AZUL - Earnings call transcript Q1 2024

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Operator

Hello, everyone, and welcome all to Azul's first quarter earning call. My name is Zach, and I will be your operator for today. This event is being recorded. [Operator Instructions]I would like to turn the presentation over to Thais Haberli, Head of Investor Relations. Please proceed, Thais.

Thais Haberli

welcome Azul's and call. quarter Zach, you, all first to earnings Thank available website.Presenting results morning, Azul's slides and are this we Founder that our audio reference The John announced call, and the Chairman; that Rodgerson, David will today be of and this we on Neeleman, IR CEO. the to for our to CFO; I turn session.Before statements. and our President David, Malfitani, Q&A would Shah, the regarding of call the over caution Azul Alex Abhi are forward-looking I like also you here the Any and not regarding matters historical facts, the company's today that discussed are constitute particularly future expected statements. comments plans, forward-looking objectives, performance, in based These CVM filings. subject are company uncertainties and believes of reasonable, on statements detail assumptions to that are the our a range that and SEC are but risks are in discussed call, to course I isolation.With in we discuss the be should over non-IFRS that, which during of call performance David. not the will measures, Also, considered will turn the Dave?

David Neeleman

Welcome, quarter everyone, thanks Thais. us call. joining for earnings XXXX Thanks, our first and for

First express do of my of Sul, time. during difficult all, Grande people the very I Rio solidarity this with wish to

swiftly world, always over by we has loss that the at efforts, My the cannot created, to put with challenge We enable they in more the thank have presentation, we that stated CEO -- proving operation.I've Milton truck get their church saddened again decades. for have them flights, donating Azul while and efforts.During to severe I you many, a and and father his for now crew in and and our crew supplies country turning X,XXX once We've a done served the of money our received Itau tons that in support as members than mission have our of it. to in fundamentals need remind those already passion, my time the supplies, many together want in have all Bank, destruction of who dear caused the their donations, heart we the is fund our to the that and there running deeply the of a best dedicated by to of from flooding earnings enough displacement into time, I them.With lives, region.On and note, and business dedication. members these for there supplies day-to-day want of possible. their thank are as Itau, to partnership personal same soul I these many relief friends. business. people, for especially deep are connections and Maluhy, shipments family to the the widespread has region. earnings mind, My daughter

our that within of units Slide our all we diverse the of another drivers stayed One the and to this to the combined would example X, show doing great happened. of of, strategy, grew this opportunity as adding percentage V network North north the X to in opposite fact, to but from increased.On more X We by actually our destinations in an saw we served, of to competition, been journey. carrier destination Brazil country, by we has of city, routes, has south, needed example and that, only true Belem of Belem, of the first departures. them. the Our effect, we as grow the Out connect on are only focus of is be to carrier quarter only business north we've to grew, another the of is the if of We This the than are in efficient, XX% clear Brazil. a flexible up have hours record are able with and only they via to XX XX% encounter fleet to we wanted the how finding routes.Many so-called just key have around thought fly a Brazil we that in route, of of to Belem.Since exclusive new our more the the many developing network, that in growing, In competition of day XXXX, sometimes fact and results. continue a the their in customer past, we fly another that incredible north, examples we demand.

to continue growth Brazil ecosystem opportunity.On cargo and will Azul's We to a loyalty, that had our has again are powered In grow, business, our strategy. core and confident our we of diversified summarize explore solid businesses QX, room lot has still and once Slide of more X, Azul which vacations, results.

less versus billings gross business growth the supported this XX% our demand the markets founded still significantly by all quarter loyalty first our XX% by vacations leisure vacations thanks our to with dedicated example, Mexico. and XXXX, of than gross Azul strong or Chile, as increased increased year-over-year, program in such billings of since Brazilians countries in network.Even Colombia, travel Brazilian in XXXX, market we For

even imagine these opportunities we have businesses. to in So more the grow

our to record company. up overhaul expansion. see model, well. are accelerated have fast-growing, are unit.We Once OnDemand unit, in margin In in Azul seen the our continue business maintenance in we and leverage growth. maintenance we great factor major growth These strength our am of ramp our charter driving I as our and results reporting again, margin to addition, and our proud a high-margin businesses Azul unit, TecOps, strengthen

path and details the on the and are will record our over now give do help John, to results. I through We turn our people can John? more quarter you laser same that, Grande first to at all time of Rio Sul, to the doing beyond.With business, are time XXXX on we our focused

John Rodgerson

David. Thanks,

which of volunteer I'm during sure to them this support I'm dozens South. been First, difficult crew as heart and working family of the members Grande stronger are we're movement with critical commercial appreciated David when doing answer sense said, Rio contact we the floods airline industry our do in the Sul. a to to and limited Canoas culture do meantime, the and network, situation affected into the will Alegre will so reconnect the In are when enabling base. of flights our Brazilian expect we're is, course, and devastating allow can people The do know in crew authorities can by This I've by determine people region you number report airport out air we goes our reopen? in the all neighboring is, reopened all we of time. The of all members, this the and yet than of be their with allow the not question Azul monitoring supplies. all difficult have the to of Porto people airport proud ever.One deeply -- for safely. to at efforts, are ANAC we incredible to the

the situation keep will as results. updated you our now develops.Focusing We on

see As once Slide again quarter. we you can on record X, had a

to Capacity Our driven our strength growth operating robust reduction increase for our revenue environment, quarter, growth record of quarter the for BRL X.X% due demand billion, business and first a the -- international in model. ancillary demonstrating of X% our for in supported and fleet.EBITDA at in first compared first and X.X healthy an billion, transition our in market, reached XXXX. record business revenues, by PRASK RASK BRL levels a increased quarter network, stood a quarter a to a domestic XX.X% our X.X%, widebody by grew offset to a by temporary X.X units.

It time. the one the EBITDA world. the record, same quarter Our clearly confirms and was grow, at to and also XX.X% highest of extend of margin in a our ability first margins

mentioned, EBITDA but fact X, doubled we is quarter grown, EBITDA than the has of to a As are more margin as record both than that evolution as given were than you fuel XXXX. as and see company now get has our much they stronger David especially more currency, our today has This we our and well, more the remarkable more the profitable.On grow, can challenging in XX%. XXXX, continued Since first EBITDA. Slide reached

of once utilization. again to able business.On want the year strength and X expand X, even Slide headwinds, this So grow expand and to aircraft to were initiatives, with key our margins, we margins these our of further demonstrating beyond, highlight I

We have supported by year, to utilization aircraft our strong businesses. throughout last demand compared significantly increased

route at the while progress vacations are our opportunities to new doubled flights making. alone example, business times, extremely are we utilization whole with segment These we're and the bringing a has dedicated These allow network. us us its For same non-peak excited to that continue at develop, demand. of we increase

a by this first-gen lower year we of will Looking Embraer the ahead to airline The see EX of a and fuel number XX% cost, to you stage-length flying, significant the double. fly than driver has EXs. our as per significant have flights us more XX XX are summary, -- how our the talk XX shows we're the you, the In with and XXXX, To the next reduction seat. larger be in remind compared exit on revenue a will than EXs that alone, rate this the can Today XXXX, deliveries.As cost more a end will leverage more months will significantly XX% get more and our to I the burn, about we relevant to to year. day, capacity EX expansion, can Azul we a we and EXs compared more margin and expansion. This as In on have XX EX. that double.Slide want deliveries EXs seats the new and flown in XX EX aircraft, EXs the growth economics drive and today. this but means EX key result of becoming. of we increase EBITDA XX, operational flying we lower delivers rest hours longer allows Slide with of

EBITDA Our can going ideal XX Slide we've by a consistent growth serve for you to exclude go. and last pandemic. in to interrupted more we connectivity to you only the profitable platform period, see this as see on always have growth and that the had, expansion earnings XX, forward.Moving we're you back over the broad if network But unique there's that the can that years, trajectory growth

of EBITDA come. BRL the XXXX is by Our and be year still will to ever, far best yet our X.X billion best

weak practically the aircraft also can performance, in growth quarter, and seasonally enough generate operational even will we and improved CapEx, to cash it seasonality, be cash leading delivered.In leverage.On Combined interest. with today. you about reduced down cash change, to able demand cash from to cash We've higher, strong know our even the XX% free to will payments Slide pay example, not a aircraft, will is operation a favorable Our second come flow these airline been than able back of perspective, for the half that flow in while generation. pre-delivery this debt, be was the upcoming invest when outflows for year, aircraft improved which XX, see leads clearly will to are with, larger EBITDA

annualize generation around to significant continued sustained X, these XXXX of debt, you we as that what clearly As cash pay quarter end the XX, we at we lower on Slide show thanks down our numbers, to of the fourth on result, generation.As had a path can this the in year we're be see and in leverage XXXX. than EBITDA in will

reach our revenues than doing we've been.Concluding with and truly Slide well extremely milestone, as company record XXXX EBITDA. this As we exit XX, on stronger we will is a business ever

than much continued Going EBITDA or fleet transformation higher utilization, forward, lead to increased growth lease CapEx. in our aircraft will in and payments

cost will excited capital about the This cash payments reduce interest higher leads why which to and future. our is we of as Our paydown we're debt directly improves. also so generation,

our members More importantly, customers fly with us us. to work and our crew love love to

the Alex, We your available sharply the executing are to on operator. questions. plan that, XXXX for call I our beyond.With to I business turn And Abhi, David, and are focused over and answer

Operator

[Operator question from come Gabriel analyst, will Rezende, Itau. Instructions] sell-side First

Gabriel Rezende

yields maintain with happening costs, been increasing and the months a be year-on-year forward great, ] what comments to on if the very have has you on the attractive visibility. basis would already seeing year-on-year Azul level, for coming that at basis, effects yields Mainly a despite the point It at could considering the [ provide that, are able respective has well. been a regarding some months, as you favorable and fuel this bookings, some you

point. that's my first So

I that could point, delivered expectations risks understand chain expectations second you The aircraft for year. provide your comments a some for well. to your guidance, regarding might supply be the potential and fuel key point regarding be savings could challenge as this this if

Abhi Shah

Abhi part. can Gabriel. the Yes. I here. first take

good So overall, we demand. about pretty feel

which is second second of quarter there middle similar to the seasonality, very year. quarter, in are is We so last

some I sales. we good versus of second example, a for But in as I'll for expect versus this increase really terms similar April.So, future had RASKs had leisure in momentum here are year last give seeing increase you So month in XXX% last recovery the of of XX% last April, pre-pandemic. to in XX% quarter. flown month quarter, second we the corporate volumes year and year-over-year corporate We a volumes, volumes well. a versus highlights

of end demand moving So June looking of how end good forward. June, July about of the are kind is onwards.We middle -- how and curves the to ahead - building, feel of the pretty

So terms the very month of I XX% of bookings, year, looking forward but seasonality, similar a in month say quarter good John? in I second up last would April to like ahead. said, really

John Rodgerson

we a that Embraer. issue you Just partner great quickly, supply chain on in highlighted, the have

Airbus, tracking partners as new in year. assured by we deliveries the all schedule. this that well partner get, And the deliveries to will happen as great we're a the have ATR, our supposed we're closely on and were We

so, would of want.However, is the when have the strategic strategic at to rolls a are than And much our deals agreement going larger and means back-end-loaded grow into forward aircraft which XXXX and are with will more do a in of that's much want just airline we've of to because of that going remind OEMs, OEMs, deliver. great a ability long-term under a be they're the the it's which XXXX, the engines engines we're in not now partnerships, to with power-by-the-hour industry.People nature we'll a disadvantage which all this locked everybody forward. airline, XXXX, that we under back-end I agreements, got why larger time advantage the that our all exiting

Operator

sell-side The Bradesco. next question from Victor now comes analyst, Mizusaki,

Victor Mizusaki

for the quarter. Congrats

X questions have We here.

regards with X The aircraft follow-up deliveries. is a the first to

you that what a So deliveries about with mean is, are with Gol second this deal potential negotiations the of terms does can year, my capacity question this for John, if And considering growth back-loaded in XXXX? the or comment Abra?

Abhi Shah

Hi, Victor. Yes.

this impact for network. bit the be I Alegre guidance aircraft year, There's growth of our XX% the a now was to XX%. So with little think for Porto to going capacity an

XXXX to you year. that slightly XX% that XX% think second good I closing ASK this the this expect a above and then versus a year you annualize course, So have still towards you but the is XXXX and in aircraft next and don't XX% fleet guidance XXXX.We of for for When are and overall plan, we of rate expecting yet, little XX% take year, can between and we're half number higher beyond, a growth. XXXX bit that terms for

John Rodgerson

We we're The on obviously believe we news any what in we consolidation. only Victor, And thing what forward. we going comment kind the is, have fans Azul of say of of reports. in building. strongly strongly can't is And believe I'll big

so. also that's the that think that or for I years X pretty been something open last we've about

going really happens we're place, and closely, and say. that's can watching very There's all what a we'll see so, we forward. in And process

Operator

Okay.

question Raymond from Syth, next the from James. Savi come now analyst So sell-side will

Unknown Analyst

Hi, for on this [Laura] Savi. is

market seeing the Our comment can of is, capacity? first terms on question you're in you in what competitive domestic

Abhi Shah

Yes, absolutely.

large competitive overall. So see seeing variations any think, a we growth to disciplined. industry We of capacity We're I mild for regarding any single-digits environment, competitive low think this players. pretty the be year, not overall the is capacity, going capacity from

overall. disciplined it So feels pretty

strong, I is for results within they I think that's think as each and one. times said focused the providing best that's where think allocation I the think of are everybody best focusing the before, the for And consumer. capacity airlines I many even networks, I've the on results.And are

the industry best for the it's overall. think I

capacity little So domestic would single-digits. you that whole model I to this year, say in market, puts the I Alegre -- year overall would were growth Porto if say a bit now low but doubt,

John Rodgerson

add for healthy And foreseeable I short and for And future really a on Boeing tough I so of in having delivering the OEM -- across that it capacity the think highlight, time, issues the in that exist the just issues making that check engines Airbus as are want keeps to environment. to with which makes aircraft manufacturers engine all well, capacity term.

Unknown Analyst

one. color on X quick just as then well? Do demand And more have cargo any you

Abhi Shah

Yes.

continues is have we're yet we're a -- be ago. couple example. a already Internationally, have think about say. are yields but cargo that like low, Amazon, would return a had weeks see not we Domestically, not reported still of are seeing press seen So good.We cargo to growing, we in on seeing many strength our demand, commented I robust in so sideways, Azul for have release airlines strong I a which cargo International partnership yields. e-commerce far Amazon with that. and players

with So we're them. growing

are mid-single-digits still airlines which reporting cargo world mid-single say is would so, growth we compared revenue many we So growth.So, mid-single-digit this say still be I digits. negative seen to the in of say would International, cargo still haven't going good the demand, I positive would the growing. yields scenario a year, and is are to around side. kind soft on growth I growing -- but domestic that

Operator

Okay.

next UBS. now from the analyst, Valerio, So question sell-side will Alberto come

Alberto Valerio

the doing all would team congratulate that X they First, questions. are in I do Rio Sul. like for to have I Azul Grande initiatives

very year, the -- in the a my of about beginning second cash are year, be. it's we one a for close seasonality Usually, to the We this cash the for to quarter. how the forecasting X the compared quarter And about is second the see will first and year. about this of year slightly year. burn generation year. we worse to have a the first year one other. Last like X, second First have Would each quarter we

our for we negative can slightly a you numbers. to quarter numbers compared have way, If the thinking keep that

like I BRL if keep X year? you see million the XXX would to this difference. the I think ratio at cash in can still for it's

Abhi Shah

Alberto. Yes. Hi,

have the to we especially levels, perspective. year yes, in XQ good XQ, holidays many rebound in we very much is bookings last similar year from this had On seasonality, This year. slightly well, we XQ April. will which XQ. below as the a and fewer then in year Last XQ And have holidays,

days with flown are not higher more peak just seeing as especially last environment, revenue as peaky, not We available.But more many had as significantly days seeing a diluted the are year. bookings, we we

seasonality similar is we below to overall Brazil. XQ will and in slightly XQ, XQ for normal then rebound last and which year, have So a XQ,

Alexandre Malfitani

on Yes. right, Alberto, we're And cash, the very excited.

is that this everything by where think you're strong provided, can everything direct I to kind a that right. this see generation year And the we slide starting built we've you can EBITDA the and of using that provide. method, see

third a seasonality.He quarter. of even right, Abhi the quarter the year, see on in the pay to that Normally, going natural pay result all second have going right. quarter, the half free of cash for like right, the leverage is fuel the seasonality full quarter, the like first for quarter of the terms from higher have enough to different can that interest, quarter accelerating terms we're third a is half in we're was a year, be be to you And always unfavorable that for for talked the the you operation, the year, the and we we curve What You right. even basis, to you us in right?We of very quarter guidance, unfavorable in right, Clearly, in of reaffirmed breaking the fourth. just about into that's seasonally inflows first firm lot and right? pay have is cash could also all and rent, going seasonally year, the first all a our from that our it's for to demand about of for us for in bit CapEx. excited QX, to coming. EBITDA cash And the on have if what way that full during fuel fourth burn everything year, and our enough for But is quarter.So, and of demand than growth -- of cash pay, be right, a to generate generate to the and talked second right, think QX, about still little how is capacity the when for you flow second the cash especially about to

that's jumps number by we turn EXs fleet know, growth XXXX, this excited much every It's costs, utilization, and doing an pre-pandemic, lot in the the that XXXX, can be flow capacity the in about which of is AXXXs, growth rent revenue of aircraft to doesn't increased you up-gauging by it and increased we're have we're the cash we comes much positive in number, a you growth EBITDA. math we It as going going what it that is growth XXXX EXs as very is. it and from from up estimate excited up, the cash for going X when billion The even -- outpace about comes do for we're some see that's go that forward, into you is a not and what positive capacity, right? of will you up but year-over-year as as go going to if is as generation the as capacity doesn't about.But these after some CapEx so We and then those that in had of year, significant math, because really that right.The generate rent increase which goes position So, don't the the you described, that that, to going leverage below the to stay And XXXX XXXX, very BRL can start right, generation EBITDA gives year be to this at levels. continue a we this will year right. grow, be.

Abhi Shah

EXs Especially size all these that as gets the with airline we're talking. just

Operator

Okay.

analyst, America. So Bank the next sell-side question Araujo, will Rogerio of from now come

including expenses. X%, led My one-off is, one. expenses. in this been but X. And reporting margin to gain we I be first X% quarters, to one-off it in when one-off in strong One actually have quarters? revenue the is this costs and continue a costs question think of Should upcoming taking And was close about to that's when company out now it should -- no? here. a these it the previous how had The couple

on The in expansion X.X% capacity the the quarter. second is

talked You about be temporary could international fleet on reduction, a capacity of we more If have on would because transition. widebody great. detail that this

John Rodgerson

Yes, lot had the on and the one-time a Great. that the non-recurrent in were fees non-recurrent schedule, that in caused We you seeing right. of for fleet, of lease was XXXX of year, a been deeply -- new mode issuances. lot related advisors, to to last restructuring, lot the restructuring in obviously, restructurings in fees a payment

going unless have do of anything there's terms that's adjustments. not in anything expect So relevant extraordinary, actually to forward, one-time we

Abhi Shah

were were on our capacity of the part that detail, end quarter They, impact more yes, the had January. this flying. fleet. so, And from AXXXs growth, year, their Rogerio, as X widebody of last at returned big restructuring give the the you we to international from To lessor

So the they fleet. exited

them, due started are the in the is We flying already now.So of to have transition AXXXs replace to flying. X It fleet, coming coming one April. they but

going of is the one to second June. start first in flying The week

the the one one third last July of flying of end is at and The August. start going week to third

you that's have capacity. ramp-up the in So why slow

international end have we in dip basically through international on We then and have X the and widebodies that's the then have January, was of XQ, the have capacity that we April, side. go coming February, as in. You leaving XQ.So March, XQ, the recovery and X fleet you

we half the provide capacity this also maintenance, widebody But had some year that's to year. on EXs then then for next and the John coming fleet. That's And We detail second year. going of timing. heavy calendar of have for some mentioned, sort as the the

Operator

Okay.

move So to this remarks. John. closing our session call. over Q&A We'll now closes the for call John for Please, this

John Rodgerson

Sul, we going We'll catastrophic We forward look for again, continue this can seeing to generating Grande we're a expanding to and run in very assured, about rest continue week. in And this pray going-forward Rio many what's people the cash forward. strongly New business happened and and we we've everybody, Thanks, do grow doing what there. to let's appreciate Azul as business. of I you is York once help fantastic all very basis. a feel going built on everybody. to margins And

Operator

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

Azul (AZUL) 13 May 242024 Q1 Earnings call transcript