Azul (AZUL) 15 May 232023 Q1 Earnings call transcript

Hello everyone and welcome all to Azul's First Quarter Earnings Call. My name is Zach 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 the Q&A session, following the company's presentation.

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

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

Thank you, this Zach that website. quarter of earnings and call, we welcome all The this on that to reference results are we our the announced and morning, available audio call. the slides Azul's IR first

for will today and Azul's of Malfitani, CFO. our Neeleman, is Alex the Azul Chairman; President session. and Presenting Founder David the also here Abhi be CEO; John Q&A Shah, Rodgerson,

call David, to the like would forward-looking you plans, Any caution constitute expected turn comments are today objectives, to I Before particularly performance future forward-looking over statements. I our the facts, not regarding company's statements. historical and regarding matters that discussed

the and are to of will CVM the These performance are subject the that but risks and isolation. company during we believes be considered detail statements on SEC assumptions are based in uncertainties reasonable, course in call, discussed a measures, not are in range Also our which should non-IFRS filings. that discuss of

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

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

we they've our every of incredible XXXX. is recognition let On their Airline as day. Most most Time experience airline again once First in usual world, all, In for members crew following our the thank me March, on-time were the delivered in the World's

be of this what than have exact. than airline be flying ever, efficient crew last truly are the We and our could with and than is I remarkable to more all is scores It year are more not achieved and members more prouder. NPS that XX% ever, more our productive high,

We we combine into see destinations, stronger than the businesses. four, we served high and most have several XX% fleet routes, leadership of all that is a have region. of model the And fast-growing our business you'll margin in position XXX fuel-efficient in slide our we On ever. this

slide expanded of to more largest been slots downtown the daily doubled milestone our XX recent Congonhas São start to corporate Brazil. than now we Airport service, One has from can Paulo's where in We markets the flights.

nonstop In the airport airport. from service to addition, early South launched -- just to America nonstop Orly convenient we only our Paris,

that new shows us the showcase Azul are customers. our That first-time data of them we and customers, have incredible bring our flying than that in more opportunity XX% all to offer. markets, Excitingly, means we have an these to universe Azul

that program -- how billings units our slide can presence significantly On more performed our loyalty see expanded and business business -- is see double TudoAzul, our our its than five, from Azul benefiting in quarter. Congonhas. this can you XXXX gross you units performed since

the times favorite, personal pre-pandemic remarkable My Latin and largest in firmly gross Viagens billings Brazil impressive Viagens the second an is in Azul now America. its expansion, of agency growing vacations largest the Azul in seller continues tickets four level. versus Disney

Our provider Azul market to since logistics XXXX Brazil logistics XX% largest in the and with share. impressive business, Cargo, be tripled an air almost continues

XX-year rich we to announce Azul all -- a a handle of facility, regions' have Finally, operation world-class just I'm a we business launched in newest TecOps. supporting the position history to maintenance unit, that our With needs. able be unique Azul's heavy to excited and we're

world. the to and ready challenging Azul TecOps is how to capacity know is AMR now bring expertise our the customers we this around

venture. launch So, is a perfect this time new this to

set share that and to and this about a protect team creates. this our partners to the I Azul out this whole. process this business year. the optimized made me excited I turn opportunities our I am new restructuring We shareholders goal been make at have progress amazed am time on let my John, working Before with the we over that on thoughts has

are transformational business. process in share of will Alex and John to presentation, As our this results their the

we before, are capital and solutions improve cash structure. leverage, that significantly said flow, permanent As these structural our

I thank plan our their our that partners matching the Azul's to capital generation hard is for business strengthening during who superior also unique thank work. have This want and structure I our this team process. and a profitability. want it is cash to supported to model us

that, you time John?. over turn to first With quarter I'll details John the the on give to more results.

thanking World Twitter every start world's David. most Thanks a like for punctual to single listing account, our spotted customers was of other really and day. on That was would taking the care the members list. also I I cool. first and of by off Statistics our each of recently the airlines Azul crew on

to plan. updates We including show lot have today important restructuring you a on our

let though, our quarter results. that me first describe Before

Revenue you a XX% increase can in billion quarter. was As BRLX.X even than an EBITDA BRLX of an slide XX% year, strong increase with a we all-time versus prices. of with record six, an billion, had last see more on fuel

with an operating EBITDA XX% BRLXX.X was of result margin quarter operating for the margin million and was BRLXXX million. the

with see the of revenue with BRLX.XXXX. a RASK our first strong even you a could seven, strength in increase XX% wide-body slide long-haul On the XXX% increased year-over-year record of quarter performance RASK capacity.

the Looking of RASK the increased market, year-over-year, XX% our highlighting network capacity. and disciplined advantages domestic at our just

clearly is of This quarter you doubled at fuel structural higher of that revenues. allow Turning shows to program and with slide generated costs more EBITDA, advantages time we that see XXXX. the competitive considering XX% more same transformation This eight, the since effects first than that higher even fleet billion than grow higher impressive XXXX. could to recapture more us our and BRLX than

This only increase XXXX will all One sustainable X%. this ASKs on of next-gen XX%, profitable growth. incredible Departures is X%, example up in versus truly aircraft. is increase departures that XXXX total while will

our see grew With on in highest of BRLX.X and EBITDA far, expect for can history. profitability XXXX and we our and since was launched. back trajectory expansion a you we consistently beyond. nine, we COVID By slide margin now our how XXXX On firmly that, setback we're billion. the temporary EBITDA

we're tailwinds we XX the year. show and seeing to you slide On XX, of want this combination that the

you a slide fuel the effect of in jet XX, prices. First can reduction see significant on

This half versus fuel liter the strengthening the second as lower as of first Brazilian is reals result prices currently well global in of US per showing the the dollar. price real quarter. is in The of the the a reduction year versus XX% fuel

our slide Combine expectation RASK this performance which XX, this with shows for year.

We expect similar overall seasonality. with performance, RASK oscillating just

capacity commitment to XXXX. grow XX% our strongly On we capacity in the again, X% side, discipline. only expect overall the market, reaffirming But once domestic to versus

down, XXX% second with The increase of The natural expected best well Brazilian extremely the really revenue year. opportunities and our part up-gauging aircraft. goes of seasonality curve that fleet combines the fuel-efficient fuel remainder capacity is from actually transforming the Trip while increase. cost stronger half for market the into is

per lower Slide XX quarter combination and illustrates of for a with the our year. expected stable EBITDA RASK fuel

You the themselves level results confidence the first billion on Therefore, seasonality first full quarter by the fuel with in guidance BRLX.X a of how alone. fuel BRLX.X year. price could to billion of quarter annualized contribute generated to see deliver we EBITDA the what and the high lower of reductions EBITDA together us over gives for

the coming fuel had ahead performance us. are still a is strong robust, prices summarize, To quarter results; seasonality of best is and first down, revenue we

we're progress have plan, Transitioning really now the our we restructuring made. new details earnings to on give excited from you to

and capital partners. on plan implemented address our a all we significantly and cash full structure you been flow leverage. and If fair our amicably, has improve financial of call, last described comprehensive and a treatment recovery permanent remember our This our to ensuring plan to

our structure Today, how we're excited to capital they details positively will and share commercial and agreements important impact going new flow and you with forward. about these cash

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

today, additional the Thanks our March. proud details Yes, John. we provide to during we're you announced commercial in call last about agreements

that the remind general terms First, everyone plan. let of me of

payments lessors original contemplate were the rates agreed lease going provide reduction the payments lease in current and permanent rates. pandemic. with our agreements They OEMs forward Our the from market to of a elimination contractual during upon also deferred that lease

in improved the conditions, termination aircraft negotiated aircraft as well future We have and compensation certain to early of maintenance payments defer reserve of lease end-of-lease certain also XXXX, agreed as and and payments, OEM elimination the return leases. additional

XXXX instrument preferred and exchange, per lessors agreed have and note an into to BRLXX X.X% OEMs shares a valued share. at equity of year unsecured maturing with tradable per In an convertible generally receive coupon

our we exactly XX, these you slide year. how show each payments reduce lease agreements On

of As you can billion, and annual XXXX. neighborhood more payments BRLX even see, in XXXX and we're the in reducing our

operating As recall from you almost XX% our debt leases. nominal comes of

flow So, next-generation in breakeven flow. importantly expect And this generate of our is ASPs fuel-efficient cash positive and already XX% than more improves from in Azul significantly XXXX our and burden be XXXX. reduces our free coming has flow to free cash We more that aircraft. cash debt now

is a convert operational solution positive flow. the also have now free the competitive enables most lease This to with us efficient our So, fleet we rates. that most strong profitability cash to permanent

reductions. these you On slide can lease of XX, aggregate see the results

lease BRLX.X for seven Our by payments in who nominal of assuming balance our sheet present are rates, a a total, On this leases. BRLX.X and those discount XX% our debt reduction. bigger billion is over constant times value billion a basis, capitalize dropping reduction even reduction in rent use to

down turns debt X.X we XX as quarter, our month In paid EBITDA. organically the leverage and X.X to increased first decreased last

reduction deleveraging is With in our agreements, liabilities lease the from accelerating. our process

exchange that This that reduce slide our leverage X.X%. to you On XXXX XQ receive the in to can lessors see for plan. their OEMs the contribution notes XXXX will would and X.X% XX, another includes already

if And X%. recall, then we starting in you with XXXX a end expected to leverage originally

with and X% expect With with we these to now agreements, line X.X% leverage in XXXX levels. of end around our pre-pandemic a XXXX

remind other everyone our other without in haircut did. any a XXXX I restructuring our that around imposing process, and using leverage to would returning without or we're bankruptcy, to like as government creditors just airlines without on support, world judicial the X%

XX, our equity give details the portion we'll slide you of on commercial the On agreements.

but you a the detail. provide have more morning, just released fact this also bit to little material We we with

shares plan. receiving and for recovery instrument their and our to equity at shareholders, their aiming to is exchange share. full BRLXX per our in are the The an at equity and dilution Lessors minimize instrument This preferred contributions also OEMs limited to converts to instrument provide same into the part time, of downside, upside valued partners. in contribution for

That half to amount it vests over half it of per vest XX The until provision will from will million After quarter vest quarter second second million that, that X.X -- XXXX. the XXXX. to shares. ranges installments the quarterly the has way the per all amount X.X instrument of lockup taking a

shares give Just preferred a and reference day. you million ADRs our to almost XX trade point, per shares

any vesting of profile selling noticeable not create pressure. the instrument So, should equity

at share, issuable and XXXX of vesting the the the conversion instrument With of we price from half dilution second period, second shares will XXXX, if of BRLXX will estimate the market the half prices and the the Throughout time Azul's XX.X%. equity per lower. equity reduced measurement, between at of instrument certain the be of dilution thresholds, therefore number via higher at the be

our market of than additional the with with with BRLXX, may If partner. the lower instruments debt is acceptable our so compensate partners do we cash to and we'll issuance or shares price or new

reduction net strong Our with us our corresponding slide debt strong on that our growth comprehensive Azul's we're of will XX. value EBITDA creating necessary give John of for solution combined elements confidence reflect and fundamentals the as explain its our equity to all

Azul's amazing we're Alex. EBITDA historically see the Azul. about at comprehensive and at times traded and everything of Since for your times. we've Thanks are currently extremely four our that doing trading team proud to I'm plan evolution eight you and IPO,

a has cost our our in increased structure our our the world forward, COVID, of capital cash a the reason significant increase plan know upside going comprehensive and to reduced why generation price estimate capital stock we We optimize since designed around at multiple. was even but

average, all should estimated debt X.X% reason is issued after times shares and our net of and be almost come. market the historical equity so excited be and than as reflecting to well a stock new the lower multiple three trading our plan the Considering to we're the investment current as upside this the This capital new price. of our about

see and our I'm our see As unique, in excited years. can model to strong, on will all the slide Azul very deliver the are business great things XX, you fundamentals coming is

And deliver our move incredible I to all crew also as than members, and we will passionate expected and want results I'm that forward. Azul thank better of confident

Q&A. With the for I will David, I over questions the and call Abhi, as operator your that, and answer to turn Alex

Ladies and gentlemen, thank you.

begin We [Operator Instructions] Q&A. will the now

We're BBA. go your Rezende, the Let's question can going your Itaú first Gabriel to analyst, from microphone ask that you open Please to sell-side proceed. question. so

like just is understanding had Good I first you Hi, question that shared? the for David, and providing on John confirm the would Actually, my details restructuring. and Alex. guys the morning the to thanks details thing. on that we you valuable on with

do a in three and case mentioned shares, the it you in BRLXX on decide and cash. seems would Azul, can here; of Azul that scenario? note; some not who new to in you it or options what half happens issue it like additional So, issue that XXXX shares is understand I reach the lessors, material XXXX, between fact just second half second you or pay this to like in expect negotiations whether kind have

the this point case should above grow different for that guidance second a saying and just the your in mentioning And year a on you've subject, here XXXX traffic for that. XX% released increase also international

the maybe expansion operate on Paulo and same it. or be the just São bit that Thanks. international explore by traffic creating as such now increasing on you you new one Paris? routes you it's Azul That's can So, a little announced -- I sustained will routes right mean, more? connecting this

Thanks Gabriel.

we have shares. do the to option So, in it

choose would and So, lessors. be also debt And by negotiated So, it be cash, debt, a if the accept way the by option the but the option it the but agreed we have to lessors is of in that obviously, in that. agreed the we terms in right? lessors, needs debt the do to to do ours, of terms also they

four I disappointment, year, continue think you're it not of where year times move cash to much come it's talking this think the to deal? trading to really would an reinforce be this to about getting enormous it at next three how need as not from times today. stock I savings result BRLXX, we and a is important When

of over ASK to with that, the And about kind deal. significant because so -- Abhi this in improvement it and to there's cash pass generation a we'll pass And Abhi our of flow growth. talk --

Gabriel. Hi,

market, the X%. in So, ASK domestic In growth, at we're overall, John XX% as looking remarks, we're that's mentioned his total. about only growing

the overall domestic disciplined especially in disciplined very and So, market.

remainder we Internationally, do see it's or that the new network major the I year. of basically markets not right now, have the for any destinations

are We the to are that selling network capacity, that leads we seeing number.

new. nothing So,

the selling, to fly, new have [Indiscernible] and We to do is which well to US. US as X% already some overall everything the as stuff XX% domestic. But receiving is

you guys. Thank That’s clear. Okay. very

were be as through at I I just now the three well, years remind cash can as want as I between well. is business downside never the other to too this but improved never want we in these as less one that flow as two, generation numbers that thing and business structure EBITDA an right? rises, highlight looking think there's we scenario, an to stock go now is that there has that and leverage XXXX actually ranges this to and down everybody ago upside you're it shares issued has actually at seen, in our scenario trading XXXX. to three capital seen, we're And

John. Thanks Thanks.

side sales Morgan Josh from Stanley. comes question Milberg, next analyst, The

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

you me? guys everyone. hear Hey, Can

Josh. Hey, Yes.

morning detail guys. you connect call. could non-recurring My was to the you Thank the good of near and give you Good around BRLXXX recognized some in period. if you items with question that the for first additional million Great.

I restructuring, think fees that you but could to piece that you reverse. a the advisor and your had mentioned fleet also biggest adjustments were adjustment one-time of related

just it around some give great. could that, you So, would if more be color

be sort of being year, to end part we're towards quarter And BRLXXX agreement half expect agreement And doesn't we the been have that half right? is this renegotiated. for that amounts more the of we're first within of place have of future to represents the really the once our have engine restored the agreement deposited before the powered adjustment on exist, maintenance those Sure. Right the of be right? so in adjustment but Yes, now that confident life the the of amount, going agreement right? which that it, should the another we agreement. than The non-recurring agreement, reversed, the biggest another by more than engine million, is

related going fees OEMs, additional doing to biggest as well. capital multiple next legal advisory the that the item The are right, all raise stakeholders, rest, of we're and the lessors, with negotiations we're fees to bondholders,

then the So, sort there. restructuring be fees to biggest all of related item would those next

And restructuring adjustment you part then that of as just as have some well.

non-recurring of As we we that the part had the the item terminations in mentioned some of as of the some that is mentioned. -- largest our some sort agreements, lease in and we fleet, adjustments restructuring third

But I as as call majority comes we'll in it when well, reverted and of be out think that important what's back will it back, Josh, one-time really so. is

that, John are But on agreement. had just year. component is the that understanding earlier our contemplating prospective for what fairly Thanks you're -- I are payment instrument My equity the than that and line. in components rent now Perfect. you note question in lower second From somewhat reductions the Alex. are and lessors' think both anticipated the

those just items? was hoping I you reconcile So, two

to to wanted extent what And And agreement bit remain what linked a bondholders? more definitive to little a a agreement I is to an agreement? hear hurdles also with about your definitive close

Sure.

So, all now we to only these of the we're formalization kind of -- didn't agreements. of close provide

providing we're now the only So, details.

think full the right, amount. but we general last not some call, I provided views, earnings

to the So, go transform with document a into essentially with we I the the sort kind And right? leasing the have until that term, agreement high level that end all of sheets new of is reconciliation a agreements the that. along details goes final the we to think of fine-tuning as all continue negotiated leasing the that of term details the

few last these And in real the saw the also weeks. meantime, strengthening throughout you

bit reconciliation. as maybe of there's the So, that a part of little

as the is which step, part and that a we're next talk in about conservative the XX% organized well was the conversations bondholders, you're our plan. as next going the bondholders. and XXXXs have unit with I think bondholders the those weeks of one of those Josh, and are around they to about we're ongoing the the And little with right? something bondholders, active have discussions we And And I over initially couple think see XXXXs, are and

So, interest really done we the work we this out exactly all I the we've to the as be? they provide getting quarter. far would think going earlier, we roll? we about there's discussions of well, XXXXs there I all hey, with new What's you that way so right? and excited plan the is to robust to the sequencing And part going discussions said And this rate told was around you are we're we we're prior the the bondholders third how to of wrapped start information the the important and plan. up our capital? hope are Can money bondholders XXXXs with as today. it's So, to out think and the decided And have

Yes. whether the a how And question about agreements we think on not and right? the this are we lot we bondholder and really get this, structured that lessor and agreements how conditional that's

and the stakeholders we in all encompasses stakeholders. as plan, beginning, benefits said The all

And unique so any on I think come you really we fairly were restructurings. able airline seen something with haven't up to that other

confidence where one in of industries, our see other, benefits other it's XX% with terms very an synergistic. fairly group issue in nominal also by of that deals of agreement that the the giving right, us are that's right? And you actually confidence unique on of buying stakeholders the it's lessors, the the our So, which agreement other something reaching with the resolving bondholders. -- us debt, It's

because to And recovery, what other out Chapter government exchange an get or help And through didn't saw love either bondholders right? the the really we apply lessors through haircut they that offer, airline with is XX every right? want there what bondholders

we so bondholders bondholders we with got need lessors. to to agreement the It's well. not source And we it's tailwind that the to as able the that's the solidify us the really reach the think that be an from support giving

up forward company year. payments. by is aircraft this our aircraft our lower, rent into XXXX, of was cash starts significantly a as XXXX that's But Josh that goes all eaten lower beyond, EBITDA can you the going forward. BRLX company with over EBITDA you see, previously that's And where now to it and going rent move all A and produce billion as significantly generation of

long-term bondholders, for as viability great our lessors, company, the of That's shareholders for for great it's our well. it's for great our

That was for you great clear. Have the color. Thank all a day. super guys

Josh. Thanks

The next Santander. analyst Barbosa, from comes sell-side question from Lucas

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

Lucas. Lucas? you, not We're hearing

question the Lucas' details you my stock you thank two conditions for how I more question. convertible and debt Azul's morning, vary on have issued the Can according provide lessors questions. is, to on me taking good price? to

Second question.

the for does development With on look like several plan fleet Azul's agreement how commitment years? with next lessors, the the

part first Let Alex part. me second answer the the and then lens

why doesn't what's important The about amicably. right? in Azul. is think did why plan, I really did lessors they That's this Azul's believe we this change growth, that's this

delays the continue So, of some previously the over will number to few change. There's OEMs, we take of aircraft were aircraft fleet next does delivery expecting our number same of the the to but not plan is years. because we take

assumptions And AXXXneos fleet, Latin how AXXXneos you ahead have? next-generation many How are of peers take have? continue American well. in an have? right? as look to many so we next-gen all fleet in finalize many we How couple well as at highlighted, of fleet. that's And a so terms already Alex And and to EXs reflected years, we in in we we'll our already over having that our aircraft transformation the all And forecast leverage our of reflected it's have next

Alex about into year, the coming down, talks couple reflection this the to fleet next over X.X is that of when XXXX, getting in So, of additional X.X leverage years.

to we've a because year terms the right, of created single-digit growth indicated don't low of keep fairly markets the lot now the if aircraft about we throughout GDP think sort in forward, going with growth managing fleet significantly, we've think a And grows We're just think way what our right? going I pandemic is stable, a to the right? fleet, only you the count. or fleet on right? thinking continuing right? just we're fleets Yes, grow If right optionality of X% less, I Brazil

can into We're we significantly as going stimulate Azul can right? cost, next-generation lot because a we a demand move on get markets, just own the aircraft, within to a we that cost. with seats We at customers grow these demand to airlines. And of so stimulate don't we our our markets costs, are essentially need incremental steal capacity at these from negative negative in other with seats coming

grows Brazil right, if resolved, more our than are conservative these deliveries, we expect, aircraft they more accelerating we will assumption, short-term supply Now know than especially chain have provided right? which the of be, that ability Embraer, from we issues

with So, gives at be a also right, on basis throughout an fleet capacity but these optionality transformation, discipline that we've to maintaining there, grow that all years, demonstrated right? us able the the absolute the if is the safely, grow demand to low-risk

issue or the expect. of lessors, to And number It going right? debt. an then the to detail is on have the issued better will of that adjustment the It's the than expect are equity trade we case we than shares shares worse instrument, which a equity we're that on in convertible not

you if be at the right? guidance beyond EBITDA debt share provided, Now with use of an we presentation, BRLXX, input, everyone's right, like with the look you valuation when have we've on right? our obviously, of would the level historical that our way and And the multiple our on do achieved slide and new an so output eight, we we should the OEMs, the the when that lessors negotiation we had be not model, of price per

settled get And even a that, right. we half, BRLXX potentially are and the XXXX assuming we might XXXX be than Azul a end end of shares fundamental XXXX. talking of with of But why around you need right, much of sort about right? six And multiple, when XXXX, as BRLXX to between XX% value on we and not the conservative level even to be the EBITDA, of the we at indicated, higher the shares

it's get at will than calculate than indicated. be the significantly the XXXX, EBITDA, is dilution. shares, I of Azul's, what end The The as for XX more right? million And worry share the you XXXX X.X%. than at have to going know don't be to right? higher XXXX looking higher So, BRLXX, if price but incremental shares you to of Azul's your BRLXX, about So, dilution for value don't you EBITDA you're that fundamental we significantly

BRLXX getting you higher that than lower. something be If even potentially dilution then could start to

Okay.

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

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

taking Abhi. John, you my Hi, Alex, question. Thank for

The first is -- already new much I that like of if and percentage to lessors a be know these conditions there one, would how with would that?

The on second the have leasing It's subject. we look then and about next the for that this why the dynamic payments same year expensive decrease, one, more for future leases?

question. follow-up on subject change a on And over the guidance going bit little a Josh's

paying this recurring on agreement you how had question. those when that the that quarter use it And works? make reverse items? a my we cancellation EBITDA You new much. on might very your fee be guidance for you're maintenance the much maintenance, you That's Thank mentioned how

address me let just Yes, that.

It just the there them. XXXX, negotiating Trent we're okay? has there Royce, We've into was care So, cancellation we is with total the And fee. a contract the the money deposited already already temporarily suspended new agreement as paid and been money it's -- Rolls contract, not wasn't but negotiate with a

a wanted neutralize we what from that. to guidance do So, is perspective

one-time it'll guy most in the quarter. third good be or in the a guy bad first second likely a quarter, So,

we billion with have there. to neutral It's nothing to that in has the that BRLX.X So, that overall. do

then just agreements, are in on March, those back that providing in are we're agreements, the we're we Right. are documentation These you agreements details early right? them. and We've the exactly language right? same, announced And So, these signing we're detailing the refining new the been the essential. We're that now just the to agreements refining right?

the what that is throughout calculated obligated is lease payments shows note table provided And note of payments present lease our of gets look financial you that value essentially lease balance the aimed updating you a on statements, our make with all for we we our get of contractually sheet. XX.X our at value The are to XX.X at the the liability statements. basis to that following When years. to financial on

now right? with are So, based we that the note basis on a you providing agreements we're pro updated on XX.X finalizing, that forma

than announced in originally. March these when We had more of lessors we XX% agreements

Now, to closer commercial to XX% every and that talking committed we're lessor we're yet. again hasn't agreement to the

still XXX%. we is for us that possible to believe So, it reach

forward. payments to in your cash for forward, we're get rent going going flow Now, obviously, estimates more we of as go terms aircraft

be will And as won't payments XX.X, right? not significantly. so indicated low on as rent note the it grow But what's

like can think then I is how to low said, XXXX in significantly single-digit beyond. aircraft forward a demand in XXXX starting that count, take the and the lease it calculate market. unless grow from so go going can of there not you with payments growth fleet is But I Brazilian the point. as kind would And significant

why relief so it know but Yes, of a we And that's we're with larger and your generation to we is question, XXXX kind more lessors, just -- going going in so upfront. to cash XXXX? highlight negotiation XXXX a more ask just for the that reduction It's have versus right? into

so timing And just issue small It's a there.

Yes.

move you of think could forward I XXXX sort that. of rent at terms a In then and as representative annualized here look from payment,

perfect sense. Alex. and John Make Thank you,

follow-up. a Just

BRLXXX cash taking million close BRLXXX So, had we a Is find positive debt or now you million. year these consideration, the might numbers to that new for correct? to cash in

XXXX. year? breakeven we're for This year This expecting

Okay.

very Okay. you much. Thank

beyond. XXXX And positive then and

you very Makes much. sense. Thank

a Goldman from so Sachs. we're Next from Amorim proceed. question. Bruno you that question going analyst Bruno, your to comes open from can audio, ask sell-side Please

everybody. morning, Good you. thank Yes,

the the it with is you Can company an remain excluding mentioned So, transaction as debts actually of is billion the just is the eventually suppliers, transaction converted if the into would lessors acquisition and the question you give first instruments. idea of not the shares? by liability acquisitions on additional the BRLX.X what reduces the us be

on extent it. the commented The second fleet you question to plan, is on some have

years? you base what's growth also have case the in understand the to the couple that of level base wanted Just the around of ASK the for what's and case implied next flexibility

to EBITDA is back billion This BRLX.X mean you deliver question, to one as XX% to to going the would if you you roughly finally, similar levels. showed, margin seem be And last pre-pandemic similar on on which track.

by fair XXXX [Indiscernible] should onwards, from otherwise? you that be of it is Thank primarily seats growth as opposed much. very margin driven So, EBITDA to revenue expansion say to

first the Abhi let third ASKs. about and I'll the and talk take I'll the

converted be chance always issued, becomes and as So, believe conservative you the shares need that that by using additional And be more if So, right? using and isn't always on than will shares a the a Azul right? fundamentals. EBITDA, deliver shares shares, debt, trade will there to again, no we calculated, will market value right? multiple has of which the will calculate issued, based that be And additional shares the our we've had, we market and this

making our committing essentially lessors to We're hold.

roughly. another plus one through a they're debt of combination debt, to $X equity of plus on cash, So, way plus debt combination or dollar through cash -- the through the get going

equity, cash, we're you the the would that to which as going price, get include you're but lessors lower assume you're can going share debt they're you it was count share that get. to of the the going of your they're calculating whole. So, right? then don't they up, and than a number don't the to or get But our you using, dilution, originally. debt then BRLXXX million when if of Whatever in pro kind get forma gave is be that north be made lot calculation, So,

kind So, it's of reference. circular a

shares, consider which this why have source and equity the pay we're a is have to debt in confident also using either going list share number a that right? you're which essentially to value to, not as or to going consider fully way, you're it to I going outstanding of way you're Azul, count, price fully we using you're don't one you're you just get that it as another, of going goes using as BRLXX, the don't share as per equity, or if But a same but lower know do of BRLXX to get kind long highlight debt, you shares. as to and over you to and number If equity this this shares, full right, double to back it for you our reduced going

quarter. the to up, Bruno, equity remember say few that through disappointment, holders. oh, this is our stock And opposed the to per hit shares BRLXX big it that, stock a for the is as comes let's million XXXX, extent BRLXX doesn't obviously,

a very talking about You're minimal adjustment overall. there

where, Yes, that right? in out as X company BRLXX million, number. quarterly gives will is you're to BRLX, the a have than right? get of of you're The the by probably this generate that going beginning, whatever time right? the we're material lot been distributed for to much BRLXX us kind that you be, opposite of share we over first to The BRLXX, million you that shortfall, higher shares. to about north those price in not showed a you, of see billion and by right, point probably the has compensate shortfall with you So, period we're XXXX, EBITDA you installments a at have any in problem going having then short vesting fact we're about confidence. is revenue, years, talking going a If And XX if

years, on impossible. Because that unlikely, pay fundamentals would if not never we very that the a shares based more and wouldn't next we always, trade what Which four right? for the be, we half right? assumption is If the than

Abhi. right? On turn the, let me the it talk about to And on then margin, over

kind in going Yes, you're the of terms we're margin. XXs to be EBITDA of I right, high in mean,

everyone, calculate positive need and should of where you when just we of in XXXX cash real cash the better will XXX, because the amount in it that amount were at was with margins flow the with margin. where that year do the at but back was and XXXX, we believe generated higher cash same right? XXX, best EBITDA in do that same remind flow get real better cash to cash XX.X% generate you XXXX, those which was Our industry generate free amount should to we of whole margin believe generation, you the to with we XXXX, talk we about to When we the it today, is levels,

kind thinking we is we to also it's the expanding on that back say we're not rest then do hopefully pre-COVID and to up, margins, kind once margin to to industry business the to margin weaker, laurels above is but we going XX% that that. higher the back valuation there, of give continue get order beyond that just cash because not our first the real obviously plan and not and to discounted that our our need. to on of and of margin. get going we're based margin go we way, we enough get I'm whole get When to a margins, going right? back pre-COVID five-year get to but And is yes, to flow, that

remind in big, is And Bruno, two big. just the is business, Azul to times as was business you, entire four it XX% our larger to XXXX. packaging But as than Azul times

a cargo Our also Congonhas as we we business, two that half previously. big and have have didn't times

well. the we in aircraft next-gen over next years more couple move as have fleet our also forward of will as We

think that in come so, EXs as EXs the our right? business XX with what today, We expansion And unit, out the those kind well next And about our are XX in fly as so, like of place. through margin taking XX aircraft EXs years. should Azul replaced new units tech those highly ops business still fleet gen adding and when profitable looks coming come

It's similar point, XXXX consider growth unit can a XXXX beyond. the quarters. we're we very this seasonality have year plus. steady high just be now, what a kind is to giving philosophy continue to that level back. compared Bruno, which of XX% something an apart And that four single and X% steady the is from industry capacity unit right beyond, terms not capacity revenues. new final last not and is expect so digits, giving and on We of The revenue at I overall back. as to around maintained and industry, to in pre-pandemic, stable, you that should Yes, XX%

certainly earnings increase that use Our and efficiency to margins. not give to John and the that back increase philosophy mentioned is

of mentioned almost The the is growth, a capacity what fleet the I is here not consistent right? I've aircraft of And growing growth all. fleet with mentioned at terms in that ASK Maybe per next-gen we we there count, and are where up-gaging, with which seat call aircraft but and growth is that's shedding year, aircraft the higher bringing comes because from. the in what smaller couple

from seats these seats to markets, share growth coming not we negative low-risk Azul very cost, other using because those are at it's and deploying competitors. in in So a are steal that

that's we will mathematical grow just obviously more Now, other the if but market our grow, construct. than a competitors, share

share Azul grow market we to guy that grow other fleet across all more using we share, need will is market If the You of XXX% to markets, distribute players. our plan transformation. is increase but the -- than in markets here stimulate Azul

international growing especially XXXX, between the clarify, is Abhi, recovering the Thank of or split you. domestic Can kind just and you pandemic still? more, X% is in to please, evenly from still international XX%, it

more now in so network. international in international reason starting Yes, much our be more it's we growing XXXX, The XXXX stable. recovering will is are because

the actually end year. be of will larger by this We

then full be point that little a effect more in of year So have from it'll onwards, and bit you XXXX stable.

on And Thank initial just Alex, let several what you much. questions. cash us final possible roughly to the is amount scenarios, follow-up, issued, on commented maybe shares too-pessimistic your many so in this one would you I just mind? is needed liability have know sorry but it very scenario, for be remarks, just are if of reference? to not so scenarios And but we or settle a the the debt for agree

the vesting, the, surplus every that's right? against deficit calculation, have times BRLXX. the of the vest quarter, and shares the you mean, the number of or The number that I shares

you. thank Okay,

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

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

Yes, can you guys hear me?

Mike. Yes. Hey

Hey, a here. couple guys, just

Congrats way, getting question. on the I've got a this here. process Just, by through

put equity, looks it was and which maybe it's less up, I the bit on thought, we know error, little rounding. that is lease that more like billion, is there, that, that what maybe like is separate XX-XX, release split a the it's bit you that but XX-XX a that Just little in be a a has fine. could the but it looks more notes, rounding it number than debt based just like It BRLX.X

they equity has that what the So right? of Because with, would been using it's plays back today, So are the calculated essentially what we're note And of value been all BRLX XX you're the plus giving across the this equity. years, a a given way has has on back Yes, I that to it. warrants thinking, and right? kind on kind into of they're and to to the billion cap, PV. some how well depends get to They then, think contributing right? payments, a dealt of going a up them as plan floor calculating up, a lease present that get

calculate did because using up just calculate different value we XX-XX, calculation. way So it but when the may it, the of you slightly do end you Mike, present

next few we And weeks. and we it's Yes, the as think get I you it's John, phase, about, said, think then Alex of next small. both the the sense sort

that's from ties perspective, of this equity that round of some to your What collateral and and negotiations. we dilution component the an And actually or – some assets additional I by maybe your anticipate should so mid-June, next you've holder we're talked about of the done. know maybe equity

Yes, think here. The dilution way really it's important. shareholders And lessor happened via our the right? Mike, has contributed deal, that's I the that have

have of Those are we TudoAzul, business. our we unencumbered all business, our Azul you, remind packaging have we cargo assets. have to Viagens, Just kind

TudoAzul, will idea important And the and using to some debt, new new sequence and we once is debt right? raise complete, right, so it, that it's

and six where balance And so at to stock should there's XXXX be at these given of a there's equity the issue we're levels, of and a further. you raise because half no, get even I to the the third trading done, kind think done, especially where today. than migrate these get up, prices, intent significantly right? Mike, the And we new should a strengthen go be think into beyond, we equity lessors multiple, no is capital better as and But then the bondholders it sheet we as

to with at be I to the at levels. to way. the We -- we disposal right use pandemic think right got able our debt And raise the through so those this raise did price assets to

races, XXth kind doing, was the bringing to rolling lessors important, step XXth And next off very so, we're And in the the new that and right? cash. then is then be we'll obviously the getting the of

board, with very think at right? progress feeling about then these it's so good amicable And the healthy right? we're lessors the And working I we are been to still today at use their And because think all us, about to that, bondholders a raise process kind also cash. we good, across looking what giving of disposal where they assets and been us appropriate, is feedback our and great have that that's

Okay, in the good. guys of Did et with changes, the were renewed what good. you two see the your And if that. I cetera? deal, Very non-restructuring And term questions. just Maybe did see then that deal any, United? I

a note hey out Mike, put just know we we expanded saying the I Yes, codeshare.

it's United. commercial agreement So, continue a with

the Orlando cities they expanded and note put fly Fort more so, include from to that was Lauderdale. That And that from we out. the codeshare we

Yes.

Okay.

a have basis? just obvious know other. RASK accretive? That's it And on I Okay. as my added good. new I then margin on questions. Thanks you, of presumably accretive. the tend it one Any is How margin that? a you're just taking it's up, you Is service, to ramp those up, yield ramping there. give bunch some markets color be of that out the but higher historically, for you could since

with because just loyalty is the a credit them accretive we and through and demographics our in other the and markets we fly expect know once in what signing people yes, of for having our Congonhas that definitely flying program, us the Congonhas they're September, when -- Easter, find is get holidays. expectation up we is a from internationally from April to expect and had seasonality. up great from as accretive this general be once But especially card, bunch well. Again, to new happen second -- past. Mike, that many we services to ramped and we We're the margin with half the year. so margin of still

just but by accretive. itself, So, margin yes,

Thanks good. everyone. Very

Mike. Thanks

Bradesco come we'll question, next the from to BBI. on Moving Victor Mizusaki from

so ask please Victor, question. that can We proceed? open audio your you a will you can

the questions I here. have restructuring. on congrats Hi, two

with mentioned The and you this about this to a X.X first the John, we year. in deal lessors bond one, the can that I just see you pay me And per new bonds. case, you close mean,

So, -- the for the say you grant there bondholders to XXXX is need any kind negotiations and collateral can you that anchoring XXXX? lessors? to the these with you're that And basically of

the Thank the year. the And in these or guidance for for my do mean, second and basically think will be that assuming it benefits I will pass question, you're person, this you approved Congress tax will you. May? assume in about terminate What

there. just The a lessors, positive right? we're right? discussions the thing X.X% is to Victor, so, XXs the the unsecured have So, and XXs, overall. And still we in to some on, is that security that's quickly, rate there collateral with out help I think down them the So, that get

first the of the guidance. XXXX Tax guidance current confident for in this BRLX.X very fiscal As it's far but not that five of our It we're year. only months as the pass, [ph] fees will billion, was

regard news the we which in in that XX have be may as days, could very next well. positive beneficial However,

Thank Okay. you.

from will come next the analyst, It question. Daniel to on McKenzie, Seaport sell-side Moving Global.

Please Daniel. will so your We open question, your ask can audio that you proceed.

you, hear can't We Dan.

Okay.

ask your Citi. audio Can Jay, from We're from to going sell-side next you move The that you next ask proceed? question. question Jay going open the a we're on question. analyst Singh come will question. So please to let's to can your

Sounds Yes. good.

demand most my Thanks any as the with can you and your how see is you temporary with these a with patterns compare again. others adjustments of first XXXX adjust do these you follow-up, bit they agreements further United, tell if your view structural? about how And question possibility are or such So, recent as different agreement and more upgrade regarding us to JetBlue? little a as

so thanks Jay. question, the hi, much Yes, for

network expanding two currently, been partners. with we together And broad our actually, slowly into with So we've a United and States. these the JetBlue, United really have network

XX destinations additional and in can Orlando eight we in So in and gateways Fort in U.S. to now Caribbean. Lauderdale, the the total, connect via our

Horizonte, of and here multiple the And a Brazil, via origins U.S. with domestic Orlando JetBlue and our hub Manaus we so Paulo, with well. major mix and Fort in that Belo Recife, Sao cities as Belém cities, Lauderdale. United in those all in obviously And serve

really So XX the in then broad the U.S. our a network destinations partners U.S. and with into

In addition, European Lisbon. partnership with TAP XX cities we connect via also our in to

able to connectivity our provide with So we're great really partners.

seen even in the unit of up as demand very, terms we've average performance. quarters, revenue rafts and $X.XX, performance. In fares as is higher, the four not the and patterns, pandemic seen that initial last revenue between are a The shows we've so Omicron consistent $X.XX in post very overall, or basically recovery. demand, initially was This just pent thought unit

Small between and medium bit is more above but before. XX%, are levels, Groups, a very above. than is revenue up is pattern below, little groups businesses conventions revenue meetings, Corporate Large very one what well. the XX% changed seen revenue. XXXX that's is corporates double we've strong demand interesting as

From customer we seeing let's behavior, purchase the size increasing. say, are average,

So person their mix one a people business extra little taking personal. on with of of sort them of are a leisure, and bit trips,

XX% And terms that were quarter find we world airlines we right general, but larger. now and couldn't XX% of revenue so, in larger the was across across than the are looked I And in else in anybody XXXX. first many I

performance. So sustained really robust, this revenue is

Thanks so much.

Yes.

analyst, We Daniel, for open proceed. Global Daniel his can the McKenzie, Seaport audio question. will sell-side Please, ask

me guys hear time? can you Yes, hey, this

do. we Yes,

okay, about yes, sorry Oh great, that.

collective assets. was, was did question, those what's initial question unsecured my you So, my unsecured of the talk That picture, about but value big assets?

to And capital TudoAzul XXXX? ultimately of TudoAzul, what much EBITDA how just you was percent on then here? like would in And raise

appraised last And billion. we our TudoAzul, billion, at Hey Dan, they and had Viagens, Azul call, right? over so Cargo, brand. unencumbered about our $X Azul BRLXX we collectively little our So mentioned a assets valued were

advisors on XXXX and with want working assets try and some those new to XXXX them. raise We extending of use money right? to debenture It's time also notes, renegotiate additional senior the get to and to some to essentially our to this. we're unencumbered structure convertible And

keep I company. the also rainy want just don't main assets some of think right? here too a everything our the encumber We is to de-risk to for And because objective unencumbered day,

is we've everything. As to great, encumber generating are this is right? And and idea mentioning business doing call, the on forward on focused cash not we been de-risking, going So the right?

equity, assets The to do we'll that as there, everything. encumber of use cover the what that renegotiate is right? new detail a want XXXX. we provide note, encumber we we get raise So to I but with the convertible ventures and our not mentioned, to And we no extend over all our XXXX time idea and that secured to want capital

Okay, that's real terrific. Abhi, track pretty expect fares we continues continues, been, strong. you Brazilian the Pricing between talked is somewhat? us current today foreign been pricing, revenue pricing? for environment. strengthen, or health And if Usually exchange historically, of a the fall there's has least that at those to to and Brazilian link, if the about there should

a industry the don't Yes, I see second just it more that doing I cause. order that link hey is Dan, think effect.

a Brazilian see I if lot today, of look system more new the capacity coming it's I capacity. it's I pretty And think at that in linked the don't to disciplined. well in. industry And capacity for

around very maintain four environment, these for the years have And right, is versus We're growing domestically industry talking X% so industry today think number Go well. LatAm and math our XXXX. do you the ago, about their given can overall, X% I actually constructive and We've out to unit the as guidance capacity X% growth. to is domestic revenues. the

see will remains should unit so down, I to to can continues as affect not disciplined, fuel situation as be capacity as continue think revenue. that today disciplined, the from or which I come long currency And strengthens that what

cost thing capital other in you industry Brazil was today everybody's significantly too, one and take competitors, Dan, of look at is than XXXX. a our higher the in it if

think York closest You two think high next the important years. I across So And show that be listed to it's the board. that's I discipline results. right? needs get good need industry to them over coming to in of everybody competitors have positive for going our New fares, for And overall

guys. Yes. terrific. much That's Thanks you so

Dan. Thanks,

analyst, next question sell-side from TD The comes [Indiscernible], Cowen. Chris

open Please so question, can We audio your you ask your that Chris? proceed. will

forward-looking competition good answered. you routes wondered guys. Thank and various a the I little rest morning, give you serve. into bit of just my on very the of you if have questions much. could Yes, capacity been And the me Thanks. insight

Yes. Hi, Chris.

We continue to be -- different a to have very network.

We haven't time. over in market overlap significant seen changes

overall. of a they've a I fact, think healthy industry actually dynamic is which sign In reduced,

what are and where think are them makes focusing I airlines strong. strong they

Our is network nature different. by

We position are a of serve, over alone that serve. we in we XX% routes that in of leadership XX% routes

the realizes overall think good And and is, again, that that I that. industry discipline is industry the

like I overlap anybody see industry or So any I trying attack major don't that. seen into envision, frankly, I don't a changes I dynamic the to somebody or enter to to capacity. haven't from market harbor, else see, a the anything don't

I are focusing they strong. think where are airlines

Great. Thank it. you Appreciate very much.

Bank The sell-side next comes question from Araujor, Rogerio analyst, of America.

your question, We will ask open your Rogerio. Please audio so can that you proceed.

you to that be few Thanks is the on have for opportunity. restructuring. lot the liability follow-ups talked I going gentlemen. about is Hi, a One Yes. a recognized.

is effect question a quarter in be think point or equity calculated? starting deal to instrument. is so how a concluded? be quarter? the this to linked is my be on there to going that when And this going every going Is market-to-market how of I And this there is, to recognized is the the is next much

rates BRLXX it XXXX? to a then there BRLXX is adjustment any share? on conversion the Or this another share per And fixed per is price, one until

a confirmation, restructuring. this conditions on you about talked on Lastly, several

think condition. This capital a I new a on new debt. is new fulfills you raising One already collateral debt, raise capital a new Is you talked them is of raise. correct? this much. be debt this very about as Thank TudoAzul can

XX you will the be given are that again, what But debt, up a be don't as Yes, need of the It you include completely recognize side, at essentially the liability, the equity the look so shares shares amount amount. million right? you predetermined, essentially going issued. so, you unless is that to easy the under whole fixed lessors the to will as to on IFRS, it XX%. a include structure for Rogerio, if and So be have

equity to the will outstanding, that than XX BRLXX. the going we you get it determined. your and way or But total the in balance is sheet and not the have see including adjustment debenture But as similar up be if in right? it convertible we that amount the the be something calculation, the you're is higher line designed. will as is kind either balance one including do shares debt specific XXXX, equity instrument debt of in shares until million to maturing Therefore, that It on no show sheet, and will equity there

the of include in don't it that include outstanding you you as If then debt, shares. number

include If in balance shares, you it disregard sheet, the outstanding debt right? do you the of the on component then number

on on forward. then the floor, new BRLXX there's right And money. going adjustment The the you're no

As a it with be component. based essentially equity collateral note secured on we TudoAzul will to mentioned, no the as

Alex. clear, Very very much. Thanks Have one. a great

Thank you.

Rogerio. Thanks,

ends Q&A This session. our

our We will have final now remarks.

Obviously joining a a lot for digest, to you information. of lot today. Thank us

be we'll flow and We're This offline. about the to we have. so to excited any years your of back cash our Azul's races. improves the take Thanks available what over coming everybody. questions significantly And

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