Azul (AZUL) 6 Mar 232022 Q4 Earnings call transcript

Company Profile

Participants

Thais Haberli	Head of IR
David Neeleman	Founder & Chairman
John Rodgerson	CEO
Alex Malfitani	CFO
Abhi Shah	President
Fernanda Recchia	BTG
Bruno Amorim	GS
Gabriel Rezende	Itau BBA
Stephen Trent	Citi
Stefan Styk	Bank of America
Daniel McKenzie	Seaport Global
Victor Mizusaki	Bradesco BBI
Ygor de Araujo	Genial Investimentos
Rogerio Araujor	Bank of America

Call transcript

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Operator

Hello, everyone, and welcome all to the Fourth Quarter Earnings Call from Azul. My name is Zach and I'll be your operator for today. This event is being recorded and all participants will be in a listen only mode until we conduct the Q&A session, following the company's presentation.

If you have a question, click on the Q&A icon at the bottom of your screen and write your name and company. When your name is announced, please turn on your microphone and proceed. Instructions] [Operator

to Relations. over Please like Head Thais the Investor of proceed, turn would to presentation Haberli, I Thais.

Thais Haberli

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

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

over With I to turn that, the will call David? David.

David Neeleman

Welcome call. Thais. for and us everyone quarter Thanks, thanks fourth our joining for

plan. I leases. fundamentally the over go-forward can our you more XX% to reach comprehensive of all for successfully worked agreements you company. know want today. than very days and changed hard lot Aircraft our commercial teams see past the of to their about future (ph) XX have financial our of As on the agreements These talk Slide a X, Alex is to hear details and there John

in and business personally to management our confidence for a shown like I'd tremendous and [Technical amount of our partners Difficulty]. our team have thank

presentation, created company As in Difficulty] flow annually. see creates you in cash the [Technical have can we the billions

and Alex then, will our our about the details business of share tell me plan. let you great First, with John and you

generated up BRLXX to revenue competitive full XX% to was Moving strong growth to (ph) X. due our structural revenue, our compared advantages XXXX was performance the Slide in possible. unit record network and billion for Azul. combined Revenue business also $XX.XX, our a from the of up We XXXX. year made XX% a with units wreck this XXXX,

wholly-owned and to year results XXXX. record units business had also compared Our unencumbered this

gross year, domestic Our loyalty and program to XXX% billing. Cargo, air TudoAzul largest XXXX, -- logistics impressive in our as provider loyalty its Brazil's almost logistics . the our ended and compared program (ph) business, double Azul revenue

TudoAzul, gross Finally Azul (ph) to our travel business BRLX.X Viagens in grew XX% bookings. billion

that's markets. revenue We in we to Azul BRLX has XX% above daily offer. Looking all billion, Overall serve XX Later the EBITDA this total are cannot which in and will to a year, to wait show network excited Congonhas. XXXX. the BRLXX that billion these from begin expect more Sao More at corporate airport all our than see. we double we opportunities largest the flying expanded at downtown we increase month, Paulo’s will customers, (ph) for than XXXX, flights new

them. Azul in we X, routes a development our of and network more Difficulty] of and in competitive advantage. than our building XX% show Slide market to Moving XX% destinations unrelenting We and making of focus, our XXX route expanding and the carrier the leader [Technical serve only is

international Miami, Together network. annual Lisbon together this will recently In network, capacity Paris and a and fully [indiscernible], destinations Fort are year. our very Curacao. exciting our with new to such we Orlando, Lauderdale, domestic as putting We announced addition recover relevant

our allow Air and over increasing Europe, markets. position our partnerships -- the and customers with us JetBlue, addition, will all TAP U.S. to In United, partners our in significantly codeshare new Europa connect

I airline very in X. with with another which Slide world's that to followed we the airline exceptional best [Technical for to up Finally, Difficulty] the (ph) award happy on say operating turning XXXX world's year was am Difficulty] award. time [Technical

achievement (ph) a [Technical dry and members Just with our Difficulty] was in the not crew there our this and hanger eye house. last week, in

I even few proud team. shedding spot so tears. of I'm think just I on this [Technical Difficulty] a

As John of we business, cash amazing reis will flow operations. have which in explain, an generates billions from

have so am and ahead We what I built us. special of is something excited about very

our on and pass go results that, forward our John plan. I'll you more to the With give word fourth to details John? quarter

John Rodgerson

I time that for dedicated of help world. repeatedly people airlines our unpaid back emotional enough us who most to our week, last without to was we XX,XXX thank would I leave like back, than of their on would and cannot be passion had Yeah. support that to get these led and remind more David. did possible. the their and simply they took the everyone Thanks, results dedication Azul, pandemic, shown I during members not they crew Azul it very when in and the more special stronger absence dedication came came be

revenue quarter XXXX. see XQ and billion, As was Yield to XQ XX% an also BRLXX.X, XXXX. Slide all-time an record fourth above on X, for versus XX% record all-time increase you compared ‘XX the XX% BRLX.X another of XQ can was at

and was our compared the record income also [Technical was BRLXXX We in margin operating XX%. RASK a Operating Difficulty] RASK to of XXXX, quarter our million XQ XX%. up had

XX%. that value BRLX.X impressive was our is was with more and This absolute XXX% of XXXX even EBITDA consider EBITDA versus billion. you currency fourth -- quarter Our was up margin when an fuel XX% devalued the

our the sequential On Slide RASK. X, see improvement in you can

you been level not it a RASK This clear a how the through has is since and improved First, just improvement signal performance. the year then significant and demand, up revenue of XXXX. of sustained but see sustained XXXX, pent can how new

we're achieved that Abhi assuming see Second, team his XXXX. chart for XXXX, just will know can we've XXXX try RASK, I for not are already assumptions maximize aggressive. this you to that but always what our and shows in

you such as margins as our year Slide The indication peers EBITDA this environment on the strength in gives to X. the excited milestones, the improvements of fuel can clear its airline and beyond. the and revenue the among Congonhas strength the as growth in and so you why we're our one a for of earnings performance, see has Azul highest

bridge On XXXX Slide XX, XQ our results to we XQ XXXX.

exiting You being inflation, can and see negative able the crisis. impact fuel, more how injuries offset were currency business efficient revenue cost we performance, our from those and growth, units, to airline the a through

were how Even our more how strong fuel cash fast achievement, is over the much impact cost of during With alone, increased to from during impressive quarter contribution year. these initiatives, we impressive given and XX% able offset an operations. the the prices

outflows Slide operation. our cash in XXXX, cash We billion BRLX.X billion, that and over BRLX.X process. contribution shows These when paid we in XX supported deleveraging that the to debt. are payments had the comparing inflows rent a significant from of

leverage result, year with X, the we the a ended with As year. we guidance at of you below gave consistent start the the

we the On that highlight in XX payments of have magnitude and and billion Brazilian mainly see Slides growth. the payments XXXX, BRLX.X over also paid Slide of to aircraft rent in XXXX. than devaluation Debt you fleet XXXX, the debt these to due BRLX.X further, our deferrals billion can increased interest and and XX, XX, XXXX. real, more COVID rent rent, On in aircraft, want we they grown since how

paid BRLX.X BRLX.X the can in due and debt XXXX, see billion on XXXX, in you debt Slide mainly to more As over billion take principal, the Azul had pandemic. during we XX, to than interest. that on

the we rent and is unlike not As significantly able But Europe, with payments in process. clearly did airlines subsidized and operations, that U.S. we're to government these. aircraft any our a deleveraging are on the debt reminder, we've so optimizing challenging results accelerate during strong focused our and of from levels financial help challenging this why time. These been receive

cash and flow strengthen our forward. we going sheet, So balance can our improve

we have progress As David at that on made front. the mentioned significant already opening,

forward Moving have you Azul high prices where pandemic, Slide currency yearly since results. can to devaluation, launched fuel our the impacted see and we results our XX,

than before, billion. and billion That's more for of over of a As evident. we mentioned BRLX recovery XXXX, business EBITDA, EBITDA strength is strong full our expect the BRLX of

traded see while XXXX to EBITDA, below Azul incredible times. back that trading our Slide a well X X historical at going that average. still XX, It's times consistently think X about just are you can currently to On from be multiple, would at we XXXX to which

valuation need triple. would Our to

XX, show that Moving to reason the valuation Slide we what believe back. main we is held is our

the on here during I can combination of Azul net As showed of the EBITDA outflows financial support of lack effect cash and higher the recovering you see pandemic. government the you day,

cash gap significant to and previously together our BRLX have challenges XXXX for of billion and with projected had We valuable support the partners, address initiatives continued revenue we've made through progress since productivity we XXXX. of these

already significant cash not comprehensive the have and in we to we progress future. go our thanks eliminated but that made, Now, have for results forward gap, improvements plan only the sheet foreseeable balance flow

Let now turn give he this Alex, details more you over so it me can to plan. on

Alex Malfitani

with Thanks, with of what we share details you have excited the on XX. working John. I'm Slide really to been starting

and them. to improved can that structure, you have comprehensive for maximum receive stakeholders value developed to capital ensuring permanent As they our we was plan see to of here, started provides our XXX% generation flow significantly solution cash committed a what our that provides and implement by a

XX% on you comprehensive We gross our of can significant debt this related our started a Slide why? flow improvements. therefore, and aircraft way in implementing to this with plan results leases, see by in debt About negotiating cash addressing lessors, XX, is

you made we On can XX XX, the see already have progress last Slide days. the over

night, obligations our with share. we an XX% last reach in announced I we've representing will confident am of we agreements material As more lease our already commercial remaining lessors, the fact than agreement reached and with

to for We had this in smart new have is months, to support our four AXXXneos. additional investment, withdrawals, and fact, the them understand last a they that including decision, in we've support our return few from Throughout I aircraft maximizes confidence. strong this us thank the aircraft have delivered it negotiation, partners want zero business XX seen and on partners their as

in described On these lessor Slide XX, agreements we details. more

capital structure, will In certain agreements, risk. a to and market approvals, to lease note a reduce will reflect Azul's XXXX our maturing conditions cash and They our COVID-related the subject improved gap our between payments contractual upon flows to lessors receive will deferrals. rates corporate new tradable priced credit the and agreed reduced these equity also under client our in in lease and way eliminate lessors exchange, rates. So eliminate

is from is record, in our give designed combination payments sheet. through committed our with of of a to our XXX% and being Out track and of represents reset XX%. Consistent that deferrals this balance gap, a reputation equity note long-term COVID-related and represents this XX% rent again debt the plan the lessors equity the reduction while value the exchanged, total which the the both long-term

with Moving tremendous permanent a vital onto again, the we engaged we significantly our of we XX, also principle this partners, group with similar as well. can we XXX% that address we're OEM flow for partners. improving the our progress for plan, the to requirements. are have cash making same the comprehensive recovery Slide another our time, so airline, follow group, at Once stakeholder With CapEx committed

plan of plan. items from Slide this not Remember of our are XX. XXXX cover with payments, of that a monthly that this balance a as the billion stakeholders can breakeven. and of creates The the to on a permanent we year plan flow can that a generation as talked solution this is you cash sheet And aligns gap only. BRLX The and strong just deferrals. stop maintenance mentioned, you gap profitability. the is the our CapEx well we COVID-related one all eliminated, results XX, see are Slide main beyond reduced though, and I about go lease that alone, is This consistent truly interests this see converted cumulative effect does were for the XXXX, In cash of the negative on not

Now let me turn it conclusion. the John back for over to

John Rodgerson

Alex. Thanks

ahead, an so and contribution this we to have unencumbered opportunities more from $X independent our packaging and today. see with units. margin or are BRLXX about Slide Cargo excited Viagens. these always and praised all wholly-owned billion. start why business, talked We a XX, growing share incredible TudoAzul, growth recently in businesses of Azul at business we little the you our total, look we're On had Now, you billion to appraised by can than Azul firm, fast and them

growth. when its in in and we corresponding credit strong needed risk solution EBITDA, growth markets our combined unencumbered invest our to assets Our access generation comprehensive reduction our cash our and can gives capital of valuable confidence with the us that

XX, Slide have to the so on future. show we we're excited Finally for you why

incredibly revenues COVID why hitting effects about cash of to love progress incredible Our will record is talk the We're towards you to business in XX negative love us crew days, fly our impact, to our a record continue information to today, improve had a come. the realize flow, our revenue. more real to and which structure we customers plan permanent today optimize business. members we've and and and work EBITDA, macro our Yes, our a is there's lot we presented and doing well, here. Abhi comprehensive last I gave made invest capital just but progress much and in have

will Thank Abhi I questions. answer your for With Alex, that David, and time. you your

Operator

Ladies and you. thank gentlemen,

open analyst, Recchia, the audio [Operator your question. will Fernanda So begin Instructions] to session. that Please ask we so Q&A proceed. can you sell-side We Fernanda first go let's your Recchia, will the from question BTG. now

Fernanda Recchia

Thank me? you. Can you hear

John Rodgerson

Yes.

Fernanda Recchia

Great.

Abhi, So, on you congrats taking my with Alex. Thanks the announced for it. lessors hi, and question deal John, recently

give agreed two our you lessors this could provide Airlines, Just it. discussions if curious regarding terms you them discussion Thank somehow the deal? if us the it's guys behind I color especially that you still with please United is the see us strike price dilution could with provide you. or or you from are wondering us update the in second was And could from of on the if potential I questions question, ongoing? you color something side, equity was if any portion with agreed of the the could terms equity to regarding additional

John Rodgerson

Yeah.

add Let can me to the color start the questions. Abhi and rest Alex and of

lessors when obviously with of we're EBITDA $X that, you lessors, the today right. I is so all, of it but over which Azul's done price higher that and strike First not XX% When today's produces is XXX% in price our reflect right. does come done partners a communicate and at value, billion have and we're think business will than recognize we'll our

so it's X, where we're today's minimize and X dilution the not for value. more give which it reflective of excited and to and for on we will company partners us And it's Azul's at multiple being full prices excited a true to because recovery based and times are don't them reflect it'll our done

Alex Malfitani

call we about preferred was very markets that that were were Azul cash provided Day, our to the the capital could talked even it some spite And us said support that, count add were we a we getting had the that you on cash of and just smallest on that happened, be possible, today, stakeholders back of information alternative lessors gap, knew pandemic the we being Yeah. that cash main lot in of if a that here if seeing to we I gap but about were since stakeholders, we which gap, from we billion would we support access our the we challenges and sense support finance trace XXXX that that, facing, the BRLX well, public think we us to cash made airlines in this about to how narrative sense but talked lessors the didn't to to in objective obviously for it the to lessors XXXX, make obviously in aircraft disagreed. support new -- weren't delivering to it the we market

know they market I And nice is wanted it's because that the materialized, today, I us, to we in it's a and are nice EBITDA they that think And than think are levels, think business right, has fairly lessors not the but they or year right. not they produces these good right. to a company at priced billion more main communicate message support that's a that I like $X is because the that that decision like us, and not

time, lessors, color that And so, and fully provide additional we with over we as details, negotiations additional over provide John we provide to said, we finalized will time, our will but with want will information. be

John Rodgerson

the our will having wasn't to leave fault, devaluation unpaid and COVID end as our go of people in COVID in most challenges, wasn't entered profitable those including enormous of the airlines one world. fault, most but profitable absence. the one the on world currency done of we've airlines of We we our the things as the XXXX combat

relationship And I'll and talk we've the let partners good through so invest what for forward I credit us of this with our because it's done lot the think they the give know market they Well, want to Azul season. going United... business a a Abhi and in

Abhi Shah

well. we as Yeah. about we TAP, and with with Fernanda, Air with as United, JetBlue, great partnership others a have commercial them Europa do

in We're commercial connectivity but short-term nothing U.S. We partnership there's than continue in at that looking commercial more partnership with opportunities and the announce. to Brazil that in always the a

Fernanda Recchia

Perfect, guys. much. Thank very you

Operator

will The next your Bruno please ask analyst question sell-side audio so Bruno, comes we that question, can Amorim, from GS. from you open your proceed.

Bruno Amorim

Hi. Good morning, everybody.

the as unit What forward is the of have question jet in going assumption terms prices, that now you my been higher to pressure indeed. there. this on you needing can conservative comment in jet see is going from market the So under pressure to flattish fuel prices, for means you Azul falling the Can comment lower you out dynamic included, the your the seems revenues revenue be assumption of laid year, fuel since to lower please? feeling light on unit everybody, even RASK margins forward or

Abhi Shah

fuel of adjustments at we down made and quarter capacity the network. Abhi things, our very going X% prices part doing very disciplined our in last because is actually was a were certainly think Bruno. I and to I and be are here. year, overall, is look industry of the you industry couple Hi, and Yeah. we to that of Sure, if domestic fourth think the the We disciplined.

only factor XX% but in this so grow pressure, us to done the X% work hard the ahead, that about and to increasing that load about not sacrifice to the seeing we're year, pressure would the volume cause X% going domestic average we're total, fares. other has industry Looking

record I for the overall, think that good to as and are is talk off used these not prices, days, those last as asking customers war referenced, new we booking prices, customer seven did The we just think in I when coming industry revenues. fact, job a to started really and year, we're last the John keep today, want lower the gains.

seeing we're the very possible. is not goes on in or fare back good if the overall so, think disciplined to the way fuel And gains best down average side, certainly give momentum the intention side, wants booking our be I on not. the the industry to profitability recover And regardless

Bruno Amorim

is And may or think quick implies follow-up, EBITDA BRLXX you. for if you of billion was billion a the then about that are the the least Thank XX%, BRLX just your EBITDA, I level pre-pandemic margin of XX%, target around level, you targeting are should next at guidance so which differently? couple revenues, that as the thinking an we right, years

John Rodgerson

There's back get why Azul those no right. reason shouldn't to levels, Bruno. Yeah,

And there. you what margin, and quarter with this there be EBITDA fourth a at reason prices, revenue fuel environment, a the so no in did shouldn't we're so going we strong is business XX% showed we why lower into XXXX

be forward, a to and after that target going not and if there, we're So we get it. XXXX, it'll continue to we're but to there go going big that's in we're our obviously saying get going don't disappointment

Bruno Amorim

Perfect. congratulations. so you Thank much and

John Rodgerson

you. Thank

Abhi Shah

Thank you, Bruno.

Operator

analysts Rezende, from from Itau Gabriel BBA. comes sell-side next question The now

open your your ask proceed. so please question audio will you that Gabriel, We can

Gabriel Rezende

one everyone. announcement Hello, as regarding questions. lessors. on the with negotiations space make for Two our the side giving regarding well, Thanks. to Thanks the

do debt should until you be cash that. it comfortable, regarding in on just color confirm be paid just coming debt fully a So in not the outflows try to confirming get trying so that to And should -- these what also right, XXXX, XXXX? here the is just 'XX years

that what front, levels pre-pandemic you the just to expectations get those you levels, so have XXXX is feel I And for room things back BRLX trying not clients the are have for already expand example, what in your guidance your to color corporate your like incorporating for the and pre-COVID 'XX to -- is as understand to to to well? passengers, also operational still back on additional they're customers, billion on regarding your recover on in just room your EBITDA what was

Alex Malfitani

Hi, here. is Gabriel. Alex XXXX the questions. Thanks Correct for convertible. note not

we going we think comprehensive I over outflow, a to looking that forward outflows coming conclude time this that far. you cash like of of is said in more we've detail that done so involves plan providing terms what additional years, year to we main we over talked is than is had that negotiations, these the In are plan be after all once BRLX for But to we and is message with about positive we you time. the item and breakeven for breakeven should have it's which now additional look XXXX, billion going positive negative XXXX, a forward providing be that and details every to and

Abhi Shah

Hey, I opportunities, Gabriel. think quick can three ones. About the just

are you correct. corporate, So

seeing recovery, are corporate about XX% higher. XXX% XX% volume are revenue We average because the above is fares

XXX% over we expect volumes are we and to corporate So are continue. recovery that but XX% revenue still in

for opportunity you great reduce the is fuel, down have stabilize our your is nights that's these a at notice to couple that weekends below tend to and end early EBITDA. levels, our reasons, for are you of and higher utilization, coming obviously which is day, levels a have you the at very, seeing day our are, of higher as utilization very at one or utilization fuel, we positive increase pre-pandemic as flights the opportunities is and is will Another fuel we still

we will International, recovered and network, last about still of to in as this international future that's at recovered opportunity a XX% of we only be in XXX% our the the international were our XX% so end terms by end of year, network, year, well.

the momentum and upside industry, with still demand, discipline, to seeing some are come. great we there's overall, So with with significant

John Rodgerson

Brazil going, last the week to the week. highlight want over we -- mask and Carnival just I where about off potential remove so and last think couple of masks finally demand a just came is just things, you we

in so a of seeing unemployment Brazil a lot overall. is activity think I And good runway, multiyear economic low, there's we're at

in I good so feel quite think macroenvironment few time we a years. the And first here about the

Gabriel Rezende

very That's guys. Thank clear you.

Operator

Okay, so you. to proceed. please Stephen, that can we're going analyst your now from you sell-side question next comes open ask thank question, The Trent, from Stephen Citi. audio your

Stephen Trent

how and question. for Great. just very was get I taking thank everybody, you the this you to might a Thank my about Brazil, you. the not deal on I much results of basis, morning, great Good love only on solid in consolidation back curious, level view be lessors? thinking that would high long-term your long-term with on basis this of the morning a but reached you've

John Rodgerson

but Steve, always we've Azul talked on that that's very what is focusing a about I possibility, that's think and about. we're this excited it's something think I about,

We'll And BRLXX core gap daily that of flows cooperation know lines. an it, study flows deliver along we crew assumes year, unbelievably EBITDA you going revenue there, and this that built, opportunity into XX,XXX delivering so members we've our business in look experience. the the no those but a passionate the an cash on if believe billion great basis anything there's at and the to when we've cash what, much consolidation beyond so are you performance, 'XX got that

band-aid, and we're overhang addressed just because earlier, as not and profitable and currency once gap, world, of I stop said, the COVID an and way, it's the Alex for all airlines the one a our devaluation And in as said to of had it we of we've a not ready we've move and addressed that addressed a in and we've forward. that it's big most

Stephen Trent

I U.S.-based trying the to seeing two that appreciate challenges quickly Really real And if on pilot hearing I of item, of Thank from in about you. months terms your guys pilots, you supply? find are there most just John. last your down one could spent how counterparts follow-up it

Abhi Shah

mini Hey, of history as pipeline operation caravan so rich to enter We partner our of inside a aviation schools actually even school and a of Azul into a we Brazil fleet. to pilots flight has our with. prepare great Steve. really that use flight we our have

any of to actually pilots staffing constraints limitations terms of staffing, our So now, overall pilot in we're right overall. no in so even and we're not comes seeing it efficient hiring. when more And -- terms or but

Stephen Trent

Okay, it Thanks, I'll there. clear. leave very Abhi,

John Rodgerson

Thanks, Stephen.

Operator

question you. America. comes question, Stefan Okay. your of that audio next Thank proceed. to The your Stefan, ask we're from please sell-side so you Bank Styk, going open analyst, can

Stefan Styk

America. question This potential and ask Thank new things Stefan you. component other the bondholders to my with then on here Thanks on you taking is up And schedule your secured slide, that? rate, on provide expand is be you planning? plans coming on Can my and capital as size, potential call, notes, and something to what a as questions details unsecured that options it there today. seems imply well. Styk wanted Bank potentially like money seeing new you're well as other with is the for can of the or these terms I any interest XXXX will like

Alex Malfitani

are And I are cost transparency, credit and stronger like will interest I share that balance talked the the reflect reduced reflective the generation, and our as XXXX us we more Thanks, about, we you Stefan. right, know The for notes very we details. excited unsecured like to do, we -- of normally be before lessors that, to think I do our want due in time. about valuation similarly to we but the information will provide that we're finalized talking all with that really we Obviously, to just seeing because as as the screen said, is risk, be this you're of we on again soon do equity, they on restructured the improved cash levels debt, the will near coupon the instrument and health of pay The sheet the the provide the debt company. that of that nowhere we'll will we not can. think

John Rodgerson

Yeah.

COVID think think I XXXX that's our with towards treat conversation looks to bonds you we in a And deferrals, our the holders, stakeholders we'll and to how stakeholder we of the plan wants bond capital it bring right. no right. have or and group. part that and that to that are bonds, the see that Azul have you our can I money As XXXX have, assets unencumbered as for to new new we one bondholders pay But look to

going And and comes is so to and have growth AXXXneos, take EXs capital that continue Azul new the fund into the the balance our strengthen sheet, to that's us forward, intention.

And to to just other so you using you really unencumbered capital new pay assets can't the that back to raise have or markets go old stuff, Azul right. capital

bondholders, is permanent works that And this true this lessors, for true that works the reset, our a works of is for that our sheet a a fix, crew balance works for members, so for fix our everybody.

fact And we with is unencumbered going is the And the and I I XXXX of through for idea. so, yeah, BRLX that got do what have we XXXX that potential think forward. assets, to think limitless the billion

Stefan Styk

you. Thank

Operator

Okay. Thank we're going sell-side ask that so your you analyst comes now next The Daniel, question from to your you. question, open can audio proceed. Daniel please Global. Seaport McKenzie, from

John Rodgerson

move try again. Maybe on onto next and we'll the mute can so Dan. Dan one if

Daniel McKenzie

you Yeah. okay? me Can hear

John Rodgerson

hear you, Dan. I

Daniel McKenzie

Yeah. on sorry potential that. recovery. just the I'm pace pre-tax questions so is of here, one about Couple of earnings

weakest here, growth be So the just for question of it's like double-digits the year. revenue into strong, quarters looks going to a Abhi

a So year? this any quarterly pretax in is, the reach question profit can quarters Azul of the

Abhi Shah

Yeah.

right. income the on main Dan, line volatility main the So comes comes that FX, I the key know, you from think net as there

is So FX on that a a some tailwinds basis. or Yes, from that. think assuming don't we guidance I income stable coming possibility, even net give

expense terms that's because restructured with of unit model. last line and especially of few of balance revenue, size all balance modeled with lot is a that rate. fundamentals, in the fits profitability think you what depending that's company us But profit, a certainly strong, the lot generates the hardest years, cash and the business of the now consistent the costs, happens is sheet for demand, possibility the have interest of operation probably company, within with exchange a I to right, unit and of a that and on the sheet, strength with

Daniel McKenzie

lower how encumbering borrowing, been just not to guess then Yeah. a around And might was That's the would not, if encumbered, bit question an or it'd looking those reduced if exactly the interest process more seem for have hurdle business seems it or least like restructured TudoAzul cost lower because little what was can it the there. be the on you the to look opportunity the it expense, get is outside and in, approach at Cargo debt, to a you it like guys was, plan you but was like I doesn't elaborate encumber thought my of it restructuring? it with

John Rodgerson

Yeah.

So Dan, in when borrow we look, we were unsecured at right. X.XX able (ph), to XXXX

us And our through to a encumbering right. time, that at without it's assets, so, blessing the that the I got was market we pandemic opened think

move that associated opportunity provides TudoAzul, use we to with want with and the which again, I position fix so as of XX% now long-term the that a security our balance so to a the associated the play going And that showed the of I COVID. from Cargo the that sheet sure band-aid of lessors, strength, think make think we Alex that we as we just for we right, interest the business, problem, during Azul's with forward, and is plan, we're fact best have not

And so those with now, do opportunity something have assets. we to an

Alex Malfitani

the open, would the Yeah, it, any unencumbered us exactly. without for accept knew cost a count on Having the is the sense the and trading save reflect no really at last on, could rates, that look, we security, few or thing. make it business of were seeing assets did was over were not of rainy these because for was fundamentals those support that it we be if levels could encumber to a it of the right. issue anchored we weeks, need see strength how debt we we the even when that assets collateralized there didn't good When encumbering day. a reasonable the to markets And bond the right. That's is assets, those the

sequencing a providing equity more profits here should producing the some right is collateral debt going there there risk to the because everybody for above And a the that's the of growing we And to once asset. is to then or was continue additional logic cost utilize industry in and time further, to realizes of that and this line reduce even cost of company, average that a company the that see color debt, cost that leading company. is no with

Daniel McKenzie

the guys. thanks for you Understood, time

John Rodgerson

Thanks, Dan.

Operator

ask BBI. from can we question from next Victor please that sell-side comes your analyst you proceed. The Mizusaki, you. audio Victor so open your Thank will Okay. Bradesco question,

Victor Mizusaki

Thank you. Congrats results. for XQ the restructure and the

according [Technical questions our capacity to numbers, quarter. aggressive We first the plan here, one the Difficulty] have expansion second a for two

balance higher and talking restructuring yields you talking talking expect we're about, do the we're how So say, and we're as low react Azul season, about higher and LatAm LatAm to let's margins? go pullbacks to do about expect sheet, so some the then capacity

regarding second CapEx. XX, the question Slide the mentioned OEMs the where And and about number you to is

and is when So fleet it change permanent the additional get the XXXX could then think maybe about this my about permanent maybe and we're if reduction talking a is and question reduction were we say out you you for planning only deliveries also that you is maybe discounts? can here a

Abhi Shah

Hi, Yeah. Victor.

capacity, think obviously, looked XX% has year guidance. LatAm versus cannot we've X% Regarding I domestically guidance out put the this is overall, industry out, the put to but industry grow capacity they've directly, speak to to we about that also at going XXXX. And

actually I with that it's be think disciplined So pretty think bad honest overall. to I you, don't that's

going I X% XX%. X% we're domestically, overall industry to to X% about think be to the about

I so everybody been has think disciplined. pretty And

over factors and think the that think couple to the I that before, prices drops we're we want the than as last profitability demand think, out all years, the ever, willing and on seeing. recover airlines is I and to we, demand pay customer there, they're that in said seeing the I stronger in the we is will not of think load demand based adjust the airlines I've lost are fact,

think the decent capacity, which be X% overall pretty is XXXX demand to to it's seeing. given think that levels, above overall So about looking at of level we're industry going I XX% I

John Rodgerson

to Victor, EXs, want of to it on XX% thing, I is of forward highlight just right. it capacity, aircraft, just XX% I that AXXXneos going next-gen another too, want and and now remind everybody our

other not anywhere, is going Azul think Go highlighted, And is not I right. an anywhere, not the that going distinction. you thing so And that's important going anywhere, is LatAm

that's rationally and according right. it the today so to the that cost big us act market sense in all think message, exists in makes I to price And structure and Brazil for the

wide we to by again, more our a have margin so compared next-gen competitors, all aircraft on And right. ASKs

the lowest the cost you in So structure talk cost when AXXXneos. in Brazil, about flying we Brazil, have

for lowest very earn everybody the financing a is will and We of capital. cost flying right exit in we're well of so capital, cost think high have return competitors very I be to think and needs In of the disciplined. EXs, Brazil to cost positioned our market that pay and I the

Alex Malfitani

our and on very to because the lessors. with almost And the about of OEMs talking started the the OEM's the Victor, we we Yeah. we as right, similar after two concept represent to the XX% started cash commitments lessors lessors, lessors, weeks mentioned

in can note, provide are information. and But OEMs, lessors, the similar behind rest it's concept very done similarly due what so OEMs on to So, we once that additional concept, time. the the negotiations already, the detail for same the will with dilution, we assured the maybe are weeks to and on that, happy sequencing, be you same XXXX with calculation the two mentioned we'll the provide

John Rodgerson

Hey, Victor.

we Brazil XM and should we're have of in here GE jointly to financing if overhaul engines things overhaul had the decided I engines our financing in the our well our as I'm one OEM we going engines of Brazil, of overhaul get to Embraer the OEMs are things One to partners, right. that, all so big in that where outside is of we'd of as to our is, pushing access with highlight specifically Brazil partners Brazil,

And think GE so on, with that government that's Embraer working for that good working the jointly something we're and we're that's our at and I partners with new everybody.

more the GE because because a have we little right, and relationship very ongoing it's negotiations than they've they with been of lessors, the and constructive Airbus Whitney OEM have and but fantastic the why & bit supportive, different and see so very And Pratt is Embraer different and a that. complex a business ATR, little we and

Victor Mizusaki

you. Thank

John Rodgerson

Thanks, Victor.

Operator

Okay.

question Michael ask that we will Michael analyst, next from your question, open comes audio you sell-side the your can so Linenberg, please So now proceed. Bank. Deutsche

Michael Linenberg

hear okay? guys Okay. Hey. Can you me

David Neeleman

hear can you good We from Bank. Yeah. Deutsche

Michael Linenberg

or auto spell auto congrats Anyway, news, darn obviously. hey, That on populate. the

of down, going look what's a charts forward does expense you us least can we the you've restructured result here, does best questions it year that as on think we like of interest couple sort about this some give was Maybe, forward? of at about when come as these the deals, provided, that Alex, billion BRLX.X appropriate I as with a last when expense think that interest and the of Just that numbers. your should

Alex Malfitani

of number, Yeah. we looking is most payments our a -- that talk remember number number Absolutely. payment. if us or that IFRS the cash those that billion rent the is down, on free right, It a flow, Mike, ramp payment that XX, that for if total included cash right, basis, already comes in way the gap from comes big BRLX.X long of for the so you're rent, that's if it's before that rent you right, days interest the you about include cash our most of

to will happy part go lease we have And XXXX with note then There's an should little this as should the that bit have that once interest -- stay should to interest though, well. provide the going have a a since once We're remain, expense that to that component, go the that is down down we will result interest payment interest reduction non-operating roughly going be rent that same. done we're additional it, the And right. but expense. detail net an be in all of

Michael Linenberg

Okay.

year, way is by lease in in XXXX So it do to I reduction the go think you that about I measurable should forward then a see that's And And CapEx. of going liabilities we CapEx BRLX.X helpful. tie or billion, release, your this that and you beyond. saw last sort state in up the highlight as

me going maybe CapEx should what number that on new is would based liabilities be than would what that forward, a giving anticipate grow Going 'XX look like, 'XX, number, great? in to rough coming we airplanes numbers rather lease

Alex Malfitani

important an question, That's Yeah. Mike.

the be next the of like aircraft I always any for all that come that that new include of orders. about, joining CapEx talking not we're will As fleet to the because highlight from the does lessor couple years, CapEx aircraft

to related The maintenance [Technical of CapEx a whole Difficulty] projections big the credit CapEx you and flow provided seeing were stakeholders, through they are new for pandemic, dues and exchanging us equity right, also debt credit, aircraft. the our us had are get that providing component for past we our they OEMs also deferrals, the mentioned. to in So, cash with COVID additional were that structure with they

COVID OEMs through in of and financing the big resulting need mentioned, credit they world maintenance engines, here, paying which part our And events. the additional they that the because our developing we've So that maintenance the craft maintain their lines as or together, engines RDEX and of CapEx majority is airlines other is the additional CapEx John elimination on deferrals engines, of right, to that the their finance, (ph) get the from will big maintain been cash sure make of the financing the Azul is from reduction for as and reduction remaining are this we all come OEMs. and an the then,

John Rodgerson

the carriers, Mike, it right. makes subsidized sense no Brazilian development have U.S. bank financing to

Michael Linenberg

hear you. I

John Rodgerson

aircraft made the in Brazil. Brazil, the here create, do we for that's jobs we All we buy

that think Embraer to a that great -- together there with lines I think I GE so and case financing is we've more available ensure with And NDS. got the

Michael Linenberg

Brazilian only John basically airline Brazil. the you're are And you the one, only buying

to feel it Is tie are of appreciate this impact like sheet or number percent piece? So get it give it again, BRLXX.X finalized you I actually obviously structure going look that cap the and of a or some is I portion affected, that your if leases, all call. number much to on can a you here, you year how about equity because rough a still is just half, long-term, some I'm XX%, for trying me just the -- of more like to short-term, deleveraging it but and will billion, how that a tell a I'm at XXXX I trying there much is me sense year two? get what at And just balance changes moment a to your end, is everything, again, haven't important I'm the an few get to note

John Rodgerson

Mike. Hey,

would about in way. You think the it following

need right. our XX-XX the it deferrals, and and that an then -- so much need that's look take You a for COVID difference reduction zero and paying was say, hey, right, how at you rent in much current Embraer Azul to aircraft it's and of market all aircraft, XX% in to some varies take as rent. in split the and and as reduction it's our versus its some

with at mark it and And a but lessors XX% are but we now, negotiating so we deferrals if and look big other and with to believe did the the you COVID they as XX% market we're take right said, the we're where the is get then component going the Alex to there.

this a the today, want accomplishment will touched equity all mean of going will it but the note is, of his it is Alex everybody's I that it is debt right, supporting plan, it you're and for that some sheet. message in dying some most phenomenal and know details have more team XXXX on that I and period, away, have it to the into is of it to where some of XX-day form, in So everybody right. in think seeing everybody remain goes doesn't turn we it that but participating, that's be and and done balance that important a

Difficulty] XXX% so And yet. why [Technical are we

to weeks, honestly, next of Well, over we're probably the couple quite right. we're and to get there get going there going

Azul's this of done it fantastic -- business we and they've way I've never sheet because court amicable why, has that on great believe seen partners they've out done and and us. it we so which anybody have And at it done in speed restructure the in balance have a is their

Michael Linenberg

piece, the you in and deferrals the Yeah. least mark-to-market have of came was know And around BRLX I pre-COVID is if well, I domain John at I somewhere least billion back, then, there's count, the last thought public that? as this then at said

John Rodgerson

that's... Yeah,

got You them.

Michael Linenberg

Okay.

in. back can I then So

maybe perspective, triple at will we're chart, X, piece I be last important the X.X piece said most a we about this company like you from showed you then to the of about And up long-term what it's if is threw this X I you stock a where feel think dilutive a charts sort and trading were I you. and of the you times, said, and Okay, talked times you that up the if traded. the talked bunch has of heard sort X

been end think the I about right think the think at multiple. struck, So you've high and higher times, somewhere that a pretty equity a we it's clear clearly struck in that so about X way Is be to but lot know not where if between, the it's ultimately going from and about it's it? is I

John Rodgerson

close, hitting You're Mike.

it's we So details give minimizes we [Technical appropriate said something that's that's let time equity think it the and partners, great as for dilution, will our our holders. Difficulty] great at but the our for it's me, important, earlier, I

at wins so looked stakeholders, And think message most all I that's the and right. today, everybody We that is important.

Alex Malfitani

stopping which we're use around value you to is number do turn, higher is our the going we we right, profitability, our is believe why BRLX consensus, We a it's Yeah. talked trading on one market billion, consensus, think add about to, if just equity think is And than seeing it's but us something either profitability right, or not at the just as about the the doesn't you X, right. billion, than another our because why, make adding even so that cash a that BRLX which different basis, has top multiple on we're market well, that's flow we starting be right, company the BRLX public. so had at Friday, and when if times had, right, the of generation, X in from, not math, at average almost billion of profitable has X times one today then is time X X world the times X trading that, you times went that why leverage, we which the take and for would you're but you we since to a lower that's that's most

Michael Linenberg

seems to over right now. Yeah. with agreeing No, I XX% stock be think your to extent the market up some

taking for So very my thanks questions, gentlemen. good congratulations again,

Operator

please your sell-side Araujo, comes The analyst so de that going from Ygor Investimentos. proceed. Ygor, we're to you can Genial you. question, your ask from open question Thank following audio Okay.

Ygor de Araujo

Hi, guys. Thank you my for question. on with Congratulations the taking agreements lessors.

Just reduction around a follow-up quick XX% about from EX costs question. on talk right. the you of aircraft, year, a of Last the leasing previous AXX

understand assumption of will this the would agreement reductions. exact don't but we I last I is, understand, that right? need or change continue to be in cost new do number, does what with the probably level it like So I that

John Rodgerson

Yeah.

what we're about, rate is, several So just right, to current are talked the us new highlighting the there and profitable Obviously, board, that obviously what market paying the across changes as north EXs coming $XXX,XXX you gap EXs, market we below the now were but ever were going as the a but excited in are reduces and paying. reset what EXs of on, XX% as for month the at those we've rates this we EXs extremely to aircraft forward. agreement about

on more XX it per the a seat than seats and down lower average is historical so produces ownership cost EXs And and XX%. basis, is our for this

Ygor de Araujo

Yeah. you It was very much. Thank very Thank clear. you.

Alex Malfitani

you. Thank

John Rodgerson

Thank you.

Operator

Okay.

can now following open comes ask sell-side of you Araujor, your analysts to proceed. Bank question, your please that America. Rogerio So are the going question from we so audio from Rogerio

Rogerio Araujo

you Hi, Can hear well? gentlemen. me

John Rodgerson

Yeah.

Rogerio Araujo

announcements. today's for Congratulations great. Okay,

on know expected I only the you restructuring, it's So provide balance details concluded, at when direction follow-up a have impact actually sheet. going on are on more the this I guys but to

far. So there that has so sheet also terms may of of gains also debt incremental payments, so we, I not liabilities that, on paid the be reduction operating deferrals understand, a but unexpected I understand lease balance lease in instruments, been

and somehow? if So expected there going going timing current direction on rates payments be that here Brazil in the Lastly, of results if levels, on may, in likelihood? is Thank rental you much. update with and repricing very level negotiations I taxes this to is downwards relevant terms on what going is and it's the if the on of term to see in jet the government market-to-market on on the market on fuel, we any

Alex Malfitani

Sure.

the on sheet. expected me let balance with So the impact start

about Let directionally me Rogerio. it talk

using taking think a even information, a of an investors the that see of are out, lot average average and an X times sheet we I segment rent, lot people rate sheet using and right. discount using -- figure to a discount of the First, trying is balance balance there to rate calculate it people

net if impact, the XX right. was So impact, debt IFRS balance of debt, are so gross or problem, times really sheet me using and let then talk rent about not sort X that you the leverage even

we debt on at with was a before The starting in reason a X.XXX, uncertainty leverage we never nervous John leverage never have, why double like the to X the such a are mentioned, been nervous. to our and level were paper debt a X, market there that was start when now the so has issue the we even and digits is and our more restructuring, that volatility able with market lot the been heading right, and was of has

not we So the nervous debt, had the gap because XXXX and XXXX of or the for that we because projected in burn leverage. cash cash that not because it's of had the of

of that net I option, that -- with incremental for we our cost all see because familiar should if and calculate Having be have that, lot you're of you use time to I by incremental should IFRS said IFRS debt, value too reduction present a the don't of borrow to the XX, borrow of on maybe my those XX leases. an of depends where will not the you right. cost are small in a you this, using finalize have

once But of where originally net of a IFRS is on we reduction cost it during see see it borrowing you're believe what in will small XX. number at in on debt, that renegotiated balance the estimates with the XX%, lot what our of on that present our you we beginning whatever a was be and makes done sheet that pandemic, value so will if is. when our And using a the the here right. app sense, determine depending time our are what should we'll is we leases And

what and you rent, was rent, right, in subtracting significant a right, using you you're rent were the but only of should X if be XX% by were calculation, taking be right a even sort note, Now see total including if because reset related your leverage, the the are times you multiplying leaving you're were you it's doing not going taking values, payments in to recurrent current Difficulty] [Technical rent deferrals reduction the if in deferral lease X should significant going because the should liability, XXXX that net times market offset rents you result net the reduction be reduction debt. to and to and the see by in a it

Abhi Shah

year. tax regarding we've And the EBITDA in for discussion, this changes potential already Yeah. any number fuel assumed our

in we're So it's our changes. potential already for model and planning already

the billion it So impact not does plus giving that we're guidance BRLX EBITDA today.

Alex Malfitani

is can is a far, can benefits, lot a sense way about The we where we stimulate so what of government this government know a social talk, I talk sort with of of think lot of continental aviation any including create it can will potentially it right. it that's that known in our what always always guidance. for and help, sized upside country right, But that to there's generate provide in makes in the We're travel but Brazil, be additional we guidance, can economic of our is never if in include something count that there comes upside. and any growth jobs planning, our that's coming, potential we only on

Rogerio Araujo

enough. very much. clear. Very Fair Thanks

John Rodgerson

Rogerio. you, Thank

Operator

now Okay. I remarks. Q&A John. closing close. session That invite like a Please, would for our Rodgerson to brings John

John Rodgerson

to lot thank if of in amount such excited for out time a really a to and the I'd short were and everybody us, to feel there's any like today, done. joining reach questions. you able more work accomplish We're about call to to we free what be have

course months. to over few market the And next of you everybody so for updating in joining us. we Thanks look the forward the

Operator

you. the for Okay. and concludes day. your a audio Thank very Thank Azul's today. good have This conference call for much you participation,

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