking back you are back decisions the tough that you're can like committed to at thought need? get As to are profitability, sustained Azul there. But it how process when if the

Abhi Shah

can I Abhi Dan, the capacity part. here. start with

the we I environment very given in So given the think very, demand and been environment. fuel managing the active have capacity,

X% versus September if 'XX in So down September 'XX. our at actually were traffic, ASKs you look we September

If forward November in your October, actually to what our to what sequentially industry. -- between going peak lowest summer you capacity our the we in the increase -- is have November look compared now season January, sequential

And mentioned, so if you look fares. lowest highest at as length, our John and the the stage right, have we have stage we length, corporate

and of -- with next-gen XX% So with all ASKs our of these aircraft.

what And so active very, focus. making keeping actually that and we're could very network our makes more flying in needed. high, to to, are as wanted the as on revenue, we but sense, continues adjusting of the that the very actually very, and if side, we're be can RAS fly you We we the quality we're sure see

will So capacity with fuel, to just and get results capacity managing we're come overall. with demand, will come best the

John Rodgerson

highlight transformation going plan the early, into previously operate that right, Dan, I aircraft. XX exiting our things, were you've mean of to I the want they're and and fleet then next-generation just retirement of to accelerate us now in couple the right? And of all other XXXX. a seen EXs

kind EXs, gives aircraft, of the your little XX you that relief going replace into and Congonhas a this put take of the has forward. bit you crack with see So maybe them leverage company spread model,

Daniel McKenzie

XX thanks the for thanks up capital on And presentation, months, comments. good. Very the for priorities for prior picking coming the working

returned, XXXX? CapEx? the sort position back cover and the to funded are could cash going how maintenance just the reserves just you billions aircraft you those operating how the If cash of end flow, the being biggest year-end of long-term from thinking of of are to And position again, uses, requirements at us reais cash given, enough understand at help about

Alex Malfitani

you so think yes, XXXX. and I compare Dan, can XXXX

We're inflows XXXX we're cash the much seeing You not increase it's environment just better seeing in annualizing we're today. are in than a from essentially have EBITDA. what we a what that expecting expanding huge right? today, And

than the the If Omicron of have that with don't even just the that XX just the an have spike have more this it's CapEx, fact in environment fuel you months even that we Then fact from terms we generated a the of generate devaluation we with don't demand flat. what basically year. in fuel will already additional see, real, cash operations high ton of prices, we

rent, it's basically of In terms flat.

In less little a it interest, this call essentially you than it's can flat. year, but terms of bit

difference. roll example, this in don't debt So right? maturing we terms business, have interest the can a and the revenue to the see we that year, love of we the you performance I of maturing our a don't outflows, debt creditors able generate We for lot that big were for of So think they had the them. and see high because

is margin of story cash flows on if going then and positive maybe the the John why easier a get our against things of is slightly mentioned instead couple really, So of breakeven, essentially XXXX, get a to little continued XXXX depending going recovery much than way you terms a in us. of we expansion. XXXX year how in And

John Rodgerson

our front, And quarter, going that us increased in also the the that two to gives of the reserve me, reserves about on reserves things Dan, million unsubsidized deleverage -- those say, We is more opportunities. And you need I and get And we of right? all we're quarter, at BRLXXX if right? so And almost excuse I deposits, right? billion maybe are billion almost things we're balance hey, of right? right? that assets, to think and and to process, gotten look to European the carriers. cash kind you through that transformation, U.S. so think -- maintenance very have airline this, there's want with right? a -- carriers, I if business. just then so with BRLX.X couple and BRLX.X so keep CapEx paid by we I unencumbered we highlight million quarter, flexibility are are deleveraging you the exiting we talk an forward fleet numbers want all other cash tight, partners. on pandemic strong compared And lot little the mind, inside We've a working really -- a a a in this all when interesting compared And with is paid of may to slower, in spent our And BRLXXX

was so did get of devaluation not increase only And with Our economy right? not the devastated we government, fuel from in prices. the help the real and the

And "Hey, delivering so so that that never And blessing again. go Alex, earlier I is the look actually to deliver said at going up that question you numbers Abhi hasn't right? to slowed. Abhi we've it's sequentially, the seen and say, revenue today", and demand he's that unbelievable

those -- to in be there's opportunities on you be can flexible -- then be much flexible We flexible, CapEx, didn't if in that. and your you so for this year, continue you and in numbers And and be is financing finance have really reserves, so could there CapEx can can do you CapEx. lines look And right? where you your can you to opportunities

Operator

Savanthi Our James. next analyst with question from sell-side Raymond comes Syth,

Savanthi Syth

in you're of just but side, financing a costs? terms the And and years? next flow cash from you're If of a balance seeing you in couple perspective. cost the Could quick on follow-up more number about the aircraft just that of kind of talk I like sheet might, getting what bit a

Alex Malfitani

EXs The or we've basically additional as guidance we before. will the get same the right? call, seats. remind already end the to mentioned as we'll flat. But EXs, next-generation on the bigger mainly to in EXs are the successful of just see discussed stays XX accelerate negotiations by stay of so the exit Savi, coming the fleet John And aircraft, the essentially everyone lease that their in, EXs as are

EXs, fuel cargo that right? by on aircraft ones, less of So what than pay And we burn of taking the rent those be paying already about going about than capacity, spite delivery not rent. are we fact fuel of most the these less to on aircraft going we're In we XX% right? the And pay than bigger seat. less they're XX%. later fixed, those XX% we in already. years total, -- They XX less the to of these are terms right? In -- of original we're rents in negotiated all per They're

are we coming because advantage you reminder in I maybe a they of aircraft like-for-like, the replacing guy that's And -- a lot so the today seeing the aircraft as will And see of in, that continue. that terms of And us will they upgauging terms in actually John cost a even not process, we not the curve. they're because cost going which right? they $XXX,XXX But $XXX,XXX great be aircraft of that $XXX,XXX, costing be month, in transformation who will have exposed is as behind do to we're think only be them ahead mentioned. forward, bad cost we are month don't for a have project with that a the fleet may will be capital, essentially replacing right? So competitors

John Rodgerson

fleet absolutely now at on that do transformation are their going to cost it farther upon stated. higher are that's as Alex critical, People than significantly a that's embarking journey. that along Yes, someone

And I think so have I and a cost competitors exist of as think that's discipline will that reason in forward. Brazil going ownership fares capacity higher our will

Savanthi Syth

going the good Congonhas, to level just that the from how changes realize Day, might revenue? how or with length to And I about about utilization on in. all the talk steal they there. And don't that how stage Investor high we impact any maybe helpful. kind Just P&L? we fixed yields that's to thunder you should but like know. the So of didn't are modeling Could think might, start if what the that mean might want I that I that's -- were

Abhi Shah

stage lower airplanes might actually to get And we even slots length lot be have -- very it's like. efficient, we because better will use because it have right? Utilizations today, are stuff. corporate a than so general, the in Savi, more we more we'd not at that

have actually you more opportunities slots, rotations. improve more have aircraft you once Now to

flat We we're credit of Paulo. And access think Congonhas importantly, will access because fly length week Stage example, most little us And pick Orlando, or know going are Lisbon or customer to will nature better. allow us, that card. a doesn't down for us little the be will to come us right? I But bit, us next bit our for today, to a of we excited will they and week or fly small one so up they in really out a Sao market. it's just utilization customer that fly the to the this

And so overall to access -- the our there's And we having network benefits of is top this I which to going think be relevance six overall. serve increase that's of lot haven't which out significantly now kind to a five, Congonhas, had. able we're just markets where customer, going to of to and

Alex Malfitani

lower essentially has a much cost And we the trip even to airport so flying able trip need But will the day, but aircraft in is just you During revenue a us late for look have be a wasting because lot need Congonhas in body, it in for it narrow day, the to during with isn't cost that's fly, EX the narrow everybody early aircraft evening. at in you there maybe our will we flexible same the you large per much as enough aircraft EX because we fits lower need not for day, you're capacity one if a that narrow-body get is of the the and body, the And else large large fleet, demand that you narrow-body a it right? thing that's right? than do fill a exciting that the You way the per demand Because right? Congonhas. day, throughout the about the right? Congonhas, large best

Operator

a We now have Amorim, with question GS. from analyst Bruno sell-side

Bruno Amorim

my So a flow dynamic. the question follow-up is cash on

to it with wanted Just the validate behind numbers you.

annualized we from for third calculation flow from BRLX.X of analysis roughly billion. held have BRLX.X of that burn on leasing BRLX so billion which annualized all, if at BRLXXX we Company So I'm the a EBITDA guiding to all basis perspective, of an would financial means cash million, and EBITDA quarter run basis, increase numbers an an annualized CapEx, billion. else to annual constant, same expenses, the BRLX.X first And billion if to look on the simplified cash

if second the sense do would of to to rate as first you neutral around understand billion? to will I already forward have be forward? going the wanted cash still math just going the it BRLX.X you the finance this you, billion, And burn will EBITDA related the mentioned, I how cash is, which intend makes So be is that run confirm decrease also negative. all, but BRLX to question

explicit? is possible How make to cash So over this more it you next the do XX months? it finance intend to burn

John Rodgerson

can't kind in more also that our fares of missed subsidiaries, our project forward growth the missed you What you the in quarter the business in cargo packaging take to the we're what highlight, doing and you EXs, Abhi right? just doing third obviously we're strength been you of we're going of and has Bruno, in and increase Congonhas, our missed because business. TuboAzul, doing doing network and

BRLX.X that not is number that million BRLX annualize. XXXX, in you our the So billion

right? and our burn already right, things, right? kind maybe Azul CapEx color. you a strong at CapEx the need cash the gets cash -- to that's And then a takes a team number lessors airline what faster business in the it's CapEx, flows. there's all when down let end you're look of to is Alex right? than this of engine finance for in our to working get doing, cash more right? you so enormous back your amount the on and then all haven't to So in about types way. ability they or that of and in generating had is XXXX of spending And going in financing, paying so remain those finance that operating forward, ability do I'll their And Maybe that paid we'll And that's if out, half. seeing so run up it, lot interest great cash think stakeholders of but We've overhauls give also talk And And the an it, XXXX? best of we're I all extended

Alex Malfitani

Yes.

a we were with for we're the gap right? the It's from annualizing Congonhas and for we're than much finance lot right? didn't very the capital John last things normal It's X. XXXX. adding a that and about I have projecting that Obviously, year. cash we're additional to you're XXXX, XXXX XXXX highlighted, one capital gap are markets. transformation, with and access operations markets capital able you're flow as be stable And able access that It be on right? would to finance the will that have on XXXX that right? And get as one capital access the you gap that? way cash again, cash we certain, or normal transaction, what X.X were that to XXXX. liquidity. to that getting didn't are cash gap when going do And X.X we're the very comfortable -- been but because best last done last the going cash capital mean either. We is volatile bigger the to We to capital coming doing. But do understand we been for access throughout. we've mean for from. see finance markets and gap a cash starts this projecting bad than optimism mean we to to So markets how we seeing are absolutely years, the we just we're in And Obviously, of for to raised that and to smaller deal easy we the higher we've the fleet in the we EBITDA have some did had X.X. year cash kind asking stable like we've the And would with had projection. question where the to today, I cash not the today it slots like just over what that was There's embedded in in capital I than years, have we cap the flow infinite markets. of talking makes that

that the leverage. sorry, going liquidity infinite we -- infinite right, to So, that have fact with raised we're leverage,

longer our took down we We access how this years our of at we've growth. different And fact delivering plan It's and going B needs. alternatives faster that are shows leverage we're we than expected in like we right? that very plan comfortable from and did slowed deviated always to originally our X.X down? deploy many plan pandemic. of reducing It's that's plan we've that because It guidance managing we we're a financeable get to why necessary. remind years, public, And slow we but public plan and you to We the everyone just to go go and for and I'd had to because a a plan C last not that's the operated, operate. a look to to a as going we to thought a is them had to long list we're And to up in our going get So D. finance And business business. C slow how how we We've plan. we we're ended continue just always never six that throughout an A leverage have lack How been XXXX. capital. public a just never didn't to Because than B down? we always plan that's XXXX.

John Rodgerson

exited subsidies one other They're packaging our pandemic, program, loyalty thing we want just highlight I the with XXX% And business. to a no government unlevered. is

in investment carrier. a an have European We

comfort All need. parts I give should right? options. never spare you that have -- think we're going So done of We at look you we've overall. don't We to still kind those. need these deal, it of a lot a of assets, just But you the

Bruno Amorim

a it? follow-up burn for billion next additional BRLX pull leasing have plenty billion to CapEx, trigger? made we an of number be on current Do your how and billion with mentioned you're levels go since not you to may at of EBITDA you BRLX to cash assuming have know where I the still you a the already that do decision point. going financed options you to just financial and expenses, If this of under Or if year would quick BRLX.X

Alex Malfitani

we throughout mean value we've the we are don't look done for and Azul have we'll now, to Exactly. I available pandemic. best to preserve the choose right? And to it pull for trigger, the all us, stakeholders we'll we'll need -- so one the that options at when as

Operator

analyst Stephen next Our from question comes Trent, sell-side with Citi.

Stephen Trent

may. I if Just two quick ones

the at now grow opportunity a an installation about there? that slots at As body you guys Congonhas, high-level language out of on competitive presence? any have bigger any And on are of that you to to incremental color sort see those views you think where going

Abhi Shah

Steve, Abhi here.

of before, Sao capture going navigate allow and can and in further largest as be going So it's we sale put there. much to of markets that But weeks. relevance a yet. it's allow I us going We'll Paulo that a surprise. corporate they look, said haven't the sort network to it announced it's in increased out It's are of market for couple again, our to then to have not the to us too the customer Azul ecosystem. And

benefit the what that's is. So

honestly, the disciplined. think, I market is

to disciplined. market the has be think I

to I be think continue disciplined. it will

seeing discipline I what them. you. for think to fare a doing that in has continue the bit, little that if kind expect to all I works empty And the around I airlines any think anybody good space don't overall. are of environment. we're mess

So way. I be the is overall, to That's market intention to our think to be disciplined. going continue certainly that

Stephen Trent

danger as Super recognize very do similar could Do seasonality? of -- we kind see leaseback because especially think it you appreciate you the of XQ take I activity think to just annualizing opportunities, about of forward, that, planes, one onboarding as when quick levels you you're Abhi. going guys and And sale of trying even follow-up. newer

Alex Malfitani

we're seeing market the actually Yes, that improving Steve. at margin,

there. financed, coming So for there's of But book, come already our We that uncertainty directly that leasebacks are are sale orders option. right? have an future the aircraft are certainly order kind of no all from

made outright some that of well Those announcement fleet within we fleet have going operation have as right, in those few to fleet, the actual the some kind the that of accelerating The sale involve options And we also the our take the the in can exit owned of We we aircraft of of of advantage, are have aircraft, still sale a many still that forward. right? finance actual aircraft. transformation right? EXs with the we

Operator

Marcelo analyst have with BTG Pactual. Arazi, sell-side we Now

Abhi Shah

may I think you be on mute.

is Well, Okay. new operating the will the in the when when we routes will question end flying that routes? read is, the The We can of we routes. start we so flying season, start 'XX, Congonhas starts March. the start XXXX summer here. March question northern

Operator

with of analyst have we from a sell-side America. Rogerio Araujo Bank Now question

Rogerio Araujo

more aircraft. a please have you I of a is second provide for provisioning details confirm policy on quarters question there the gain this sale on Can more in you couple leaseback change? And mentioned expect change release quarter? on my this for you great. you if if was and gains. return could you upcoming provide and if here. million details would also is And the Could that a One BRLXXX be the so, in what

John Rodgerson

had we if It a gain. BRLXXX million would be fantastic

Alex Malfitani

No.

didn't so airline new So aircraft Rogerio, a with time. a we for and obviously we the for have need very long deliveries started as provision brand-new to

aircraft, starting implemented we these and we provisioning we're a get deliver policy. to closer As

window. we you get for But can and that's looking at XX that the back the but within QX, months if mistaken starting we're next cost provision that incorrect. essentially, to aircraft to not redelivering of think, I the fall

before. a year-over-year have there you because didn't on so a provision change we And that comparison, see

think of these So of EX. the you're referring reversion I to the impairment

that aircraft. have getting going the very an were inflows on on the incremental versus side and was outflow made the Both continuing you those When provisioned cash to these aircraft, liability essentially assumption gain aircraft right? of XX, results as leave. saw that But the we the And the we maybe for relevant to aircraft of that aircraft between value being That's we What side on cash is were aircraft. to were the for cash and technical, a it, our be a that incremental to the number asset than our asset sheet. that the choose right? but cash for we're that going right-of-use both perspective, what and so the we're of provision gain really to getting balance IFRS cash is balance the get we're these these aircraft when going impaired Because the basis the number debt on the was we that our going balance the today quarter more the there onetime it's future So get provisioned. what the was happened a comparison the that sheet. cash a sale that for this that's was And matters, we really have we're those impact, That for up ended that for that in that that for in is own source have we sheet do between gain a on change the and market more provisioned our simple net we have the we is higher still if still to on additional utilize a they potential it. aircraft.

Rogerio Araujo

flow actually million. called operations of and the the This is where in get the release leaseback. a sales BRLXXX I cash Yes, line is there in

if So can could we that, check speak you afterwards.

Operator

Milberg question Stanley. from Now we Morgan have a Josh from

Joshua Milberg

on Just your the a of gap. financing of flow follow-up cash issue the

liquidity. touched think potential don't could codeshare those just a of made with guys bit I bonds. of you little issue the reference a the potential You of on And give of an of the actually update to United. was renewal both you tap hoping I sources on

you're what detail more some Just on thinking them there? in

John Rodgerson

us seven issue gave capital with when ago, and restricted partner they us to ability the years certain it great a things. Josh, they've do that our is with been United

network in our with the of under partnership them. us have what And so And old good so we Airlines, seeing still lot you're our with JetBlue, you a right? possible United a wasn't relationship destinations with into those and Florida see as expand agreement

We them. have place codeshare in with a

did to fly urgency strengthening term extend to was stuff but and doing right that maybe to think right? we're long-term what's but term, we need about long you agreement, to to do didn't Azul we growth front the something this ability even so time overall. and and our -- And And need talking original them, that's our we up at. because so we're network the there's internationally, no we get when for something at and do long good what about so the And Probably, for think looking contract? when

And in things And we flights, you our opportunity but with specifically doing on relationship, board still JetBlue we is think Fort in do other more have a Campinas. double have very about is JetBlue to Lauderdale airlines, dailies friendly other in United so -- with Lauderdale. and our if from Fort Spirit, what

us a there. connectivity Manaus, Belem going going lot have in That and of important to is really forward. capacity We

Alex Malfitani

right? can to with market any want -- view The see available we it view two that value. to market's think of being we're opportunities married asset. a us if value And aligns aren't maybe Yes. is to that and one don't right want right? asset that the that examples, going We is recognized to the has see and maybe else, to Josh, we if what sell good But I that view. asset And it like on value, It's check we does, right? unique that for we're not everybody also assets, an those are to, available a are TAP that have the to

decide best the whatever going for then to what source the to right? at been value the As has that's John the the strings that and but has sure making some X.X access exclusivity last some doing moment years. also brings We're very cash, very one look the value for agreement to of priced capital capital it, potential us correctly. competing pragmatic is going over best to and agreement potential we're look of that mentioned, at we sources be capital, we're we've whether the we attached That's about our And need that a choose going at it capital or and right? technical

John Rodgerson

sell-side Josh, position our more analyst, out the really I protect what that's how want going from that's way protect cash our all to for sure Azul, we And appreciate than I do. that forward. place any in to stakeholders of at is so we're good have shareholders, playing And there of And have agreement. And a we to if our trying we closing holders. of of kind term we mean not right think long right? get right? stakeholders, of strength, a all that's as were important making cost, an we you debt the And agreement of our

Joshua Milberg

Those great, are very response. detailed

on the that opportunity form further agreement mentioned, JetBlue it nature a you detail might could a of exclusivity potential Just the what little what take? might -- you

Abhi Shah

week. JetBlue, NASA with look, Bahamas we Josh, now the over the We six have XX on connecting just to cities in U.S., the in Caribbean. announced this

can they're -- the them. have doubled to are future. summer, Spirit hub, a we Orlando about great we and well they have We're well day and with what excited We're a of JetBlue double to we're dailies partner to in Lauderdale. do partner going as great Fort ours. other So This of as

hopefully Flyer is table about on to Frequent have a well we're codeshare, So like large we the everybody we there. talking to Today, as codeshare them else them. talk with opportunities. a

We good South South have in a Florida. of in base huge customers They base of customers have Florida. a obviously

be to our So as partnership. that strengthen interesting would looking conversations But and we're well. those evolve

Operator

John Rogerson, give I would Well, that Rodgerson now the a for brings to close. remarks. to back his our session floor like Q&A Mr. to closing please.

John Rodgerson

to want person We we'll forward and for look joining all X. you seeing in and any all everybody. thank for of December to be Thanks, today, of on us you your available questions

Operator

for concludes much participation. Have good the everyone. audio Azul's this day, very your Thank you a Well, you. Thank call for today. conference

Azul (AZUL) 15 Nov 222022 Q3 Earnings call transcript