AZUL - Earnings call transcript Q2 2024

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Operator

Hello, everyone, and welcome all to Azul's Second Quarter Earnings 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, Thais, proceed.

Thais Haberli

welcome Azul's and call. quarter Zach, you, all second to earnings Thank available website. results morning, slides and are this we that our outdoor reference The announced call the that of this we on IR the Founder Presented today Rodgerson, CFO. and Abhi John will Azul, the of Malfitani, and Neeleman, President CEO; Shah, Alex Chairman; David be Azul's our

statements. the matters filings. a discussed like comments to historical are forward-looking believes regarding our uncertainties that you constitutes are These I the of company SEC turn caution that not future risks in performance statements company's detail call are Before on the the subject are statements. regarding and over discussed Any range in based plans, to reasonable facts our expected that are to particularly but John, and assumptions I'd and today CVM forward-looking objectives

we call of which turn With course the the should during John. be the that, considered not measures, Also, discuss isolation. over in call, non-IFRS performance will to I will

John Rodgerson

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

the I with express in we Brazil Aviation do. as Friday. that in like loved ones members come to by always the in an tragedy occurred solidarity the everything the need. is together safety that would #X Aviation on affected of and we First, industry, crew And families, times

crew to the our our and during very We thank I for hard support also our prayers during this offer like and quarter. condolences them difficult time. all second would work members their

I team quickly is especially all an south which of and result. currency devastating with what combination we navigated our an adapted the implemented industry-leading challenging delivered fuel seasonality, initiatives was for incredibly proud of to floods of of fleet, the this difficult as culture high combined essential I'm Brazil, conditions, changing successfully strong in made think how the Our and devaluation, a we quarter. entire

for summarize On the the we quarter. results Slide X,

a devaluation and BRL real with the XX.X% and XX.X%, reduced fuel our the billion, million, Unit was XXX BRL RASK respectively. year costs of with margin BRL X.X was up X.X% dollar. our Our the of billion a Brazilian even of representing and BRL EBITDA X.X last revenue was prices to importantly, XX.XX. Most EBIT against compared

As the we this The in even this all will the with to I was look adapt, is more lot face, and talk something around is our strong world, challenges this key ability result. a a we presentation. about

impacted do Moving to context update how and I it to what Sul wanted an provide our and Rio in on X, results. Grande Slide happened

that again to state quickly on good Friday, were capacity to clients on airport, we now airport our do saddened the will daily delivered call, largest Once by most. and of As those Alegre however, people severe May was who will operations. news, The with October which last in deeply contributing flooding. the our members crew stepped our again, mentioned Sul and destruction of loss X,XXX We up, lives, region. displacement the of donations, impacted and over widespread by in Rio in we Grande early tons is it our partially needed we of opened closed. the The in main reopen Last XX be Almost that remains XX. we prefloods. XX% Porto airline sales the

a of fourth total of For economic major state largest the equivalent The Brazil XX% relevance of relevance Rio is airline. us our do U.S. activity is those Angeles don't know, over the to for and Los who capacity. Sul represented Grande to in terms in

loss had bigger $XXX including of at ] cash ATL we and impact As quarter million the a in reduction estimate impact and second even an to the when result, impacted by least our capacity in that the that our negatively region [ forward results bookings. to

rapid the the devalued of time, while adapt see period at On in devaluation required versus us quarter, fuel of second exchange XX% the Brazilian X, quarter first End you the real rapidly same The during to rate the quarter. the negative effects could of prices in XXXX. Slide X.X%. these combination increased

we to the redeployed capacity For from quickly other example, network. in cities Alegre Porto our

we to a EBITDA of sell quickly to While were we than this lower at would able mitigate we still part capacity have liked, forced the quality were impact.

Slide X. Turning to

instrumental were business to very Our our ability units adapt. in

XX% performance of XX% proud our of which and We over more for extremely our of business of the EBITDA. our are units, accounted RASK than

Azul customers' with credit our card program Fidelidade, records active in gross and delivered strong results loyalty our Azul. preference billings highlighting sales, all-time in members,

second packaging gross XX% vacations our XXXX. quarter second Viagens, business quarter in grew the Azul versus bookings in

Our grew logistics business XX% quarter-over-quarter.

an revenue In airline on is above that XX% Azul's larger. XX% was levels XXXX roughly total,

to year, encouraged of the seasonality very plus and the of revenue in by the demand the average normalization capacity ahead we Looking and with bookings putting fares initiatives we rest are are place. favorable positive and additional

will details, further over I to you Abhi. turn it give now To

Abhi Shah

Thanks, John.

about recent in because we lead all will good revenue. talking flown by start trends me Let bookings good know, always bookings as to

we the better on since bottom in the are fares, and improved since mid-May. quarter As average seeing the even Slide X, significantly can you see beginning of

closure The revenue. X major of to Alegre impacts had Porto our

also just largest but routes the Porto largest the First, from to network demand shock, XX% Alegre, fourth from immediately a Brazil. to where the in was the contribution in not state city lost, and

in damage system, by that the also deepening the seasonality weak caused further We floods the affected the XQ. throughout the believe demand

to in month our June and with of Finally, this quickly we reallocate and rapidly to the May sell advanced this capacity capacity of network other parts have little notice.

good but lower impact. still in resulted revenue, this EBITDA mentioned, already a mitigated the John part of As quality

beyond, showing improving year. tangible in On stronger see is and The for RASK booking strong signs actually is continues you and XQ July, flew results to seasonality up fare of that July market the environment. July Comparing improved as RASK was in the year. while X, was what XQ we down the last see than a strength. the just basis, can from environment we clearly of the a very curves This X% X% demand versus RASK, has trend faster demand year-over-year indicates rest the August positive in Slide On improving XX%. and

booking curves look the are this second in consumer some are indicators in U.S., Brazil reduced us some further year. like the of seeing there GDP, as gives the Contrary here signs These the of indicators for economic by are are and demand, half strong what to we where supported strong, unemployment demand confidence to Brazil.

talk network Moving about the X. to challenges I to faced Slide and we international the quarter. during our want

from resulted plan the exit network. migrated aircraft temporary add in our X earlier year, to this our XQ a we was As reduction as AXXX the of This transition in AXXXs replacements.

aircraft Due into challenges, moved to global were to had fleet enter to XQ. the planned XQ we service in

our can flights seats you large sale. not result, and a to This As long-haul XX% able our in canceled our were blocking very are we The growth that we those impact flow in positive will sell created a bookings fares. fares. good see bookings for we ahead, had effects. down very and international is as international significant to almost on higher-yielding This half, in of closer flights. have capacity. long-haul significantly those a a our volume on customers big own now we This we had a as news to And those revenue impact see, looking unit reaccommodate had our beyond

demonstrates ability I Slide XX, business longer-term view to drivers. our our recapture macro in and the unfavorable cost that show a to increases resiliency on wanted Finally, from

our As explain and real good Brazilian David creates we with financing A true are on, this all years. as uncertainty is the expenses will the our we of part have later over dollar-denominated, model because that is and devalues. to grown some

structure, has a the required But this have Azul our way dollar a increased the capacity. X% about to happened to Given the because revenue to looking offset all The we realize have is even currency. expenses the to in X% overcome time requires of here some that point dollars doubled thought show does back the CAGR And financial as be XXXX, our X%. of take the in can in our It XXX% while effects ability of effects negative you the and than grew are offset cash. more our increase term, some to these during long a we the grow average to time, effects. revenue fares continue X%. X% But of and expand has much year, margins, on impact of at see dollar has in They that the recapture. only over a increase this And increased to able will fares impact.

and key As to recent in our long-term our opening, adapt. his again. John been encouraged quarter us has success ability The have do this challenges to so to mentioned the

growth who And how so can turn Azul I'd about to over like talk on vision his its David, now David? trajectory. continues to

David Neeleman

Abhi. you, Thank

heart part members. of airlines. and time. someone for events who's in during and deeply to tragic of industry Friday. families we difficult on provide the And we been years the saddened everything prayers is crew and X the My can this do go support to will I'm First by course, X

as We just to realities we our again through with exchange exchange navigated have rate, Slide have to yet well single environment Azul realize the Throughout launched last years. that revenue ago regional serve we and As had destinations much growth the me XX type, consistent a the that the the aiming of to years how XX a went in gives we -- became the adapt, quarter changed. Brazil. summary been. rate new how incredibly have new it years, and done the of clear fleet you has XX something Azul in once earnings

loyalty, And opportunity business much logistics. international a soon same high and high our our fleet we -- We the larger. travel. like realized business diversification, expanded strategy that high-margin and time, was growth and units yield that the At we diversified expansion merger with by vacations into

Most to pandemic real evolve BRL our a X.XX was from and BRL a from capital $X example BRL BRL plan fuel liter recently, liter. per optimization of clear the to to almost and our the X our to ability per to of another price of X X $X adapt response to

have major bottom our and more profitable. all, to business. count And can And is be X to at evolutions grow we line in it through the least we continued

XX. Turning to Slide

see core can of our You elements growth. and the resiliency

network foundation our and of advantages. structural is a Our long-term competitive

time. the be is of fleet right our we flexibility, of our result on market in a right at aircraft This to routes. only where direct the put continue the We the carrier right XX%

several have over past doubled more the true model. than our in to always staying business We years, size

business as job crew powering incredible played culture Our our has mentioned, role while our XX,XXX our critical done growth passion special than I members. have amongst team in of more the maintaining an units, a and

Our Building able was team completion to trends of improvement. capital a clear shows history our focus upon year, key turn and the of the last successful optimization evolution and tier plan XXX% team the target back to maintain X have we realize than To once an incremental more this, external challenged annual factors business. in BRL affecting billion value. I to the the QX, of

fleet we with on we developed XX, which Elevate, continue a across team cost, years that financing to and started Slide multiple many thrive once come. opportunities allows the and again adapt for to revenue, As and Azul show implementing to plan, named

want over turn I more to details elevated the that, to plans. our call With Alex on to give

Alexandre Malfitani

Thanks, David.

said, year did last natural David our As we the announcing the structure. is extension are a today we capital plan to of optimize Elevate work

then, we As seeing. and our I'm to across company. the this we plan results about on and now Elevate focus said focus the opportunity business, able really are the galvanizes excited early at we're entire that XXX%

area course, side. illustrates about These provide opportunities and connect the A of the and in in I so GOL all convenience revenue codeshare XXX our thank the the that some codeshare options to July, Ancillary now origins is we're focus. already happy we customers. started with jointly connections But the increased We only very We're the growth partners, are working to of our selling multiple results, XX another revenues and Slide main of with GOL. [ we're destinations networks. selling one, and are early ]. beginning. X want on the of

airport are with ancillary revenue want year For selling crew versus per XX% members a our increase they to the what July hit ago. we month 'XX. in sold passenger July, especially who a revenues a record I in of double thank

Our a business be units revenue continue key driver to of expansion.

and side, direct points customers, providing to of dependable source loyalty point now are recurring our the cash On club enabled sales our buy flows. our revenue our card, by product our credit largest

was are we idle using but only customer capacity to the weekdays off reasons expanded not business and more the one on weekends, vacation our side, vacation choice on the grew provide This also flexibility. of peak, available than in XX% On creatively quarter. that

earnings network as Abhi recovery forward. driver Finally, in a generation growth of going key the our mentioned, and and international cash is

to fleet, all more reduce utilization, These effectively more allow the us will resources and turning cash. XX, utilize costs and cost side, productivity opportunities in On we Slide exciting our to really see purchasing. some efficiency, generate

want Let initiatives of network. in we this by operation. me across our reduction expand in our share We June, slides. to Slide structural to already make next a times highlight one late the On across margins further the aircraft I But utilization some were implementing XX, to examples year, a decided utilization. key change the increasing in ground

quality this between every aircraft operation. XX Such our to task jumped operational a the implement that process therefore, ground time reduction develop the immediately the reduction allows for of most of allowed X and and us air team importantly, of changes capacity and improving longer, in to minutes aircraft more be earnings. maintain generating safely turn The and to series

I Azul thank want for their really operating work. This to team and new incredible is entire network the already

far on-time Slide EXs another performance with XX.X%, best have completion the On month, XX, see on our So we the an opportunities of this is EXs. Brazil. you fleet great factor can example XX.X% move into from side, of which in a

more considerably is extremely coming we that cost. of much from any next-generation lower aircraft as X the seat Now aircraft, This with our with more day XQ competitor higher per beneficial approximately much in is ended flies region. than XX% hours capacity a profitable

reduction than to per In average day, in in delivers leading on July, our almost plus seats a EX, lower XX EX XX% cost for the has EXs more XX% example, XX of per seat. fuel total and burn hours the flew

utilization but the CapEx we expect we made the will decision and as and significantly in improving by of drive the utilization receive across this utilization type advantage, of As and X spare, reduce next the profitability months, the scheduled to difference seat want to models, But growth. significantly leveraging XX EX another over commonalities prioritizing expand aircraft EXs EXs EXs the XX this have costs to earnings cash. we and as a and EXs the increasing reducing use also increased further

our a XX% efficiency generating are QX. in that X you seasonally as XX% efficient show we On want significant XX, product improve more and the how airports, will continue into just already. and results can period also focus to These the is stronger SKUs company QX further growth has more productivity of see of we overall I and on levels months, fee. yielded productivity Slide within our

productivity to Summarizing you pandemic these some we're to and These a that just 'XX, efficient XQ mainly promise Compared We actions on our almost made cost ex-fuel would Slide X%, CASK airline, more exactly are that by doing. reduced XX. is the emerge driven gains. reduction what initiatives we from examples. a and as

move for across plan, As airline we we be XX have a as of entire plan forward. this and the Elevate part list spread #X initiatives will our priority our over entire of company the

exhibited obviously, strong excluding dependent. all trajectory has years, Putting the EBITDA how consistent on Slide and throughout this you together, see can our XX, growth

increase a the For EBITDA XXXX all-time expect an for of billion, airline. X again, and XXXX, from record an XX% once BRL over we

To Azul. XX, incredible Slide running be prouder wrap on of being We're of I an couldn't operation. up, part

Our us work customers to members love crew love our us. and for fly to with

As we years, our David have times over adopted noted, evolved have and to but remained many true essence. the

of all to advantages, to is and we stronger a do benefiting our our competitive expand stakeholders. Azul Everything build multiple

truly Our of excited that, us. another by this all the available to Elevate is questions. step your we're direction. With ahead plan in answer We're opportunities

I'll call to for the turn Q&A. operator over So the

Operator

Fernanda first Recchia, Our question analyst Instructions] BTG. from sell-side [Operator comes

Fernanda Recchia

side. our from X

now QX. not on If first, to conversion the would I'm update for conversion like lockup I in debt mistaken, the The period expires terms. debt an the get

So are are X maybe lessors. could bit comment the you tackle little the you thinking to by how million shares to that a vested you if expecting be

strike there know We price the is. price the that is current between a stock that and this difference

cash ASM. terms gap? one. And thinking you So if led chain that us the you this supply latest mistaken, revision the not alternatives you're latest? what XX, next? around AXXX, what and year, -- or second, downward if This fleet update And you plan close to the around the is finish of If expecting are first Could thinking on if X you EX and guidance you're on the are the could is on deliveries? for maybe in to guys, could using year this of regarding my that comment issues you that have thinking the were for start to I'm you Airbus the comment next on receive to how aircraft

Alexandre Malfitani

equity Thanks, call Fernanda. talk we about I'll structure. This what lessor is the Alex.

essentially lessors right? in to paying essentially is, everyone, Just of So COVID transform option that call first equity, free or this has our debt, what's into is Azul deferrals right? interest the where what remind to the that agreed cash on

idea doing. in may we if ability our we be of right? we're cash that's new the with our to long-term that with airline. always with it there conditions our then lessors, terms, remind always are lessors relationship that And our conversations Lessors to a who the what the to essentially have in equity, And partners, right? like everyone shifting And bilateral negotiate lessors. not and also We're pay good or we a have are talk relationship very to have

us, come very able to horizon. a And maximize forward for economic were own for support that a thriving on to as And well. have were them need constraints we can they year, value, we count and able at works as always So their able kind but going we they on they last we for know their their that their But long-term well. to them. construct -- business, with Obviously, support count to a also obviously, look right? up they of are works

our we'll conversations, But them, lessors. you with we we conversations and as reach you are we'll not update we terms have So we new update seen, with over shares, time. in these are so as you've And these bilateral and having all. issued

John Rodgerson

And XX% this I inside that. of as partners business, think the again, partners, devalue Alex seen XX a they're to exchange what's expected been never anybody in said, happened. don't quarter. for years. and We've they've they're seen I've here rate

the sit figure we partners it the work you what's out path forward. best And table at all as through and down so do, and

OEM fleet the for Abhi. it delays, over and projections the I'll As to pass

Abhi Shah

John. Yes, Thanks, hi Fernanda.

already going We've received the were with start year. I'll AXXXs. the for we AXXXs the So to

has year. this Airbus delivered So for

AXXXs, X as plan in already On we are said, was the X wide fleet. our bodies, the

expect final and the we January We X frame. in September expect more and that then in between X December time

you years, the of and said, As the EXs focus on year actually. for for is the couple next this

We closely The around very, are bit. with Embraer. is moving little working very number a

in deliveries and month, beyond. have the August every and example, road September, X For we down then

of with say is would working right them. I So the one This is the around moving as we're impacts. bit little to It well. a

you this next deliveries us For which year, help example, some will December, see will year. in for

would overall, year. XX% So I of now to and say, next the between around XX% end

John Rodgerson

important. OEM the is of are also loaded. A deliveries back-end lot That

So leverage at what's to as rate. days of year as well right. average, shifting on XX they've the XX the of end happening that with actually been to kind impacts the But the exchange

Operator

Syth, from comes sell-side The next Raymond James, question from now analyst Raymond Savi James.

Savanthi Syth

question we should capacity? for to What trying curious until opens redirecting kind in of on impact XXX was up of it here the [ and kind BRL to the first be do the modeling in I'm understand quarter? second fourth is I'm trying the net quarter. back ] of that my Was drag of million flooding I what

Abhi Shah

fact reduction we the capacity really the net. which well. year-over-year it Yes, And sell to as that quickly, that RASK was in to other doesn't had so Savi, the include also contributed

August, more see expect certainly we have you capacity improved bit as and be to back, the move we much when October that now can certainly, time, already how little a forward, September So back comes July to normalized RASK. we

positive expect as well. XQ year-over-year actually, And I RASK in

very, something normal, we we're quickly. back but was had So it to very sell getting just certainly to

of and were May So we so assets, month to back able of June. half use the our the

John Rodgerson

benefit amount in operating the the actually rebuild us of airline going economic will forward to projected there's be We as a Porto an activity city at it. enormous believe Alegre largest being to

was now, right a that into a so region right when day X day XXX about people the traveling there just at And Porto flights flights Alegre, now. base airports. in there's a There's not previously, military in

Savanthi Syth

follow-up then lines And no of fleet, on financing. the looks, kind I kind that on was EXs? And I I next for That's financing kind curious AXXX year? super and if just -- the was with of on think [indiscernible] I'm Is helpful. the along previous of fleet might question. to the that's of just deliveries days guessing agreement that how there an

Abhi Shah

Yes.

be about are XXXX next the next EXs. really well. be domestic planning aircraft. XLR, been So which this going not mostly and of They've that years, But off just But the pushed we're at year. on we're focus And doing on to the and XX Not actually now, focus be months, beyond. to is the the it's which very for year the very X EXs. AXXX next ones, half deliveries to AXXXs, the back going honest, the LR, the is excited

Alexandre Malfitani

kind understanding. Yes. -- aircraft BNDS is financing ECA that's available the the the to of set customers. standard Embraer by This are sector right, financing, terms And is

take XX and of for not take X that aircraft And the we approval should to decided operating up will of cash to So EXs we for now. to leases pretty expect we've have they're additional provide and be standard. majority outflows. delivery The

have expect we reason in we these outflows to were because that provide took And operating deliveries. all the also to even cash able as they also of any end leases. the financial leases opposed X outflows But are way them cash to these is of between for XXXX, you didn't a though and now deliveries don't why structure

Operator

question UBS. Valerio, The comes from sell-side now analyst, Alberto next

Alberto Valerio

And new of week the that this airlines. an the and financing announcement to the whether this government provide deliveries I'm a last lease made on would back may you intention have X a quarter, about you BNDS X sales X that from XXX interested and was to Embraer. to know aircraft, X I also about have XXXs the think

made they further condition question My think I only guys have finance to order is EXs you when And on. Embraers. you from read are this know to would And a arrive more to I guys? you Embraer? if

Alexandre Malfitani

leasebacks it's a deliveries are right? said, for So no So order of leases, the we would like kind here. already operating I have. apply financing they And financing, the the BNDS that sale

John Rodgerson

Yes. was But what you're Fnac the by expectation financing by referencing is ] that [ gets is already the approved the House. it Senate approved

President And of BNDS that ] has be is and [ so to quarter [indiscernible], the expect quarter. referenced probably dispersed the this exciting. approved in is something fourth we that third the This in

So less should need things the be this that be is some that do. will expensive there we debt to government providing,

Obviously, couple anxious is I to weeks, more they're next overall. We growth. up we sector have already financing hear make need think in going you're about a to the kind enough for which backlog the Fnac those very to a of [ of for our add but Embraer the for in ] But aircraft positive conditions. Embraer, thing very lot

Operator

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

Gabriel Rezende

questions our as well. on Two side

you seasonality order considering need week it the on confirm tariffs to to again, showed by make stable, so guidance? your seasonality on enough are the Slide chart for the you you week. Can have mean, to but just the that guidance? show seen seen we just increases? continue deliver that to far the the considering is Just additional increase confirm you the X in increasing us we it for you be in you Or by Or should that could current trend we've deliver deliver? fourth obviously, to able be I this that quarter,

the And lower first question So the a expense we much booked maintenance in saw question. second that's the quarter.

some initiatives, like upside and could expense cost-cutting this that we our the did to personnel What in the model? I of maintenance into see looking we line mentioned You additional some forward would have put higher in-sourcing to a understand. is on that but quarter, just

Abhi Shah

key the is now. we're that a help. half fare that is go year. close-in It happy the demand. a seeing we Look, The second on quarter of the trends Gabriel, demand. with we're to through demand better right corporate Seasonality maintain is It side, period is the the better to going and of and period of as pretty

after And the single to level you pretty build this level so go the was difficult to What of the the Alegre, as booking month you had to that dip. we that continue good key fares. have forward. What is that terms that every happened situation the especially and indicators. now then given of Porto time economic chart reason be the to no is of is should the strong the year, half and recover There so that that shows for seasonality take dip in in now from to the -- second we May, happen curves it's can in the is in maintain strong quarter, given second

fair levels year. levels overall through industry levels we are the the half second to the maintain they where those keys are, for as good fair the the go So of

So very do unit we good can produce believe able if to that, then do we're I overall. revenues

John Rodgerson

revenue to up want really that it quarter. that is quarter, being add, Alex wasn't about codeshare in exists story third quarter. XX% talking in a ancillary it's And the second story, the as I in company exist The there didn't a right? year-over-year, around exist cost the was Elevate the third second quarter, and And just in the

through increased efficient walked being through of as all we of airline going kind utilization, Alex kind more initiatives of have. the that As an

quarter, one cost think I quarter. great second that's it was thing a the in lost being So

negotiating business, on across the with negotiating ourselves our OEMs, focused results. and the board really suppliers we As the with cost driving better

to basis. on business a and job, needs out continue do to cost go-forward the to Alex so And Abhi needs take of his

Alexandre Malfitani

remind Yes. as we mainly And part line maintenance. expenses. on line everyone, maintenance the of maintenance have side, also operating to That's a

John that, really So obviously, initiatives is by that can provide own impact. mentioned work positive our some where of a driven internal the

it of driven some by is capacity, And right?

that big are that a where in there because next-generation think terms the that's see between maintenance right? because aircraft year mentioned the side, EXs. can in plan. billion of this is from CapEx or initiatives can you line see of then CapEx BLR more more plus maintenance, the lot and really we're I Elevate capacity, the than of X where That's you benefit aircraft mainly a terms coming of is our So using numbers talking the numbers utilizing where On this a in about correlation we a lot the efficiently line and

Operator

on Moving Mendes, question, JPMorgan. from from Guilherme comes sell-side to next analyst the

Guilherme Mendes

I have fares discussion. follow-up first the a on

about fares. going depreciation back levels. the to of increased can more see So the price you mentioned a how you How think impacting pretty Meaning forward? exercise without a to impressive prices demand? to such been you do how And you leading And Abhi, much you industry between guys do X% has expect elasticity increase increase. maintain X%

second And follow-up a it's plan. the on question, the Elevate

can you the X of into the BRL if into billion potential it benefit XXXX? other quantify XXXX Or on or guidance in us help for words, year? this some included If things

Abhi Shah

Yes.

year-over-year normal Porto So already like of positive booking to year-over-year. saw I post July of was getting said, levels RASK that kind just we first And Alegre. the month really back

sort has probably think is that not to to that Fares of the would the We now. have job We continue anticipated test Our prepandemic. market. the industry

terms, on our about But the dollar X% as actually up gone slide, single fares we every showed in year. have

pretty it's actions. of good actions, matter testing the feel terms I terms a industry of overall industry discipline. seeing market. in the network So in of disciplined I'm about

testing We're to to of are And Brazil, strong going it. see us don't a why in seasonality half keep is going economic the second And be I reason there fare supportive levels. so maintaining these think activity I any very the limitation.

John Rodgerson

we of plan, had network knocked Elevate devaluation I the and just of currency offline. for our want to our you, XX% As remind XX% a

plan, in yet but of ASKs BRL to we're less have deliver still EBITDA. above we the so X going billion And

us helps incremental there, you EBITDA. but an rate go we assumption exchange XXXX into as of -- you Elevate that's the that So should when that's the remains making X get forward get devalued. billion And BRL

making to ancillary, on permanent the -- like changes changes. doing the the be revenue permanent. the The we're But they will things structural codeshare, will all with business be side we're of

they cost the will changes as On side, permanent be well.

X BRL part a XXXX. but more billion, is it's as so Elevate, roll into we're the forward of shifting the there's and And adapting, but lot in we

Alexandre Malfitani

were the but And decided right? accelerate. talking initiatives ramp-up, of were we we were to about at, Some looking that about, these Yes. things think we

to them worth all than they full of year's But have of a for are less contribution overall, going XXXX, Some initiatives the But worth are have XXXX. new. a right? of full should contribution year's then much brand to of

ramp-up so we're And year. the going do X this kind includes that the of billion BRL to

being available yet. haven't you us in what a year. billion contribute, initiatives provided But have full for XXXX, a from guidance X the We of BRL to the full contribution of terms initiatives should on should

Operator

question from analysts, Mizusaki, Victor comes sell-side Next Bradesco.

Victor Mizusaki

Two questions here.

X, Slide showed [indiscernible] basically Capacity a international you kind one, first the second half. The for that the growth in of guidance

you here given is, domestic much how travel ABRA. question you on if And demand international one, comment our the will can how book for an update model. with the negotiations my second So if craft impact the can the give

Abhi Shah

Yes, Victor.

we us didn't domestic sell to On the seats international, helps it that truth the actually have. is it allows because our

Lauderdale, Azul. go are So wanted they Fort would not on to would the quarter, from second find Curitiba not if to a seat somebody just -- they chances

period, that region. we're that a X the regions come starting went now and for Recife availability to up. Belo the to affects domestically Northeast we and Belo the in demand in to the U.S. see about actually X-week and those And Horizonte, flights Horizonte

Porto as of driver big Alegre October, back well. demand and it's having -- a international in So

actually, was side demand domestic So international on the as blocking well.

it given domestic. going having of the and our So to also network, international, John? those available, seats it's in strength helps help

John Rodgerson

ABRA, as yes, active we discussions. in stated we've As are

you'll about news not-too-distant think I the in get future. that

respect update their bankruptcy, the to market the but appropriate time. today that in we'll at GOL have the process has We

Operator

comes Sachs. Joao the Frizo, from on sell-side question Goldman to analyst, next Moving

JoÃ£o Francisco Frizo

ones. quick two have I

is CapEx. The first on one

maintenance expect guys billion BRL that CapEx only. X You in for you over mentioned

this I think just for on And if in we a half XXXX, semester. think of about So second as we should and run wanted how how It's the stronger we on we should it? seasonally rate on the cash a right? should generation, to the sense the about the following CapEx year, also get this same year, then on back first expect of half saw end the

So view just as on well. this wanted to get your

Alexandre Malfitani

But the of going orders not going is it through is year. per right? as the what that or where see, quarter. impact less flows what you're is, expense. on Just maintenance billions is within be, the to spend maintenance on you is CapEx right? But to we CapEx than opportunity this maintenance mean There that provide to on some of CapEx, talking Elevate kind operating magnitude was XXX BRL of million reals of I of clarify, guidance did is be what about the

CapEx, more talking line maintenance to often, maintenance But you reduce When that's, newer is you really not productive, think reduce and dramatically. is that are where opposed you're help we because Always going going efficient, aircraft to CapEx OpEx. always primarily to work to we then as provide Elevate decide be the a fly help number. decide EXs you're right, can bigger about more maintenance on right, when can I utilization -- about talking to think, And EXs which more maintenance more our intelligently.

we a or announced we On remember, if of as access maintenance that sovereign line whole, that kind a the also to CapEx we maintenance while guaranteed CapEx risk. ago by have CapEx had from -- a now had you

drawn facility us. BRL We available that capital that's right? of to million XXX yet, not about upon is That have

going beginning should at so the when was yet, benefit And happened look of the be year, that no to available this the this year, CapEx from you there benefit forward. line that us in but

John Rodgerson

in quarter. CapEx and So the cash fourth third the it reduce will the

Alexandre Malfitani

the consensus us that comes Exactly. expects what the that to half, if Bloomberg market difference, also cash lot expects what of us there's market EBITDA to look second And first big the generation right? a production. so a accordingly cash And generate you half it in to breaks down take a the yes, quarterly the performance a the from translates in because generate better at

Operator

The comes next from analyst Michael Deutsche from question Bank. now sell-side Linenberg,

Michael Linenberg

going here is the guaranteed we liquidity line. go of level target that's what liquidity I XXXX. CapEx question the X.X Elevate year, does BRL sort about that we think immediate maintenance One, And through of a cash as a that Or a should contribute of have as And think P&L a is BRL but impact as Is on X:X? I think that's EBITDA? as elements that X we then of that it the that? know there And as also well include on to Just side. that into other how billion. your as impact, EBITDA for follow-up. I of you billion

Alexandre Malfitani

Sure.

just main the receivables, liquidity right, does of deadline, transform that majority immediate the right? to card is is not receivables advance receivables have credit And are the of as that risk, very any are the not So provide. essentially plus That which part and and we cash. normally cash include cardholder easy into

that us. line does to it So available maintenance guaranteed that's include not

have terms we In to [ as to Where we million want liquidity, going of $XX we cash. -- expect increase revenues that between and XX of we're liquidity, last million XX% XX% and to end in grow, like between we ]. $XX to our target something months'

it Some depends on of seasonality.

sorry. Some of cost $X billion, Mike, can in the of ranges. within those elevating we on of the But then it And comfortably of depends capital, operate right? kind terms

what especially on to included some cash billion, the initiatives BRL initiatives think, in lot kind would can state in of is Elevate also X initiatives expect incrementally So basis, up, there -- contribute recurring benefit, you these they be. benefit They're once we of are steady what XXXX. BRL the P&L. a the of ramped Azul I some all Elevate are in include billion. not of X The are But kind more what in a a beyond provide that

John Rodgerson

just will go X where from I when so quarter, often I of you thing, come offline, that is mean going major events. impacts ATL X the is to sales your next it's those too, those and want one to third Obviously, on is international network as not question. in Those us severely well. to the other forward an highlight ATL those when off-line, by impacts big back have before both Mike, XX% things X airline into the we impacted, that impacts. fourth are

Michael Linenberg

-- remind maybe happens that can And then than in because there point. there something it as TAP? seems sort I'm if stake, And be sort up was of some that is Good us any, that. about sooner now going I there to what it rather only restructuring of we bringing know later. like just around you

I you what recall, claim you as just Can Air you to value Portugal? there, some TAP some remind left But respect still there. I with had us have thought

John Rodgerson

process they in process. a us owe our reported they that issue. is they're I really -- settle until million, They go to EUR today currently, And forward we can't EUR us, it's privatization owe where -- XXX think is at And are expectation XXX around current this million that privatization right? that, widely

that, are our And so us a be that there And discussions we is speak. expectation source liquidity happening year. of this as for could

Michael Linenberg

one to headline right? That's to can examine that were whatever they maybe fact a the that great. just shouldn't That's We more And Great. the X be get good relates can say into the hear. it competition is the read into did in the weeks or process or authorities it a to to code you from John, look ago, regulators, would that X, we squeeze have back, weeks few do -- formality, that's -- it. perfunctory as that I going that just a share was process. to They

Abhi Shah

constant codeshare. are in look, communication to about the talking we're in the We're regulator Yes, how we the phasing Mike. Yes, about them with markets.

given scale do our the not some absolutely And We're questions, in be ask a selling mean, codeshare, them. we're in expected plans. we it's So that of and and communication restrictions. they to constantly with continue yes, I analysis. No the surprise it, some

of process, but will. just the part So of you if yes, it's the . analysis, it's part

John Rodgerson

into did the prenotification and code them, that LATAM do in antitrust they're the there before what a went filing codeshare. I authority jointly we share looking to with there specifically but we but at do a we is, nor Mike, a went place. exact told share, respect were should code an been didn't similar when

to process. part respect ago. this We We've process. is responded of believe, so roughly days the it, their I XX And

get to resolution days. that so next And in we hope on couple of the

Operator

next now balance from Snyder, from will The sell-side question come Ian JPMorgan.

Ian Snyder

the offset and X given years in better What any very help for saw needs would we in. that what capital this year, progress working in have can sort half with build that cash next environment working us the you this maintaining main of cash we any our and Can is build good were a the that And understand accomplish initiatives important to expect In of including quarter? we're capital on? perspective, you're think working you the the in impact regarding burn? then to of the the quarter help second working on I drivers resulted you this liquidity capital Azul able

Alexandre Malfitani

Yes.

in we it demand and agree, is build seasonality demonstrated So you necessary made have that lot we of a a always business, essentially the right? this but mainly the as also, second in start lot the past right? we that selling a higher happened very the good liquidity Our is right? year, operation demonstrated, to for in the the higher capacity generates right? But of July, we What reference of terms important. half because cash, in of liquidity the quarter, will it's we've as But

to only the stronger few essentially over goes suppliers, partners, debt that It right? and years. source, our business on goes to and becomes interest It's that to cash the our don't goes mainly cash is, as a stronger. we have any to it and good it debt question does relevant next where it And go? The goes amortization

to the our manage year, we're the what Since all to about our goes partner, of we generating was right? and to cash back did talked for of that partnership, bilateral how partners. amicable of question some that the it liquidity last with with example, the with that conversations we liquidity, So goes management support

to going of always and numbers. and from going higher capacity that in those EBITDA trends of back from the ebb between in new split of the and lot flow EBITDA in generation from majority some seasonality, terms is important the kind which to help is goes you that the see in. some the generation So But part forward half, half forth of in coming second positive seasonality, first versus again aircraft the be a

Alegre, the like especially of in capacity right, international. sell the Porto saw, to then headwinds we those XQ, elimination all that of ability the lack in And lower

shift I major the you that that's capital think and come working think, will liquidity in I from there. can see

John Rodgerson

things, million mentioned that anywhere passed incremental ] That's Senate, the [ right? the liquidity. $XXX should I just the has liquidity already source into want of on, a Mike mentioned highlight I to from FNAC million week. [ this to other couple of Tap come business. House $XXX of can Linenberg ] passed the

haven't the mentioned, we line we GE tapped into yet. that As

have unencumbered business, right? cargo We an

And access I are think needs in challenging these So well. continue good we to international got is again, But we that the to capital, the Alex business quarter not extremely said, can core right? to as second operate you even just selling devaluation numbers a in overall, that of the knocked had of offline, you're when pretty through XX% your network currency. XX% see

sources still with to So the is core even capital. business strong. have access And of we that, other of Azul

Ian Snyder

you business, would the route? instrument, to cargo what what where do that could be you financing about look lessor Can trying a could equity do think if bilateral better you with ask touch you pledged I ultimately touched tend raise look that as the do quarter as on as being I But the and Great. you -- follow-up, I as where you're there liquidity one And could the seasonality. we well of touched well already National on expected Aviation unforeseen to circumstances the agree given Fund you more little than bit and negotiations. potentially to on the if to go

Alexandre Malfitani

capital gives lessors the you can to optimization stakeholders "Hey, my to that to last Because to, all XX% comfort say, me go Sure. of need we that if optimization access year, That lot when face enough deferrals, obviously, of suppliers capacity, to I working right? ability did and of was plan. I knockout our give demonstrate, have our think a and we couldn't always so capital, capital we plan right? we the our a and of capital need part our

fly That them. with would never

we at So $X.XX was kind ]. all with that of working of weren't they events sufficient that time. [ of combine exchange We that these support we and jointly the rate occurred. obviously, were an But working needed some expected provided with

rainy a so we fund. to day have wanted And

by Cargo collateral, And that that business structure vacation rainy our in use to so as used kind of preparing Azul we our -- way business. the same day fund we creating were essentially and the loyalty our deliberate potentially

set a available. that So structure it's is up. we that very collateral already similar

We of capacity hundreds dollars But have we an millions small in of think us. eventual was used to debt go things a available in talked about that kind time, it that short-term things, at of for the would the very I raise away. capital

that's we would what raise, be but what us. that's available to to Now not would need

documentation of capacity facility, kind that -- raise it when think to ]. look us $XXX debt at first you I we of of allows the [ million

comfort wouldn't we as near anywhere other there that potential good to out everybody then, And of that, obviously, like to capacity these to always all have of already. credit us. that but you is because So it's liquidity provides providing talked on mentioned, there amount, it we top need the sources are that about

Operator

come Gabriel Next from America. question analyst will of sell-side from Bank [indiscernible],

Unknown Analyst

have related to? Apart this accounts lessors. I transfers. a you us the these question some of increase that called was translation, noted give equity what kind in a from for we line FX increase you BRL the Could idea million on the a on instruments in XXX

John Rodgerson

-- it as accounting, be in a should There's recognized basically, is accrual It no FX, interest essentially on facility. debt terms the right? And it's of debt.

FX. should be it So

take can question to we not you're off-line. this If of it, kind reconcile able

Operator

from coming analyst, sell-side McKenzie, Moving Seaport on question the to next Dan Global.

Daniel McKenzie

couple of a Just questions here.

impacting trying your hear XXXX longer-term And growth potentially I its in course, at self-help change I the outlook to and also is improved on for that the you with composition. how initiatives the guys guess macro, utilization. you instability given Just growth implementing. reconcile I'm of point? And this that just macro are elevate

Abhi Shah

on have moves what we're to. would this liked around because we Dan, basis, year, less flying number than a percentage the actually

want sense, the flying percentage absolute kind what's year. EXs. of that is still some we pushes We But of the in obviously, up level the So that for important next want.

and As given the reducing fact higher to we're -- on on we're be able Alex burn well said, the going they that given EXs, utilization much very us. utilizations EX. economics, for fuel really then worked to the fly the

year. for this to see really will X with finish possible Embraer So international to come additional widebodies circle just an sit down in what's The going that next impact have we're and next has year. what have will year. full of

model kind well. you So as of can that

this. lot focus is XX% basis, on and have a of from on EXs. be the of impacts this again, increasing is of the the And no year. But EXs that's So years, kind have international reduction our mentioned EX of competition. reducing a percentage David Porto next to going utilization, as influenced grown year, of by for year our And the Alegre routes it over nonstop this we from

continue grow. we be true going on as change. And not So strong. our very where we're we even to network That's to to focus we

John Rodgerson

I off-line, Porto up. Alegre everybody's so right? still testament with look X% year-over-year was exchange the a think down, the July what's a to a in rate. different in I is big now. than actually direction RASK Brazilian going U.S. in the is at you seeing Dan, focused macro other you're the that's that And is if increased unemployment But have economy Brazil, to able Abhi what on indicators GDP in indicator is going that that And think right

Daniel McKenzie

of growth, that's getting the economic can story, terms that a corporate just that given the you're side bit how or of elaborate to of Yes, wallet through you little on domestically? share in rippling accounts either the

Abhi Shah

feel market, Dan. Yes. good the pretty No, we corporate about

Brazilian we you from our overall, share is look you of about capacity than at share, corporate the association ABRACORP, corporate the our look market. a at XX% higher from agencies, fare market market results If the much which have travel latest revenue in which domestic is if

the presence one strong And last is year, reason we market our that. network. So the given we are doubled the market. our in very like things doing which One we're agro in overachieving in now where and where exports Congonhas corporate well and right since of is Brazil. reason Midwest is expanded

go public. information. So and ABRACORP you can the It's online out check

market. share, have our the which a revenue above XX% fair well in is We share about

Daniel McKenzie

I'm point? one stronger squeeze potentially or given could I partner with potential could here with us help last around that in understand just U.S. the the here, if just and international a If if some conversations flexibility add to move codeshare wondering things the ABRA, United at you one Great.

John Rodgerson

U.S. strength think carriers think strong what X networks do, talking comparison bigger. to is partner. something of is much you're But I United great what the We Brazilian a in pale that the and about could U.S. And combining Dan.

Phase think II that, Phase I I that's so And discussion. the not a and a in

Alexandre Malfitani

But there's exclusivity anymore. place just speaking in technically no

Operator

Q&A would floor to the session Thank for you. the This now for like closes final to today. John considerations. I turn

John Rodgerson

to available to Thanks, talk you. to an talking over the be your look Great. forward support, to on coming basis appreciate everybody, days, and you and and individual we'll we we

Operator

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

Azul (AZUL) 12 Aug 242024 Q2 Earnings call transcript