AZUL - Earnings call transcript Q4 2024

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Operator

Hello, everyone, and welcome to Azul's fourth 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 proceed, Thais.

Thais Haberli

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

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

David Neeleman

Thank you, and Thais. joining you Welcome, us today. for everyone, thank

the am members Also, addition a billion. heavy to engine Azul. challenges, XXXX do taking and of each care family which of customers our of a let extreme Despite all BRL and every I I created significant and schedule in chain begin passion members them beyond, flight. tough at and crew the customers on dedication. uncertainty large above these devaluation X went other a and state each the Alegre we airlines many Sul, in First, floods our for by Grande of cannot for of thank me and year the their proud financial Airport crew them, enough. incredible OEMs, X our supply Porto challenges, around operational thanking disruption. which our by and the in for This crew affected world, over Brazil and Like members and impact closure over impacted months. and significant resulted impacted currency local was were Azul the Rio severely by were of

members Turning The cost combination model value, more with together of think a and in our From like X. unique the supportive you to differentiated our is region, we strategic different. its advantages. to thanks strongest ever crew X. competitive Azul today. Slide record would stakeholders than present was demonstrated is to advantages, deliver and I the the Azul the of competitive our to high-growth be I designed what units, our describe fleet business unit allowed to lowest Slide The with what beginning, passionate network. us network business results to flexibility, the

has demand the always Our that focus grow access to been has been market, accessed before. to never

its in our unique are many and Brazil, focus be competitors combination allows of of connecting network destinations, high XX% operations the our differentiated is they regions X over Brazil. Slide of chart, to XX% have much show how we In clear capacity how fastest-growing the airline's in X share. in cities fleet of to carrier our in truly network way located resulting in only see of XXX which where airports While is overlap, over routes, is. the another this our us each

This to fly is to as grew, are where of relevant we carrier. Azul and choose expectations strong are we clear would fly. are to we that means you choose industry competition. we contrast industry we the inevitably face in where strong, XX% where airports we we in more the with most see, at our global As deployed capacity can the leads airports This

has happened. opposite In fact, the

the would most allows whom our received like within our advantage. We that us the I a competitive even from Proof extending moments. of have that unique We and truly strength our built stakeholders, challenging have in increasing all of also we business grown markets thank. network, tremendous to our to is our support succeed

will We time the to record have long truly you over details to John set up give our more Azul I term. With successful on for to turn results. be the John? that,

John Rodgerson

David. you, Thank

are what would with all-time I On outstanding and are report EBIT. tremendous proud our we see X, crew to like We thank very and excited members. to EBITDA of revenue, record another built, an can we Slide you too quarter that

strong a X.XX. up BRL Our a revenue X.X billion record XX% was BRL year-over-year RASK to with of

environment. growth with that the quarter. competitive to of clear X, capacity quarterly RASK the how and any of and demonstration Even year-over-year, revenue same XX% we a record of at in billion macroeconomic X of BRL historically unit X.XX. year-over-year sustained down BRL XX% capacity fuel generate high-quality strong reflects metrics BRL bringing we and unique of EBIT EBITDA XX.X% prices our strength levels the revenue with Azul break can for of industry-leading margin Our dropped a This billion the a Slide advantages, of business is we of X.X and time profitability. On

Alegre full with In of in addition until to only improvements, capacity strong generated year-over-year trends, October December we last year. and reopening Porto partially not quarter-over-quarter also even getting to

the Overall, we As head industry environment revenue ahead. quarter we encouraging trends see unit revenue year of see as revenue more this a the in and expected result, will we quarters further with a gains into improvements first and beyond. disciplined

X. of Turning revenue highlight to structural one our our of competitive advantages, the another We Slide base. diversification

of Metal, to we ways growing Our finding business a outside and new what done Beyond great of unique just call revenue. ticket our job revenue the increase units have

XX% a for I results in to in X.X from billion of more profitable key highlight units of to positive making combined The creating of like XQ continue impact units quarter the Our people, trajectory BRL years and resulted some and year, a to of units. our the for EBITDA. we're very from than million All in accounting Slide technology high-margin our BRL allowing is XXX business contribution a our key growth these into grew to X, each products 'XX. RASK advantages, XXXX in business businesses to XX% investments further competitive in strong us in XQ extending XX% 'XX come. On and element our would

Our and loyalty than members increased now well, airline billings gross ex program, do continues XX% in has more to XX which year-over-year. million

the has Our best card X.X% that total spending credit of ranked country, in represents co-branded Brazil's GDP.

me card. say is the value Let credit GDP that X.X% of of the Azul Brazil's again, spent on

in the resulting in Our stores vacations of business billings XX% country, XXXX. network gross and continues to an agencies expand its in growth incredible throughout

is growth a In summary, X% XX% impressive and has revenue by business logistics returned for a full in international to becoming the of the is a quarter-over-quarter. focus key and our another a the advantage. of part Slide Azul very what is story well, beyond strategic advantages. On Our metal year and on as competitive yet revenue revenue we in international growth competitive XX, powered increase the fundamental growth element

our will down quarter impressive is X.X% which more remained year-over-year. peers. This of an the the examples next that amongst CASK XXXX. and flat. local inflation our on I Overall show Even CASK in almost by the was lowest CASK slide. XX% productivity, X despite the on efficiency is focus and of in X% fourth ex-fuel devaluation was Our currency laser driven

calls, our As our you recall managing plan business. Elevate new way past earnings of our X became a from

initiatives planning important plan, utilization that yearly X our which us was moving very in been XX aircraft beneficial our key in has Elevate and increased shows of unit into to fact, so forward. Slide has been XXXX driving it In cost. Elevate strategic down productivity, incorporated our

utilization optimizing can and by you year-over-year. handling, our left, reducing time air leading almost has of Among the and utilization this was On aircraft aircraft see to processes, ground increase accomplished XX%. how in increased other an reasons, catering

on up you at are our today the profitable more further provide on now significant performance with consistent with of even is to Therefore, On the our way. Summing has to EBITDA a billion. outlook more best bondholders, any been XXXX to units on who see that, Despite in our optimized we're advantages, the and in per operational back structural over time history cost you thanks expected comprehensive Azul more superior last unit generation. restructuring XXXX BRL will paired record Alex, is EBITDA it structure, challenges, can that the year with reaffirm in see is the path negotiated have our will history. an a combination productive gains right, With it's be have of put projected was XXXX the about for expansion. terms the growth. in terms capital details fair or that business the This to ASKs now lessors. I our brighter turn to Slide X.X could revenue that OEMs XX, position and of it in airline capital with of turn productive its year we restructuring. of growing to competitive lowest compared say FTE all Azul XX% never in and

Alexandre Malfitani

Thanks, John.

on restructuring we As cash leverage. have focused generation, resulting improving and comprehensive in reduced communicating debt liquidity been consistently, our and

Over different our the BRL debt we sheet, additional new resulted present almost slides, liability company. detail in eliminated components coming the extinguished On can being see robust capital an this capital $XXX million balance in and we that the from structure in of XX, next Slide will X.X the you have from plan. into resulting billion

remaining in which XX the is step 'XX exchanged Azul equity in preferred 'XX, the owed agreements commercial totaling The for an partners. million over XXXX notes million X.X option That the the across our these are $XXX notes billion of see value BRL OEMs a represent with of of pay present additional in interest lessors elimination to obligations. The by X.X plan years the OEMs BRL significant the approximately X first quarter first also issued being with AZULX for extinguished of right lessors for The new notes was to slide XXXX billion exchange flow being this kind. to negotiated on and cash of with shares, and XXXX, you also now part unsecured held and improvements the obligations in of later XXXX. new due

equity by the On and as XXXX of shows to we million. These an lessors agreement and lessor and started raising with be XXXX upon convertible of of remaining to will million. OEM the improved all of count $XXX once preferred Their and with bondholders to we basis, our cash notes' and XXXX demonstrates XXXX the gross of into million the also XX% $XXX XX eliminating of Given without bondholders. represent most billion with We shares equity XX% new and XX% support By of priority these $XXX instruments are the possible equivalent a bondholder of compared total shares, The model. Slide only notes whom then the issuance pay-in-kind XX% I'm obligations, will share our and notes. None notes. all and XX.X% XX, a converted lessors By be base been April also Azul's proceeds that access least the to not converted structure shares. on into well generation our notes option. financial we an before have reaching the these at to The very equitize the share aviation operational significantly were the offering, of preferred diluted fully X.X able be investors basis into notes super restructuring. managed resulting to the community issued transactions shares shall full the OEMs, count successful completion Azul will agreements, in but to interest agreements. exchanged capital shares agreements the preferred on converted negotiating XXXX moved would into of and how be business thankful. believe OEM exchangeable reach and value markets lessor this of support partners as

these already reduction company XX%. over debt XX% in the our all of agreement instruments know, together incremental new XX% of and the total this the billion. X represent instruments, As shareholder from dilution for Since XX%, a This in exchanged XXXX X.X already the debenture convertible equity to we before would instrument, the base. BRL you dilution is a is restructuring, of and included equity means the OEM issued had the lessor we which that dilution

Slide that illustrated on XX. can see You

saw including debt new the our super before, we January. X.X As we by over priority reduced notes BRL we billion, in issued

simple the implied an of over do billion. represents If you valuation $X this math,

and our to We has John? have generating margins the been can strengthened will now balance our now concluded planning turn which and and a attention strategic effort cash of free focus expanding our have flow. This John we just positive sheet discuss.

John Rodgerson

Alex. Thanks,

conclusion, successful we're the about more now our even With excited future.

already on focus a into skies, have we XX. mentioned Under even generation our customer governance. the I experience, engagement financial the with Elevate integrity, Azul long-term now permanent As major crew can will on Slide of as airlines see a we before, most fly restructure world. strategic us. new in framework our of incorporated of member is Azul operational X into profitable And and is mindset, underpinned cash safety brighter by the ahead profitability, and to completed, best plan, you one pillars

can significant come next-generation XX, and to to fleet Finally, you profitability on have into continue see will delivered. how more Slide XXXX still with beyond. aircraft We upside expand being transformation we

units business our Our high unit to revenue and continue metal, margins grow expansion. beyond delivering

answer Abhi Our we're the business are questions additional exclusive call flexibility fleet us. the cost I that, unit optimistic very unique revenue your over turn lower of the even the ahead and strategy every operator. to management and new With will the about David, to I produce available opportunity Alex, network and our in future. With secure and region, as cost lowest platform

Operator

from Our first analyst, James. comes Savi Instructions] Raymond Syth, sell-side question [Operator

Savanthi Syth

Congratulations to 'XX you capital the the on phase the what's Maybe, been current major after for Alex, on restructuring. like an completed? components provide team completing update your 'XX cash and of flow could

Alexandre Malfitani

Yes.

think Azul at Day. provided I with what we consistent still it's

reaffirmed. look real see interest. additional were what can at free those was we of for stronger CapEx BRL the X.X that and And capital, Obviously, cash today. a flow you working EBITDA provided If is the you showed, rent, bit the see billion when we components then little guidance numbers than it you the that

at time, up real X.XX, about budget the the shed X.XX. around think BRL were to I we BRL

BRL about little to currency, But X% the to we've when a past. think the you free given a just breakeven we to talking to everyone, a the flow these only X.XX XX% back cash But only of there's we're X.XX. numbers fares, about BRL from real. about at bit I Savi, here. we're headwind basis, BRL in obviously, devaluation increase of X.XX, see Now get in devaluation remind And a to right? a basically, need on X.X%

So increase about only would the we cash much especially be that to X%, which given flow right, environment demand need we are the free that would seeing fair back today. come very guidance is feasible, to

looking very sound the have we're we And definitely that's think Clearly, free we this we've that all billion collectively reaffirmed $X.X the pursue flow EBITDA. continue still right? So -- We for year, I what cash also is to think something are for. I a strategy.

that best-in-class. But to much Our forward. convert as flow of EBITDA all free cash generation generation of generation that -- is want going much into we EBITDA cash flow

John Rodgerson

focused a And is every Savi, strategic so on, of And crew are it. it's Azul whole pillar metrics at and by our right? driven the member it, aware that company is

are flow Our now. generation bonuses to cash linked

Alexandre Malfitani

so with option, debt we number that of PIK interest all of reflects the announced components all reduction, the that And equitization, that Yes. about already talked right? The this that right? we've already So far. consistent is everything

Savanthi Syth

of think year growth of the and domestic retirements? of the And of kind how expecting of we you terms then about deliveries just maybe through international versus fleet kind should kind are just And on as quarters? you what capacity, kind in progress Abhi, this

Abhi Shah

year, you of see X so of Savi, Alegre. because a first will months mostly growth higher Porto the

see So second a quarter, XQ then it of you will in kind will and and XQ. come peak down

deliveries year, terms only this the In really, EX. of it's

this year. We Airbus deliveries have no

like It this monitoring and them. on the terms EX So Embraer is have every be of its we pushing engagement we're retirements, and in the our a Obviously, is And focus year. to world EX. going that do constant has challenges. constant retirements in OEM with a

as aircraft, We some we and well. some have retirements are selling ATR

managing so we're And that.

with we're driven to international. overall were reason by would going because wide-body is fleet. get. one impacting the in international late be I to engines XX% is we Rolls-Royce we be in to had delays capacity, high impact last digits impacts XX% going in higher our largest say, of to mostly then We expecting and somewhere The that that much didn't the I early going the In And on OEM single severely X% had wide-bodies. Domestic, year the range, the year is with we the is international think we was in be terms had of range year aircraft high. then

of would about to XX%. single XX% say; high capacity around sort X%; growth I domestic, digits, So overall

Operator

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

Victor Mizusaki

I have X questions here.

regards with restructuring, the plan one, not BRL if equity. financial XXX first to there I'm The a million is raise of like mistaken, to

Shareholders' So part And the my Meeting issuance first a the one, question comment can is the ON Azul if restructuring ] process. shares approve to as about plan. of called status of the of [ this you second

this So that subscribe deal? shareholders can will we assume controlling

John Rodgerson

one and money Yes, in we're one, now. first excited. Yes, I the on is the company second the putting I'll I'll then he's think the right mean, Alex. and I David take give to into call,

And going sign share the I so part a bullish class, a that in for this something think will year's to the -- we're single restructuring as happen company about time. it's that's overall. that's of also process process of that, in right? And a

new in, a the And so shareholders where today. slight seeing the capital is doing that to controlling put at premium stock they're

also think are sign the to I and kind around. that's in -- a company they of bullish believe plan be that

let think Alex the that's the thing. good restructure. kind of talk final So kind steps to of of I a I'll

Alexandre Malfitani

Victor. Yes. Thanks, Yes.

of there So are raises announced. described, essentially capital as that already part we the we happening, have X as right, restructuring all

happening notes. capital a The restructuring, equivalent price price million now about XX preferred which of have shareholders, made more a John then the first BRL the and voting is law, company. announced, shareholders one, we capital per shares into obligations, will ONs mentioned, share, right also X.XX in putting of and of and is per which some change, right? the Brazilian lessor Then BRL into at XXXX are the money And raises part these already the and X.XX of generate as be the our consistent ordinary be is allow are share. will equitization all to then to shareholders as about which XX controlling the of also That bylaws this BRL OEM which And at of participate. equitization XXXX with there is with that for increase going preferred the

to So with they the buy They the conditions at until bondholders, equitize X.XX the All with have BRL as lessors can under per announced. and documentation, shareholders this be seen together that together at can share, then preferred do BRL the shareholders able same voting XX. buy we you've we on public already our right? that of XX, that will if to April and have is information

$XXX we much interest all all on So from of XXXX and the equitization XXXX market announcements, do the how of from then these have see is And you've will a raise remaining capital a increases. of our as there seen million. capital notes on depend XX.X% to be also that there

We're capital And see these remaining so with we requirement. we implementing then we regard are increases, will will focused the the to of and where results. all on see

Operator

question Bank Instructions] from next America. comes now Araujo, The of [Operator Rogerio

RogÃ©rio AraÃºjo

somehow regarding bit the a I is you the management number and actually, have offer? if That's future, team One is disclosed those also is of disclose saying just this shares saying at the restructuring, calculation? include in XX% first million It's clause billion. follow-on they in terms included this controller the have post shares this shareholders -- And XX% can members, of you that little -- clause dilution. share Board that a is one. the Does may the there actually. and $XXX of a in a couple there it X.X BRL

John Rodgerson

any include did that's First question, $XXX because future. happen time raise so can right? million included, -- And that in the we capital it's not not at the

There a incentive are as now. standpoint. so giving team. And yes, and management you outstanding retention shares of from the for And plan is we're management It's performance-based the a correct. time-based

as so can you And result XX%, dilution in it up XX% to suggested.

that is certain to is that are. company However, for what are getting plan for And Azul and Compensation available will Committee the defining the those there come. long-term to terms the our years criteria there incentive new be at

equity plans old all and incentive extinguishes had, to the So it team. this we that new management plan the equity is

RogÃ©rio AraÃºjo

one XXXX in that I'm million. not regarding second is if The made was a about haircut the notes, mistaken, $XXX

include? for agreements. what done in say release this Could agreements was the commercial that exchange you commercial it does in other please clarify You

Alexandre Malfitani

our a say, those And right? significant or commercial reimbursements aircraft our there conditions, think, notes. general, under a reserve example, in items So other, future. lot into relationship maintenance of selecting I component lessors then It's was lessors cash was with in let's there paid have mainly, dispute, discount with face with on deliveries. a We that were and commercial market to growth for continuing value

specific $XXX have had here commercial have the And had disputes sure million been to $XXX able that or improvement flow the concessions make future the agreements demand everything the negotiated all probably that bondholders as qualify so checked. certified lessors equitization. be full from the that of some has of agreements know, had inside as But cash the aircraft that Azul that locks kind it right, we a checking it to and of some we in has And our company done essentially we and mission, all towards future we past. the million annual that access negotiated, some deliveries of we they of validating to ] in or -- that the settles for some FTI with you [

Operator

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

Savanthi Syth

I was a there's on if environment. provide Just, know a noise. current of could more Abhi, the wondering color demand you I lot bit little

both Carnival business do side I think But timing seeing kind XQ, curious you're comps the leisure and the up. coming of just great but here. easy the on you for is have demand not side what also

Abhi Shah

Hi Savi.

what with January we've surprised and we've especially seen February. actually, So been positively

overall a been sign. better positively They've with after coming surprised You're and reasonably well. you environment if expect discount February, than then we've actually been a right is you see Carnival builds. back last a kind disciplined which would lame February first of But of kind with week actually demand We in corporate of will, Normally, as good Carnival. revenue March, the duck right. year, close-in

looking or corporate see our at sign. very looking So disciplined, good corporate we travel signs to for pull quite been slowdown see demand in-person and of a agency of lot of a trainings is kind of as We demand. good anyone which lot that's conventions, a discounts, has well. discounts, we at trying no see groups see We customers, demand pretty corporate Talking back. to which

So -- for us, our more than been operation end and it at of side. especially stable last has on international the honestly, the much year, was

disruptions And positive so less having us, as for sign just and less volatility has well. been good a really

So what overall, seen I think January, I've in been positively far I've so surprised with February.

Next is Carnival. week

to going it's But dead. March do XX strong and expect So we be corporate rebound onwards.

say, been overall corporate which has our discounts, a been sign very I well. disciplined as So overall good operation has And would also. disciplined stable, environment,

Savanthi Syth

I any between domestic international? kind of are seeing If versus differences you might, just

Abhi Shah

it's International increase interesting And back because international kind a stable X.XX, booked good. little ahead to strong and had the coming Europe bit little were look Europe, normal holding frame, But But Northern to now see U.S.; see as little of of very it bit the either. we U.S. continues we its X.XX a looks kind in because time it Carnival spring was and seasonality, when the to really BRL strong in weaker. me. The capacity looks actually. summer, we own. time a the it the too be frame went of even good. currency a We've at And for slowdown BRL didn't actually to bit we to

selling, announcements a and we down of the Porto. will have coming already announced well. couple we That's to a next as more pike of weeks Recifi So couple

We're and come -- Argentina announced the Mendoza to about back also peak we season So excited for Barajas. here. winter

hearing kind strong, pretty that I'm international, around. the I think, overall, stable of So commentary all

Operator

Guilherme question sell-side analyst, comes next Mendes, from JPMorgan. The

Guilherme Mendes

in So of some and proposal and of the share in the second regarding in [ analysis remedies? synergies synergies. the revenues proposed And I timing terms can M&A CAT GOL, you of what potential capture the for timing the the the on one with M&A to mean, your is costs? terms for expectation ] terms of expectations regarding

Abhi Shah

Guilherme.

So we're the you highlights cannot and we obviously, you main will see to here. and as too propose, is the benefits give quick to So consumer comment the publicly really I in right? we tell But that Brazil. analysis we much me just technical confident the what what of what let

connect when and to think comes build comes destinations, it be that, that will so that when can believe of right? driver to in is, Brazil, Brazil, international capital. be we and right? it when Azul's that think network when well. to overlapping have comes really, Brazilian We cities not we many key an very is when critical we very, we And the networks that to key to going to future served, have significantly the we not this XXX the can GOL's market element think a network, and OEMs, get are do should of example, low First grown have very look low it right? between overlap overall those believe at engines, able the that's going we we last We service years. that adding growth. overlap a We for has compete is want And for also, case comes that as And on that complementary to it really here cities to to we service. growth we of are it that in fleet, a are these think more airline technical to to to keep together, to So really is access growth market to globally And that growing. case several

benefit coming from and forward. So that that's all of this, significant case case. this, we see think, technical We is the we're putting our consumer

Operator

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

John Rodgerson

hear you. Mike, we can't

Alexandre Malfitani

Mike?

John Rodgerson

Yes, any get Otherwise, him. to back other there can't to I we're can hear think try done. questions, we we Mike. move on. If We'll are

Operator

Okay.

John for today. that turn so to we closing remarks. can now Q&A our it session I'll this So closes for -- over

John Rodgerson

I'd a Obviously, like Well, to thank everybody. information. lot of

think, Our cost, happening, will close right in lot margins, A great going to Alex, you world forward. talk myself I Azul Abhi, about IR lowest highest of available to the now. things be to team, EBITDA

very, And about the fixed very We so now. sheet the future. we're balance excited

of business. races, going everybody. we're stakeholders, and very Now we profitable a support Thanks, to appreciate the we're and grow off continue our to to the all of

Operator

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

Azul (AZUL) 24 Feb 252024 Q4 Earnings call transcript