Azul (AZUL) 12 Aug 222022 Q2 Earnings call transcript

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

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

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

XXXX for Welcome thank Thais. and second us call. you everyone, our for quarter Thanks, earnings joining

flights. We flights revenue a -- is to crew our airline in XX% achieved tells you always, most year. above levels. the other to that of the the fastest taking recoveries daily amazing. care line in remind and me I'd dedication. our and more going start pre-pandemic of I of deliver to what that world October, is in is quarter X,XXX of our is would the seasonally quarter top As Abhi to only and one results Azul record know I the has crew Thanks like one profitable like weakest X,XXX members a each thanking number by members for by customers second to are

we are largest terms the departures Brazil's XX leader XX% and serve added new network. Since XXXX, routes strengthen in destinations. our continue We're in and the markets. carrier the only We to of we've XX% of of

continue future network us our Our makes strong. and focused will on and is laser growth what

over employment, development links contribute to and Brazil's Our promoting trade significantly service over opportunity, the providing tourism by destinations XXX all to country.

Our four. capillarity the fleet, in right by and is us deploy can unique right you networks the the time, supported at enabling aircraft on a slide as market, see to right flexible

news ASKs. of the we more ahead quarter XX% developments. in you runway and the down As higher representing can X, to see our about could our We next-generation margins, the environmental grow The coming aircraft commitment our largest fleet program. and region, program, Slide next of on week This our drive with ended fleet be be the the and enthusiastic on the continued fleet continue not reinforces in resulting also transformation fuel-efficient profitable. more in efficiently cost up-gauging transformation will will new ability

We ended slide I'm by team. whole quarter the airline in on-time proud I Before the wanted it in to the the end John, world. I five, of the over on-time showing third Americas to as most why so and on most this hand

and are higher they've Our ever than industry-leading scores been. customer satisfaction

Brazil's generating when of aviation a than more a compared a serving FTE airline per before, future finally, more of this generating achievement more efficient incredible entire the I'm by confident XX% while ASKs, XX% about XXX than And market. truly All is destinations. to more the ASK team. XXXX, that

to creating ability the Difficulty]. grow experience our [Technical for best all Our crew the profitably while members

the to yet the word give turn cash results. flow I to on billions come. over generating will second from operations, incredible the have best is an created details that, and We quarter business, to John of and is With you that more billions

David. I crew want to Thanks, our members. also thank

As share you these to today. we're results with of a able work, great result incredible their

Slide second see once As six, the again the on quarter you business. strength proved can of our

of Our same continue growth was in year, bookings last grew than This strong all-time and BRLX.X respectively, XX% of to PRASK forward. for performance our a in top an revenue environment compared up seasonally any billion, direct XX%, what revenue more the pre-pandemic XX% total quarter RASK levels, in compared is going the weakest even line to year-over-year. by trends positive with the period We revenue capacity see record doubled, in reaching and to and history. yields revenue second impressive quarter the were in is more Even our was in quarter year. network. that and XX% result our demand encouraged a the the achievement

As our the see same XXXX. XX%. Slide EBITDA in can million representing the above period BRLXXX quarter, been almost we on would hedge accounting, EBITDA in reached seven, a use of the BRLXXX million quarter, you in XX% our If margin have

the hedging of was the our devaluation the currency. repeat, fuel than Let local including fuel increase higher is prices our including the jet This in and XX% gains, XXXX. for me quarter EBITDA XXX%

in to efficiently While our we're we seeing also a manage costs. continue very revenues, positive trend

year period you see Slide XXXX. XX% versus last dropped ASK XXXX. XX%, last second quarter and Fuel year to increased in As ASKs for compared quarter XX% can full-time the on per measured second and productivity eight, versus versus employee X% consumption same a

as today you to and you quarter, liquidity million and forward. our the driven can a ex-fuel fleet that strong what nine, increased mainly by is BRLXXX more capital productivity more exactly quarter fleet a going more XX%, operational CASK cost our driven Slide during second Our we'll XXXX, On a transformation, get see Compared raise, We that efficient we're performance. that reduction and efficient to is by made doing. would immediate our decreased fuel without by promise efficient airline continue XX% emerge XXXX initiatives, we to gains. than

Total BRLX in quarter liquidity, expenses. immediate billion. more Our liquidity paying after BRLX loans, deferral billion even surpassed our leases, in remains at we interest down the and inflows than billion strong operating billion with cash payments, BRLX.X BRLX and by ended capital outflows

the Slide we X.X our year points. reduced X.X quarter puts on in the in leverage to you can a starting us the points finish XX, with see to points, which X As position good by

region using in is Our rent operating seven lowest leverage even when times the when the accounting for leases.

is As through enter a next-generation the aircraft Azula could fleet aircraft XX, largest of fleet rent the in quarter. already Slide strong since see the trends And as that you new reflected reminder, increased has booking and the our liabilities region. numbers. continued newer lease On your effect in

well environment. us we're seeing On what never up us It's in XX, the is you these continues how services been cost the fair high advantages Our see that demand and say fares. and average network year. for trends of rest bookings positive allowed stronger. products the This to trend to adjust can quickly has revenue now for coming and to fares set so record Slide Azula's volatile at

As and I a mentioned, fares, and the rest leverage our at This combined XXXX. recent operating fact. the we're of average gives opportunities and fuel, highest favorable in into currently bookings with you high XXXX the the history margin movements of for sense seeing in in currency

Azul leveraging the advantages, flexibility the fast Moving network Cargo, on our to competitive and high-margin of our and is TudoAzul growing, contribute further extend margins strength our our businesses units, expand of industry our XX, business by Azul fleet. Viagens to Slide leading

well to business XX% growth perform with quarter XXXX. cargo pace billings gross continues tripling almost maintained during impressive ex-Azul TudoAzul second Our revenue, up a year-over-year. to extremely compared the strong with an

to XX%, had benefiting Azul compared quarter. XXXX remarkable a flights. increased expansion the Viagens Revenue Finally, dedicated of our from

will pace operate this over Azul revenue quarter For billion for this Viagens. BRLX generate business well we upcoming a units X,XXX on is in example, had and one flights bookings for of to just summer these Each each year. season, exclusively record

to more regarding on of be airport, by departures of the quarter of of development XX, double initiatives ahead along competition directly next capacity team. XX, important encouraging at Moving few than Airport. couldn't Azul increase decision that its up very our with The Slide new years. the the airport, Azul daily at combination proud these distribution as the this privatization through wrap agency our -- is during positive at the Congonhas an this Slide slot and ANAC, this rule believe in the regulatory another was Azul over entire We customers. I To made benefiting the

as work. environment plan and We're most noted. an airlines David Americas, on our the on are been fleet stronger. members has us We the incredible love our to love and our demand operation fly transformation We're executing the in time running customers never crew their

revenues it With your as are units we truly efficient that, the for opportunities business more and all turn about are airline. producing a questions. Our over We're ahead of us. record excited will emerging

moderator. the If we're hear you for us, waiting can

now The with gentlemen, proceed. go question from Syth and James. Raymond session. may first Ladies comes you [Operator Q&A we the Please ahead. will Instructions] Please Savanthi Ms. Savi, begin

obviously having Savi, call We're a us here bear can for again? difficulties minute. you with with and so go if technical you some the just

Hey, could you me? hear

Yes.

I Yes. now. can

around here? and Okay, levels you happened not recovery on share demand curious mute. health the how what fare sustainable leisure is was could just there, Good to not of I talked just the the just that everybody, understand on momentum great. I'm And corporate maybe -- I'm about then and sure John any afternoon side obvious if demand. trying color the

quarter, very the now. demand Yes. seeing XX.X% RASK increasing right performance what's on very XX% overall Hey of happy the more exciting what obviously were increase, levels. actually is Savi, ASK Abhi Look, here. And it's in Yes, indication strong second absolutely. even a we we're with a

very, good have So the highest it fare example, coming June, just half for summer and terms bookings than is and higher weeks -- been did July in you Corporate leisure travel, so people strong. bookings, holidays, last indication I'll has had is that as an the strong two very give actually even the our It's Viagens back second it's our it's the business, looking post two which Azul is is market the really the well average July been have the in of the strong. of history, ahead July though vacations doing and which as the month come actually leisure year corporate last back season. in a weeks, already that example, been the in and as

about XX% -- XX% revenue and right corporate to corporate We XXX% corporate in volume corporate about plus in between now average in breaksdown are fares. XXX% revenue over in

great is business now there to higher more that's the strongest. of been, than Lots with second the corporate at highest Group's volume is So, is revenue the seasonally the which happen right medium and half year, been. our even in revenue is ever ever small still our recovery, it's going events, it's that performance of

which of data, happening most and half ABRACORP actually in fare, well. Agencies, the the highest June, great revenue And movement. you of is second corporate cooperation the in events of of we of the at of three lot grew Corporate look year the So Association which lot a if had as our already the average the Travel And highest airlines ABRACORP. the was

even seeing in fact, testing any and in fares you an traffic think I when XX.X% what for we're is load traffic so get to our talking of pressures that July, not next And with internally the to keep having let's foreseeable we sacrifice factor we're -- for terms market. include the And so the teams had in future.

terms demand seeing in very average be the we Let's very there and in more how because looks demand, see there of is that are more strong sustainable. fares, much are very, how fares is to average of terms much

you going I momentum we given above. gives is are the that last kind the fares which is the and if of up X% week improve XX% given So and seasonality, fares our our above, of the support, dollar well the down really bookings can the how average of heating was think for XX% compare before February, fare finally, war, an macroeconomic and oil you -- week And and is idea this much everything forward. set

encouraging. That's updates this And that in I might, no was very helpful if there EBITDA call. and I realize

thoughts related you have volatile been thoughts that's moving to maybe target But have a know and updated moving that? if Just financing any there the any curious, things given parts. and curious I

forward. debated movements lot and the in heavily second We Savi. lag fuel is kind up Yes, price it obviously a fuel in quarter pretty and when was in there a recent of they this now kind that this right to as strong benefit. come-off revenue see going we're as But amazing the want feel ever having we, of, we performance reiterate and we about business and

today about But ago, in And business, so an that year we has election to beyond, so want nicely number to we going that XX changed. BRLX fundamentally very days Is there, XXXX strong be for I we just changed put below that? good. has business don't the are feel half feel be billion? like about to Is feel that. nothing think it from still away have strong and the we fundamentally We're nothing very and slightly far going up We not away, things overall. a us sets and where and we're out given our we that and very to

generation now the weakest quarter that strong that the is the ago, right. EURX, significantly is increase was lot There prices things concerned when to we've a we to positive I fuel never real a that. fuel in with quarter Remember $XXX of testament lot EURX at is EURX a of just year, the of to at business cash EURX, fares. were flow I have so barrel, in before the to think is this the overall. seen on been years seasonally Brazil, about at a is had And that think real people and XX focus how able in been

on year, cash. us some not Yes, EBITDA that's much that of how the today the and are that's fuel, with mean a on I this This that kind of we our a around, right. right, have steady-state, you of EBITDA can about talk XX% generate see We high-XXs, is much our happen, would when like size exactly the you state right. actually know nailing Alex. with agree EBITDA, but and think call of and in to you business, of the is things when fall profitability going but last this the in BRLX earnings the challenge. I lot recovery have that you, within we billion in obviously invasion, potential, two a everything hard that the you business our it much of years kind of can see what shift down your in that a it Russian a calendar year, essentially we with with some We we that us of had operational pandemic, of had when And things admittedly models, much Savi. how generate of year. we think had low-XXs, that And is we we We steady And as day mentioned. see of

solid really our to we has full guidance said John like So, it's shifted three much think on I our very EBITDA. we're the proved right. to mean, QX increases fares. discussed track. in months six We everything in a probably business very can else that can But is lot, about And our capability all EBITDA access the and or remains that's we generation proving we clear cost through cash I though that financials. and pass

Appreciate that. Thank you all.

Savi. Thanks,

Milberg The next question Josh comes Stanley. from with Morgan

and Hey, everyone, results. the also thank the call, congrats for you and on

side. that the just you're payments and to BRLX.X touch ask billion is little today. Alex, looking different status But just I I And and you're the touch suppliers? highlighted to the question United? over think on for leases, would payments, you and of of funding deferrals the on funding for And in address great. you the in code Just lessors other could share a bit deferrals detail of that update and the to be to wanted also an options if a give question could more items, the If with related could at on this of you -- little also if what relates you potential will new and this expecting Savi's on year remainder the

of lot our the make They because we money to we we about that spend think can all count of can days, is would don't think count XX to up of adjust reference, we they're then will capital. from our can together available to our the Because, time that you And If a They not today. the side, are the if And roughly cash that forward. money go can days, go suppliers of markets, a reliable we We of gradually conditions including the demonstrated, that's gave lot available certainly we do. they Then future. cash partners. can we The circular talk days, us, that's Sure. the the banks, which from think don't to need But would this us, our payables suppliers. beginning they that which can main go we'll got or that But of significant access we we from I Yes, we lot want and CapEx we If be. around guidance of lot access right. support can generate supporting Azul. at that we which capital bit capital operational need will a by and generate think we converge are, do we access on about main to that that source know are some we'll sort today where more pandemic, flow than to will Obviously, quarter is if to and a to avenue, cash markets payables down even we which EBITDA, adjust maintain can going the prepare then capital demonstrated we us. that thrown working a XXX heavy we at capital. more a the the XXX, have. on if the spend, of know because generation I much would CapEx up, right? for United. cash on XX and right, we've source banks pretty like need but we of not to we Josh, capital markets I we were of our then make in down this EBITDA, a less I we -- suppliers can maybe adapt whatever spend is they the expect,

access. know And so we that we can

think the oil how we -- I could We with happen So of we past [Technical demand the is, war more I because Europe. future, saw answer, with it's the thought -- all come nobody the in underestimated back. Josh, we forecast could Difficulty] think and on in in the prices what quickly than

the to from in past clear it's predict happens, will to going especially need that happen, we whatever us to access from whatever for will the we I hard it's future, and think this but is what what to cash So and be happen able quarter need.

Josh, I If Hey, right? of billions immediate And of a in of right. going More a or it year very tell than you, position thought what have couple XXXX, receivables. XXXX double billion points. we positioned forward. want to be would was showed were and we business were We I reiterate I in operating if This generating include just cash you cash up to is today compared number smoking was our XX%, flow. you a BRLX XXXX so going in good to the to something, ourselves XXXX, in liquidity,

And so above very in business our about analysts forward. and we any going of expectations we the delivered of feel revenue way strong terms

I think ever bullish are So bullish on I think we're and low our as as end. this very partners

I everybody's model in the the way we flow quarter, beat showed second well. think as it cash generation

no eight Remember, about months execute. with feel we right, to And went our through revenue, and it. we strong a we can't period very through so Josh, of ability

fantastic on got have results, is our a everybody crew feel -- that this is very about great a go-forward members delivering around, engaged, on-time rallied members, our basis. We we that's unbelievable had crew performance, kind business good of delivering so business we

operation raise a itself we so, will And to to run care of as take continue revenue. and cash continue great

that is so we're As see a strengthens Spirit, happening Fort for out partner stays our we and Airlines, ours, also a the has really partners our talking there But partner fee of comes right? happy what's time, we're important long-haul United to. think still has a going into with as lot of great for But great long add we're and they're that Lauderdale, ours, other flights I continue in with talking Lauderdale, network partners. happy we're to We There United there United place, to them. of in been codeshare it, it. our in partner with international to been a with there, Fort that talking JetBlue is

Okay. Great. that you color. Thank for all

you. Thank

next question from Credit Zamacona comes The Suisse. Alejandro with

Thanks Thank you. Abhi, David, Hi for John, questions. Alex. taking my

yield the what an see environment, also reflect higher to half, I it yield any fuel considering 'XX, lag and do second we usually considering that stronger there and even [fuel] Regarding the that a costs normalization fair for in is beyond cost to can is pricing mean, you have (ph)? expectations in expect eventual

Hi, Alejandro.

high good will seasonality bookings at year. by lead the in Regarding we're flow second supported high the to at And revenue half pricing environment, fares the also fares. great of

of in towards fares in recovery, and that demand and possible higher booking we're corporate flow yields average seasonality revenue, the very see So And will higher much terms environment. that's the the what you certainly in of XQ. and yes, it is XQ

the of that activity will over definitely the in happen six points next that. Brazil, All economic months

very peak seasons which supportive pricing a in So very, our year, -- historically into of is is are environment the it's summer, current improvement the a further of and best environment. this pricing our spring and the season, which we getting even

and cost you all we price the currency screen, on seeing oil And between jet prices on lag that of know, what the as is the pay and the there we're for Yes. a fuel. terms side, in

or downward peak will we fuel our So, if way a August, then see improve fuel will even what in everything jet July now. from you are. they where prices, can it and But prices assuming stays is things right see from trend jet the probably be

have going could second place. to going and up the environment So fares prices already have very from environment due positive in a the demand and strong the favorable fuel that with seen improvement we we half seasonality taking down the

Yes.

do if you question XXXX? any expectation capacity, have for of Okay, I in may, preliminary terms then my and second

Yes.

do you XXXX our something plan similar going to can in expect but to haven't we're XXXX. We what versus yet, closed

between over expect XXXX. We something and finish to so similar possibly this year XX% XXXX, XX% over XXXX

of Do something in you similar in terms or capacity, the terms of growth? of terms in XXXX mean

No, be growth, similar XXXX versus XXXX XXXX. XXXX will versus

Yes.

I it we'll low the in nail if kind need somewhere fleet essentially next transformation, provide and to a if rent generation it firmer -- that's old still of generation down still jets would guidance. generation remember, a So think -- But think teens, more see be assumption aircraft. a of we our you burn working be some with we to we're going replacing, They have the old jets. with lower fuel and lot than they seats, less they have I

increase the fleet essentially we stable. So capacity can by keeping

utilization see more higher seats aircraft we will could provide. cost fares those even unit of assets You get with we the flying, and that these stimulate will lower can

Azul happens we and something in from excited markets the most the it's all the we in not growth other strong. from also growth really from it's going not our up-gauging of of where it's So share we're And -- stealing growth it's about most very the they're are that, competitors, comes and network, flying. the up-gauging. to of already It's

Thank Okay. you.

The from Monsivais Barclays. with comes next question Pablo

for some on modeling you But -- just to wanted your guys. for provided I right lease that cash number, flow about statements. the a quick next have taking I shed terms Hi see the the have And were I payables. question. see with I my of purposes that's talked in if Thanks and on we purposes number question the into in financial that have to payments year? lease for light remember some some negotiation Thank I that Can already or you lessors. about you think deferred you. payments take just should consideration. we

Sure.

about, state rent roughly under exchange, I our steady these BRLX.X size way, think just to I think the of foreign is way current it's think current and Pablo, kind billion.

because shorter shifting we year, actually big wave from a with than see pandemic we we going When impact of number a a You when time of lessors, big into with negotiated big was we there from from that, second was rents second extension first negotiated shorter with COVID-XX. that the because we will pay assume XXXX wave deferral negotiation a had the more lessors, essentially wave, But negotiated a the this XXXX. the didn't which obviously period we're for a happened, time, second right. some where

So we're Because in XXXX deferral in increase we that BRLXXX billion our steady and the million, leases we're first going start right. XXXX will pay in of are paying paying what leases, than we BRLX.X paying already by million BRLXXX to which more state roughly to XXXX, about

paying I think should BRLX.X So way annual roughly, year essentially year billion this well. model next we're around as about and That's BRLX.X to good paying we be billion the ramping. a

your And environment? Thank following behavior? think some some you, more of offers rational I the and if seeing been like have Or the you. fill charging is, and do of the -- just Perfect. may. you about question deals impressive. are competitive I actually asked have may lot take competitors mean, I they seeing advantage you another competitive your the sustainability I question have the guy mean, we a that very a is you have are share? actually to How be other of market

Yes. Pablo. Hi,

the I overall is competitive. industry think pretty

to all all of what's airlines I the think do that competitors, are of right. the trying

within I think February within of of networks strengths. mostly since has in what actually. remarkable the has that their end own terms their And the -- industry great been of start and think and fares achieved I

do changes we all we the that we of we can always and if ourselves so benefit time. those it alone in network, to the have so need do our We much are

them, for so, be been we're pretty I So And we own to are destiny. that But controlling here. less results think disciplined. I the on good industry our think in dependent we'll has I overall, would say, all continue looking

want say XX% things And crazy don't that NextGen given right? than that from of so type, less anybody where higher We're position, fares, after hostile is add. do fuel I to significantly think that, interest are competitors just less because significantly the to our And environment, guy right so and would hostile need They privileged we of their than and plead has because going you most I Pablo, because coming it, kind it's a the fuel the if they in our ASKs we the environment in a in not aircraft, And they that. significantly right? aircraft and doing don't are NEOs market EXs share, today. best see are have

you Thank much very clear. guys. Super

you. Thank

Seaport McKenzie, Our next question comes from Dan Global.

Hey, Congrats on thanks here. the quarter guys.

of So accounts you year, the the pricing, back a finer cash, yields on that in then quarter? of a the sequentially point to the put questions. kind put Can been in point stronger get profitability fuel you've And half excluding on the receivable. to prior fourth referencing finer just the

So the checking short-term so do investments, to end you to year? where expect cash in the speak, account,

start of ticket ticket already right, cards. in sell we've in me We sold Brazilians are close money congratulations. cash card so for doing that need. model we we the fly really said, receivables, that at waste transform found But card was credit installments, can credit That don't paying cash, the that quickly, like revenue. I buy into our by of interest because -- very and that looking tickets we those credit I fairly by Brazil, that of receivables and expenses majority would Let a thanks my cash way familiar the I are our you tickets the receivables that lot because with flown we've cash. the think in I just once with in,

had lot calls, what in won't we that bank which going percentage the account. EBITDA, Investors we cash the more depend morning if to I'm carrying to call points cash the you actually will I some end risk-free be of pay oil if as have and getting need cash by can to pre-pandemic. at prices. ended actually year X in money when I in a But my is remember depend the So think start rate of the some percentage before mean, points, a returning or a on cash If XXXX, X had the have from don't so dividends comfortable lunchtime, I we was than where we previous and will will that, paying position much do we on as feel that of above, to right? and I will position the do the we're mentioned that, cash And that may pandemic not We if we were been suggestions we shareholders. were We've I that, pre-pandemic. right. we roughly

the position had we cash that Difficulty]. was [Technical pre-pandemic So

if quarter it is after cash then, So a we the very much can end position. any as with healthy have pandemic, cash we as

So --

XQ. we then We're X.X in we QX. QX just were to highlight, be XQ going as and And down again leverage down into go turns into going to into

of use right. to is the so cash deleverage, the And

cash. And I earlier, generating so as amount the is enormous operation an of stated

any and to cash a uses is So above beyond the of cash. is which deleverage good use that business,

mean, the that goes billion you, kind delivered right. EBITDA the profitability I will question, Yes. tell will EBITDA XQ the of And what to if profitability be. BRLX on we XQ

the our our year, think I seasonality XXXX be of kind short-term to terms to should of we the much. is saying XQ of everything exactly best that XQ in profitability. be difficulty because leads in demand difficulty with because the quarter again the in profitability in year are normally and But that the is quarter going strong see of how environment. nailing best down up Fares points

in where and are, will in stay be fourth what FX and oil paying we from Assuming fuel we QX the QX. be that down quarter prices paid will they

very should very give which to momentum QX, a profitable that well. point us should So as XXXX into great

So we're very about excited that.

to quarter And the win the World as Brazil Cup fourth is in there. expected well

excited we're happen, that. that so celebrating after So we're about pretty

lot to announcement In week. coming drive for transformation Well, thanks it. you right. script, a I fleet the Yes, next mentioned that. the profitability there, appreciate

be retire many morning. and it flat like order. not tell, the it And this I'm aircraft It's not XXX How is, the correct CapEx looks for on sure should best can but there year coming statements how many to statements, what how is that as does morning. XXXX? the script I and the firm in plan financial I'm with that in my looks do you quite And in triangulate But about are imply next XXXX? how question are this 'XX guess if CapEx? like So numbers financial growth to sure many from next I

what going interest accelerate in to You and looking our be that's Dan, transformation best to fleet know, at. we're it's

So there's opportunities the market. in

that returns of going lease lot aircraft next are have months. You know, do we XX a to the over

potentially was so head that's there. it David we're that. accelerate ways And himself looking pushes what of always David to and at referencing us kind And gets and

but -- so And there that front. is of a on good news lot

up So net-net, the But couple us about more same further right? next maybe see we're as in advantage so, shelves. again of market. the or And said, we going pushes ASK competitive look aircraft, lot there, a Alex to with get more in is into which XXXX, to I next-generation our a think as flying generation, you're

think that I Yes. And negotiated during source of that's we the another pandemic. flexibility

keeping the we're think fleet comfortable I constant.

deliveries, we firming we need [Technical have and certainly because time, we our a to can of that, we see ability think aircraft to us And as from we that the is accelerate keep order count don't fleet for And for to constant. demand to can then up the demand Difficulty] capacity. long then demand There we with know enough book. right. I period accelerate additional overcommit

increase a I the easily be the right demand that Difficulty] we that's ability see to short possible to but think So manage ASKs, have way [Technical out. once in ASKs demand in rational volatility firms essentially Brazil, very can

we think Understood. CapEx And then how next about do year?

Yes.

in leases, cash of regarding no something you maintenance think aircraft you -- assume essentially delivery outflow all be and CapEx will if XXXX to this that operating most I our there is so the deliveries. CapEx, think of year flat know, I those -- is XXXX

we're And that CapEx. so talking talking about about really it's we're when engine maintenance

year. this flat something assume can you So

financed A can as of be always that well. portion

you as need something that's keep your think to model I well. in that

Great Understood. Yes. job. for the Thanks guys. time

Thanks.

you. Thank

Michael from comes question Linenberg, next Deutsche Our Bank.

actually for the to great quarter. of progress Doherty is is year And and then questions the this by your maybe taking below achievable has you, lot last expecting gains Mike. full-year. for combined you XX% would 'XX, growth Azul were side. made this Thanks on Alex, macro be know happened Yes, a Hi. cost next that time the since that Obviously you say that thus rate on job as on outlays mentioned you excluding to this levels unit Shannon target for cost and the this fuel around has XXXX think far the with kind my for one I XX% year? you before, savings productivity but with for

Yes.

get think we I the is So there costs, each certainly said, going further transformation. on can improvement pay unit our less just I ASKs, fleet rent more than Like by to they we're that leaves, generate in, that have as seats EX comes pay and productive burn on less well. more will each that they're they we they and EX fuel, on more

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from fleet us So pursue reduction the and unit efficiency can around to count can on cost you transformation opportunities organization. continue other you count on the

highlight, got helping are crew deliver very to us just members a we've experience. want engaged Engaged I fantastic members. crew

problems having fleet we're than look a and Brazil at XXX operation diversified in You what type. with now, carriers the the are of having, running the see U.S. right the are for cities European more carriers great

of a in we're Campinas. And new couple building hangar so things,

because we cheaper in-house things bring more the Campinas, benefit at can we have to all be hangar we're going our us work we again, that done, to cost. is And there saw of much provided that so for in do that more a

working having people to very airline efficient just are and a that going so provides I much think opportunities engaged for us, it airline with forward. additional more this And make great

are Sao has Got That's on quarters? is the strong the it it. maybe slots helpful. John, Abhi a to Thanks. but And I expect comment downtown a get or to you Paulo, coming additional airport to or understand you use Congonhas years that in how over busy foothold. And plan you able also corporate to

helpful. can would that be you So, add, color any

Shannon. Hey, Yes.

you don't don't access those currently haven't finalized but -- to customers We like fly Sao our connectivity that connect can downtown obviously to and large too. flying network, we'd to provides hubs, Paulo destinations have. the hubs, that markets our our now expect also to we because And business today

of so will be And it combination a two. the

very hubs much our further large the in to our also flying Some some that strengthens business network. markets, but

went several add, experience got into could just Azul we've first if time, for we I the when customers Shannon, Congonhas. Hey, that

they they TV. willing the the experience the fly they said, program, other loyalty Lauderdale, to they card. free to aircraft, I'm onboard to Lisbon, WiFi, product wow, the destinations, to they they get Now Fort out credit gets to go your snacks, great Viracopos, I'm fly go the into willing And your

And becomes us number I fantastic so And is as this people going think that more you expand that's one Azul their Airport, airline. and the Congonhas for more forward.

guys. Thanks Great.

Our Newson, next Felipe Citi. from question comes

thanks again or Hey morning, the guys. for and afternoon, Good taking question.

long-term expectations medium American on terms non-ticket So cetera? opportunities markets? revenue a TudoAzul, like And growth of expectations Cargo, generation I of have and some second on could regarding is my South revenue, share two is you in to questions question side. the Thanks. M&A One possibility regarding on in your more revenue et those

units Yes, Yes, I business with start growing for our can faster part. the first airline are the Thanks than question. the overall.

go contribute tripled dedicated actually And our way meaningful service. XQ'XX Embraer they we from into to started almost for put EXs, to XQ'XX. will Cargo, a so And continue aircraft to our in example, more revenue we've in as forward. just

now. have we'll of have And pretty more right them flying soon. We hopefully, five

customers a are starting example. we're to large with before, as and as could to be said well. excited So large we've opportunities, for is there a air, goods road And we're for There Shoppe about other just started those lot of example, market. those onboard we converted

excited few Cargo average above think that, to continue and going we're about to be the So years. is for next we that growth

active users, Our loyalty engagement, terms of a XX%, of lot in in had are July record up our program XX%. billings ex-Azul monthly

points. other allows We'll for this versus redeem been the pandemic that be as so pairs, to customers X,XXX so doubling is We it's times And to the network, coffee that back fly think has they're bring year the trend almost to as we And lot have for far a network, those And and our were before, network aircraft back year vacations seeing just lot us to of on city have we've the and this business. highlights that those of opportunities. I weekends, travel, saw of continue. those new our this now XXXX. summer engagement this want in new going opportunities. machines dedicated redeeming said probably lot bring going flights season, a don't a they as airports, redeeming we're And in international and we we the

overall Yes, So I accretive going to it's keep so as grow well. rate ways think in other the than a airline are and very at contributing. those businesses faster

Yes.

now the new As keep have to M&A, mind generation better in plan, XXXX. felt in airline coming larger in for the about is standalone was fleet XX% revenue our this this it Congonhas terms airport. We've we've got on. never than access We of

going of as seen So Latin we've we thing very airlines are in market, moves in healthy. good right, that will see very opportunities, exists things, all the always are. and the good in feel think forward. Latin we to need America, about that's America look on at We focus some we that Obviously, a where we profitability

so focusing time. we're business on really and And news at this standalone our no

question the for answering thanks Many -- Great. that.

you. Thank

Santander. comes question Lucas from next Our Barbosa,

winning I Congratulations Good everyone. Brazil you're right World John, the for about hope results. the afternoon, Cup.

a I prices I'll So there accelerated Maybe billion later. seasonality on question way a to another line for And given in year-end, forward? the and the the much. increase of you very ask ticket question higher Thank maintain forward reflection ATL Is can Or do going is, BRLX my ATL you think by maybe second capacity do was you the just have bookings? campaign expansion? Alex. and future normal price that any balance business of expansion sheet,

around Yes, of same at Lucas. essentially terms I bit, you're the bit, It up right? a you to ATL it's that little it's number. see if Thanks, go days down a since of quarter hovering Great. flat, in but to look sales, think fourth may little the going going

a And QX normally QX, And So sell we don't most is right, increase a in normally really. a but in fly of for lot. the fly example, the in sales increase some lot, lot. in but we don't is seasonality, a there sell we ATL lot

it's you we increase also don't for are ATL see strong, an much. to in in quarters as normal fly the sales but where So

yes, of ATL terms So means should you the -- growing ATL that of days expect we in pretty grow, sales, in that you so continue something revenues. at look and can balance believe that the our as if something constant we actually

strong. will thing, sold highlight and of just I was another to third you being and give very first in right? And the international fourth fourth And want so second quarter quarter our and we've States, but on international network as the quarter, exact come the Abhi Europe Yes. restrictions into numbers, seen to fly an what percentage uptick. revenues and go quarter, in dropped versus third quarter United as internationally have and

very talked obviously out. haven't for bookings those because That's about positive farther ATL are that. lot We

XX% were Overall, XX% already Yes. XX% will of recovery, the recovery, first to XXX% going finishing be getting year to first to we we by and we're finish probably closer at year the International to the international XX%. of to half quarter XXXX.

well. So, very be in that's bookings those going driving to helpful as forward

PRASK us XXXX. what next we give to the see even XQ how since you're to And question, some quarters? Super answer. high for higher forward the a pre-COVID seeing in so the you the first From XX% on in bookings than point clear. I becoming on PRASK raise the the Thanks on second seeing on was far, comparison bookings bookings forward on quarter you're pricing can can color

Yes.

is even be XQ. than higher that that the will expectation XQ in number the Our XX%

John, Thank Cup. Super about the clear. Thanks I very hope World much. it, right you're And you.

Pablo from comes Our next Monsivais, question Barclays.

color want your million. risk Hi and more just more is at putting something balance But on guys. debt question. to was exactly is you. BRLXXX putting? for a Thank taking I you sheet, [indiscernible] are this called to I what for asking have one I apologize look

support example, can But there it's interest few happen both win-win from -- get sometimes terms. lower to of suppliers, better is we a us a essentially the this for suppliers. calls and -- Yes, can our get Hey, Pablo. -- for what ago, we ago we that than pay answers our suppliers, we a have, few mentioned because

on suppliers we access supplier this banks. And that the days have bank. to to days, finance supplier from financing harder maybe access much go We're themselves can negotiate so capital the with an directly essentially the XX can XXX bank sometimes where our So long shows to right? than feel, risk, but credit with extension I as a sometimes supplier essentially as with using then also that

we another So of source capital, can we that essentially source need if access to. it's of another cash

you. Thank Okay.

question Mendes, Guilherme comes next from Morgan. Our J.P.

of terms Thank if Hey hedging going guys, on could be quick great. fuel you that forward, hedging, here, afternoon. A you. your strategy good just fuel would comment one in

Hey, Guilherme.

We prices in are We already about down. have have and essentially point right. whether right We're now. flying to of is a XX tickets that a you're bit to we to this we using contracts a is need sold the the -- and or that months and ticket been volatility guess that's oil up is reason doing. convince we or not we're industry their actual lot to. can to than going prices that forward going fairly had. have fares XX% to our why we the selling up a But want market if And we are trying protect access that XX% policy we can seeing we’re the look have also industry hedge is next now you locked may underhedged that this of which at We that lot obviously, between what over big already doing, cash we XX%. industry We've that 'XX to fuel up ticket. can the exposure. -- what the look go better the Right And the we at positive high-teens, results

I think insurance. overall, we hedging look at as

a not for in any but profit not airline. to one, on either expect lot line expect hedging, insurance, a it's lose We to money lose we money in

fuel up an or make to running guessing you be If are shouldn't you down, can prices go money airline. going whether

So I think approach similar fuel expect is you can hedges, overall. doing monitoring a what also to industry the we'll but be

frustrated we you. have accounting to quarter, didn't just in honest hedge the We're with be

guys. Thanks clear. Super Yes.

you. Thank

to today's this I and ahead, with Please would Ladies invite session. statements. concludes Mr. gentlemen, like proceed John his go closing to question-answer sir.

you for today. joining us Thank

our forward have myself obviously Alex, we conferences. be meeting team you you look follow-up and and IR If and any today questions, to at your time will available and Abhi care. appreciate the Take

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