Azul (AZUL) 10 Aug 232023 Q2 Earnings call transcript

Hello, everyone, and welcome to Azul's Second Quarter's 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 a Q&A session following the company's presentation. [Operator Instructions]

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

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

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

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

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

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

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

of significant was comprehensive permanent impressive leadership the successful a work capital In plan, July. our important we history. I in one our could recognizing not of quarter This team. quarter, leading to this the progress our on start made without most optimization and conclusion in

able and outset, an will partners later. this investors thank that six-month offer what win-win is for we window. implemented delivered which John were process. to stakeholders. who included that plan, more exchange details teams and a on all new just all value-maximizing money supported our in of Alex also lessors I absolutely this and the throughout promised a It successfully want we of solution have one their true with Together, us and with achieve to and our all incredible you John OEMs skillful together a they give agreements is rate. new new

vote future. your company our and of confidence and for in thank our I you in

to $X Finally, every and per billion our without Thanks I over have industry-leading would possible. thank continued our continue excellence deliver this have who service members efforts. their most day of importantly, customer that been to of EBITDA to a company none year, produces passionate crew operation,

where We in and the the can put are now a we position behind we focus us, crisis future. on can

to Turning Slide X.

can see ever. than network our stronger is You that

Our advantage competitive superior allow to and Brazil. business structured all connect us of model

our over We of more routes than are destinations carrier to XXX the only in our Xx XX% fly and competition.

our XX% of profitability. We are industry-leading the supports which our in more than routes, leader

Mongolian destinations. the we second doubling our of quarter, the all daily launched now top expanded During the corporate service, departures more than serving

we In Paris to and off our launched addition, very international are Both start. of strong a destinations, Curacao. newest these

this our units quarter. Slide performance On see outstanding the you of business can X,

Our in loyalty Sign-ups doubled Azul launched have flights. XXXX versus Mongolian billings new benefiting and increased gross program to more than schedule. we program XX% to clearly more since expanded concurrence our our is than from the

in growth quarter be XX% which had of XXXX. billings our gross than has proud business, I could to more not quarter another of exceptional with second compared the vacations a

business is this revenue Now terms of size than in the net XXXX. now Xx in

year. doubled by growth, all second Azul to is expecting and in continue the Viagens agency our end Cargo, with XXXX. double compared the share - of of XXX share the than logistics market provider our the domestic Brazil, to with with vacations net revenues more market largest we more with Azul business largest air than stores strong our continues XX% a to and this be logistics of to

has the these not shareholders. amazing be for for together quarter of prouder this said, team entire our results I us. deliver As important pulled could how is to an I

quarter second John to to on our With time I'll pass that, you details results. the give more

Thanks, David.

our years I to to and passionate for for is for fuel our come. caring other our thank people that our members company and special will would incredible are It like Every each I work. also how see customers. their crew this day, culture

to can see you quarter was second Revenue record XX% second In of compared the the to same impressive record I would an XXXX. up the highlight the X% like results, for 'XX we numbers, a our period to Turning revenues X. in up XXXX. billion, on BRLX.X as second quarter Slide in quarter quarter, achieved second versus

also BRLXX.X were and RASK respectively. at and BRLX.XX, second Yield records quarter

grew a record the year-over-year. of for XX.X% highest an in one reaching BRLX.X higher industry a with margins at quarter EBITDA XX%, remarkable all-time Our the billion points XX% second year-over-year, of

prices. As increased of you EBITDA our resiliency demonstration quarter a versus increase second even can see This our the fuel XX% is in the clear and in on XX% strength Slide a business. 'XX with X,

structural growth any earnings scenario. in advantages, us with Our combined competitive rational macroeconomic and our profitable expand to allow

as positive prices very On a Slide when year-over-year. of world. in fares to environment year, dropped we regions contrast X, fuel you and what are in transition the up is - can seasonally that part last in year constructive seeing a This you're under strongest X% demand pricing the while the see very were we into sign other XX% versus the average in

CASK to prices in you in XX% by driven a X, costs This manage cost-reduction As decrease productivity fuel initiatives mainly on our our effectively see continue by can year-over-year. Slide and reduction is gains. and the we with

record example, tools use check-in. self-service to Just their a give now automated XX% for you our of customers an

on-time is feat. increased, measured productivity XX% also XX% in with of In per ASKs than with has more company ASKs full-time the an no And per FTE generating now small employee performance by addition, and XXXX. this

X% ASK compared in fleet and a last to year. initiatives resulted fuel savings fuel in addition, reduction consumption our transformation per In

CASK lower region in size. the with a We have lowest and fleet the aircraft diversified even average

our next-gen world-class in efficient highest business performance, directly you customer has promised of Azul growth the the margins strength revenue units Slide As these and of of airline on XX. led and we The results. more our can service we in to than industry, you, our now better one are EBITDA efficiency ever. as see fleet

short an As thanking achievement in their the for partners incredible teams, opening concluded such their in time, our our in our This mentioned dedication plan. I capital we've support. period David a was and and David of joined now remarks, optimization

of our On remind Slide you plan. pillars number XX, of the we

before, we agreements successfully OEMs COVID As with and lessors, a announced reached into debt to exchange of combination payments deferral equity.

in make original of We agreed to a the our also debt for to lessors differences combination and exchange with to equity. leases with rates our adjustments any mark-to-market be lease also on

shares receive quarterly the installments by minimal a and roughly into to shareholders year to of completed XXXX be end Less stores with be starting to with an and all unsecured and dilution of OEMs an to X.X% of issued note end at XX%. of coupon XXXX a instrument in convertible our preferred XXXX agreed maturing the tradable issuances equity

offer why next which launched exchange in July The maturing in step $XXX July aggregate final in step the an XXXX XX% plan maturities XXXX. June, XXXX a XXXX. with extend debt We in our this to of the par-for-par raise, issuance acceptance successfully million is new was and the of of rate was concluded in in the notes of principal which capital and our with bonds concluded offer a obligation, we outstanding. the was restructuring to of XXXX The

the enabling of demonstrates execute a comprehensive success of market Azul's plan peers offer company Xx region. stakeholders. represents the of our The confidence was significant and clearly lowest and covered, to coupon ability to obtain in by The Azul all our in the vote among our our

on committed stakeholders to amicably what just is based We that our solution was was process always we remind the was guiding would everyone value partners them. of happy our this say to for done what that want partners believe with receive I have this to I'm achieved. the and this that principle that and entire maximizing all, XXX%

we resulting reduction our XX, Slide you On updated related the negotiations. to amounts from payments our show lease in the lessor

payments see, payment cash in can In we BRLX.X to billion annual billion in recurring delivered our our reducing BRLX lease you the were are and plan flow below annual the future lease we over targeting our summary, billion. to our BRLX optimize rent and XXXX, enable XXXX reductions taking growth. As by

On Slide the clearly you we runway can have created. XX, see that

outcome for terms five overachieved in match key we debt We what flow our have have to performance. a future industry-leading and expected. the operating and no maturities, Both targeted versus plan. our we cash significant maturities yearly now We next liquidity strong sheet from of another years, balance

EBITDA. As This impressive we in Slide is full yet X.Xx you our on optimization more a organically debt reflect XX, capital our can see the quarter reduction decreased second even to turn does X.Xx expected increased the leverage and from plan. down not it considering paid leverage from as

will accelerate. in lease lessors, liabilities our with from reduction our the successful process With agreements deleveraging

full another end You of can last leverage in we guidance year, turn with X.Xx will almost the the line by gave the to see quarter. reduce that

with pre-pandemic levels. remain to expectations in our no our September. a later leverage This includes senior XXXX also end with issued the XXXX unsecured than the with July leverage of notes We issued secured in notes and be to to XXXX lessors line also Xx,

have of result all upgraded the a three As our forward. health Azul, financial optimization plan, already agencies rating reinforcing going

you balance I truly to should I upside be liquidity the discussion On Slide having market cash and There XX, trading current all valuation. we flows, on and of in come. significant this forward versus sheet, and X.Xx multiple Azul's our days and historical our With the investors positive our closer are weeks our now. valuation. growth, view at with high is optimized we earnings show in our believe our levels look this, to to

want to ahead can the our this on spent hours having our Slide Wrapping to team XX. it, of everybody countless opportunities efforts senior concluded I turn up of that plan. all now us. leadership our in on business just And remind we successfully

strong. are fundamentals Our

Our business model is unique.

crew to is partners together and our all members I passionate is all best thank their are we achieved What our and investors our come. support. for for upside Once as stakeholders for is crew Azul ever. Our me, of remarkable, our clear members, as the want our have yet again, most and to importantly and

your here questions. we're to that, With take

the question. Citi. Please, so Philippe your Philippe, analyst move open microphone, Instructions] we to Let's [Operator sell-side question. on can is from first ask you It from will your Newsom

Hi hear me? guys. you Can

hear we Go you. can Yes ahead.

much Thank questions. my you. Thank for you and very thanks taking guys

questions results. on the So my on congrats I and two side have

of you for that that be would Brazil, U.S. backlog using and visas one in performing as And I to saw the new some international - but that we there know saw well corridors cargo issue visas. that might on visa first quarter, continuing - some aircraft international are wide-body. we people Tourist from The aligned have in know corridors to - corridors. this guys shifting to I well. shift we be

you that markets international? would in in adjustments opportunities be second So more made I'd see terms this EBITDA you of like to on question terms understand quarter. the which where of in are the And the

wanted in extra hear clarification your some thoughts to adjustments about Just the and EBITDA. made the

So, thank you,

the I'll I with be can here. Philippe, part start international. first about the

So you're right.

with the the network. are international performance happy We of

we'll larger Our international than be capacity XXXX. XXXX, in

So we recovered more are our fully in international capacity. and

missions year, general, what domestically even You're and Lauderdale market also hearing you're long-haul last from holding had as other right international in Brazil. airlines for to network. shifted flying especially, is some true up is to them well. that very And our Brussels, Fort wide-bodies passenger now the In dedicated we us cargo We've well.

doing but The is market better, is as the European market U.S. well. strong

partnerships TAP to feed gateways. and Europe of lots JetBlue allows lots U.S. and with Air great us in beyond Europa and that cities with have the our United in We and

and but hub, Belo main we also compensour have Horizonte. Recife have we So

So we're well. the partners hubs hubs as connecting strongest our strongest of our to

happy. So and this we higher overall, Unit XXXX, revenues are continue. year expect than very significantly to that we're

with and happy we're fully overall, So results we're the and the recovered network. international of larger,

the were to know, able some our There they're that to on tied negotiations, Phillip, early some talked as fleet. we we these about. a adjustments, lot negotiations the plan of obvious with aircraft not deliver Yes. capital you we And did of mainly on that optimization want were, lessors actually

have on are how all worked we the the much know the of company. to all better our we and to EX You our which fleet for old-generation Embraers, AXXXneos. about we how us aircraft now want replace But excited great transformation and Embraer start

the that, us is to accelerate today, the the And costs you have recurrent. demand opportunities with do way there some were that exit it are of some some you for When not aircraft.

So have you for expected example, that use you on the that of have to right aircraft. would adjust,

going the remain years. a number certain number expected to And it's for aircraft not of all on You for years. a that of the stay fleet sudden, to of

impact one-time on a creates not that recurrent. P&L the That is

we the And company what results anymore. don't so that we forward have can of the so better you will removed have going from that that when result be perspective the a on effect

competitive followed did opposed we're approach of a right? there our fees and some You to lawyers expensive in more is approach as costs, took, some competitors that also one-time we but the and restructuring our And more advisers longer some the have of and proud still structure. having and that involved with still

main So this had we mainly are also drivers quarter. removed of the the that those. we Those adjustment

has early, of and almost and aircraft of as Azul redelivered the Alex process. renegotiated. every were XXX kind was some part said, aircraft single it's just And

very And - so at. good earlier. to the have We we but few eons where ability feel about a had we're exit

we'll So to very kind margins able be we're continue forward, of even that further. confident - to going expand

Great. Thank guys. you very much,

that Victor, can sell-side comes analysts, ask BBI. question you proceed. your to Please Bradesco Victor next from question. going audio The we're your so open

have questions the restructuring. and Hi, here. thank you. results Congrats for I the two

fleet conclude your related these restructuring. So plan, now The all to first that you one right? is

know this it's year So something to plan block improvement. time talking about the And around see at we per you I is a pre-COVID So can compare and about second I day additional give for next? if level, question don't for hours mean, the now we XX with were hours, can you baits. an and my if details related right? But

to do how you. So reach kind fast that's level? you utilization possible asset of believe these Thank

late, starting others. on OEMs including Obviously, the are the and And and quickly Airbus just all fleet. Embraer

of We to next the by expect into their most year issues Embraer and fix of end year. this

to, generation it's fuel to a profitable with time seats aircraft. further XXX the per of that's EXs because So we ones, XX% take currently the we need thing seat. seats significant that replace of gauge do, even burn, we most have a coming we get we about rid every up to lower And amount older XXX in from aircraft

So about excited we're pretty that.

in and couple to next the fleet Azul, But years going the the so the of see years talk really you're to a I'll is let utilization. going for so improvement And you forward. two significant Rodeger,

make did coming of X.X%, down prices the flights year-over-year, reflection good up well, is Hi, allows out to which Victor, very a we weekends, on us at add day. flying X%, fuel more a night, more improvements stretching in sign. It's as utilization the which

back pre-pandemic to We way are making our utilizations.

out in the will this careful of compared as and there. as continue do pockets of improvement is We to see to XQ pre-pandemic be number a We fuel well XQ network levels. we higher in redesigned have we all sequential the because as advantage bit take opportunity still to little

don't so stretch want as to And quality lose we revenue. make that sure the the we the day out, we of

balance fully to will the make comes going that to is to continue number. closer that So the And utilization. I hours us next striking as we're when see over But get to we're progress. you quarter, that it XX that expect

this internally. But this Alex have every is debate and single big I'll the day.

know we overall increasing our going so leverage profitable greatest company have, CASK And going that's decrease to we and the us utilization. more a make forward. It's

you. Thank

sell-side your Rezende, going Gabriel. open microphone so to question, from that ask year our proceed. from you will Itaú question come Gabriel can The analyst We're Please next BPA.

Thanks and margin quarter. like guys. we profitability, would to the a little about XX% given on I the bit in saw congrats talk EBITDA that second the strong results,

two on questions So front. that

to reach level this factor. the quarter managed despite weak You second strong seasonality

looking margins the of about should So if touch semester, in view that thinking on reach improving operational be in terms on - my the second be forward, EBITDA you just levels in your we would leverage - what great. could the on considering

year-on-year. could personal the both in personnel on also if increase saw our higher a quarter-on-quarter XX% ASKs a And and was expenses, which more your subject, the expenses, little the bit in increase provide period, on than you year-on-year, we color

the as we next one-off level in quarters should questions. well, was be quarter expect in effect are or to forward? the second maintained Those going some repeat the that there not my So should

Yes, leverage Gabriel. We moving capacity EBITDA the $X.X and that out, we billion is EBITDA right? the that on still on which Thanks, We that things PESCO we're was So in directions, the confident on positive. so valid. had guidance approved, all different guidance had gave gave we right? are on

But are obviously tackle we so confident moving deliver That's is few for we're what on on and can least going a that billion that curve the a which the John very which right, starting we have can to six, opportunity fuel be the up where want this - about. into we EBITDA BRLX.X that excited we even had the going then next a working further, months for sure like make have is we're We at to that much great with next momentum year something said, we EBITDA headwind. we year. that expand

that The out. how of our second works, because profitability most seasonality half that's as pointed is you comes from where

in second is quarter The the year. the weakest quarter

exciting. third than a better And that's third, then entering is And going be now the to be better to something we're the quarter, quarter a that's fourth second. which going is we than We the which very there's of working EBITDA still, pointed And upside are still at in still our we right? margins. record, are but recover out, to margin, production, on as terms

was the margin the XXXX. margin lower even XQ that BRLX.X EBITDA billion lower still we year, delivering XQ 'XX and margin on had Our a for in it than still will be the than

the we have in didn't have we're didn't have beyond get today. next-generation want can we we XXXX. Congolese. even why back have - units margin excited of we right, that we business didn't go to about We EBITDA the of XX% that That's further, And plus the because had because to XXXX and in we 'XX performance think we that capacity

of lot go there's margin delivered we a the for even that So XXXX. beyond to us opportunity in

but script, do how as And as management opposed you we the now the of on running I full fixing our we sheet, look at optimize also fully business that's to referenced team how we focus of business so plan there's EXs fully fleet in balance And But to Azul, get question, we're right? you're And levels these - the do coming. the so airline? it extract optimize said again, out the utilization of units? previously How move the to how lot to on much of we forward. the a all as have as I going

are coming. a still today, There's EX that's forward. we out. fly significant than upside AXXX day EX flight fly We're more those So right? of exiting a very is flights more And two going profitable. amount We

some personnel the on you Yes. And give me let side, guidance.

I think comp options It of because our in what tough phantom 'XX. long-term and rest for with of a We the in your had XQ will of plan, the estimates is year. help you happened as XQ incentive they very are volatile. part

in regular in of to part one that long-term market the the down we the reasons That's year, of our But a price because stock nervous going last the we personnel quarter, incentive back went reduced options was long-term getting accrual. that actually and are as reduction second expense the expense reset. recognized our

That cost now time, stock right? We're a and part those over should forward right also options to long-term scale, obviously, of of then recognize lower. as economies with the more. a that going is our not volatility going lot lot you anymore happen just incentive, actual we're options Because calculate the fly going of get to

get talked going increased Avi utilization the and about in to we're QX. QX

to a from to the in labor forward mid-to-high look single QX, probably QX digits. can QX you and reduction So CASK in

back of our end You the will CASK into down year. labor the going see

Thanks. was That Thanks, clear. very Alex.

Thank you.

Okay.

Raymond question, the move next James. come sell-side Syth, let's to So Savi which analyst, will on from

to were microphone, think so that can proceed. you question. going Please your your I open ask you So

the I a the kind of provide I I leisure the mostly you But on if bit Philippe on get market, as gave could being closer appreciate color international. of wondering And on on noticed capacity more domestic little versus in. as everyone. I've you business. domestic color morning, was curious good the trimmed kind market. Hi, was you

here So domestic just growth updated thoughts on kind in market. of capacity the

Savi, Hi, absolutely.

especially that well. yes, out we seasonality. into of So very terms and resilient feel we're the in flowing second of good coming as was July, really bookings trends about unit revenues XQ half seeing

the XXX% demand, volume. of demand, volumes corporate say that the weeks, recovered and terms time in I them, So four last have confidently - first example, been so actually of can domestic we've of this XXX% XXXX is for corporate of two

Now average fares are up XX%, XX%.

So very, in terms corporate XX%. very of weeks four to volume, it's is we've and good that X, sample out revenue close. very is see - this two now they're of XXX%, of a recovered But these up

run-up terms to terms correctly in doing in environment, needs advantage well. as be think second to done is pricing In of industry of seasonality, the half of I take the everything fuel what obviously,

Our month for booked than that's the year-over-year. reduction fuel the average last with in of were July higher year. fares and

XX% May. in now above what Our were booked fares seeing we average are back

is And correctly Year-over-year of so than And saw positive. lower think side, I XQ. said, trimmed. the capacity second the are you is being as actually on in trends in half very the capacity what the we finally, capacity year

to going into demand pricing coming environment. we're So a favorable a environment, be favorable

grow growth The why than industry going that's about all-time half It's but We're tough X% of X% And domestically Last this doing. about the less what think of this set is market kind U.S. about year continuing the year grow to we increase RASK. we what versus to up year. doing. that are XXXX. to raps to repeat things is feel is comps, U.S. record over going four domestic market roughly years. good

pricing solid, very favorable and as is discipline solid capacity a environment, demand So environment well.

ask but seems That's it's like has If know still might cargo just I super helpful. environment softened, the it healthy. I

Just up unit is setting curious logistics plan the towards? what were the for revised that working you

is that Yes. It's right. down, especially the weak, International mostly international It's is and Turkish, you've UPS. reports yield especially side. that Look, Avianca, cargo, you're LATAM, cargo from seen Sing on international

growing. keeps business logistics domestic Our

that's It's digits, mid-to-high is single also and exposure very growing freighter our limited. very very, still encouraging. remember about And that

of in a and XE-Jets Brazil. freighters couple We have two XXX here

domestic for purposes. all So

Azul continue logistics will in that transform So believe still to Brazil. Cargo we

of huge country. the to There's opportunity out still e-commerce the a rest in getting

It's X.Xx XX% to that last And not we're but still continues as be so going is challenge, our to domestically, be XXXX. than focus. growing, a as a challenge. domestic, about we're but still fast it's and year, bigger International

XXX the of cargo I that got it's we've The boom everybody fly and wave. business, there have. international greatest strength in our domestically, that all was to right? cargo, our competitors the to Savi, that also, cities compared closest competitor. that to ride those we built fly But Brazil so majority the And think Brazil, post-COVID cities XX is we flying the throughout and next we that's truck we're which a advantage to our the of And is of fact network that XX really And advantage that's have.

Thank Super helpful. you.

from Deutsche following Michael, Michael will The We're question Bank. Linenberg, sell-side you come microphone, analyst, that going to your open ask question. so your can

proceed. may You

Okay.

Sorry see. - let's about that

we to your are what what to in get What for here? done expect, plans that maybe needs Just finalizing there Alex, talked later September, dotting your year, CapEx with year? in lessors respect Thanks. agreements respect your release like the that's else eyes, you your Is to CapEx just Presumably, with the that crossing other release, about than the this next in in OEMs. anything else and should ties. with shown you've the

and Thanks, Mike. the It's equity crossing notes eyes implementing is Not part the Ts. with negotiation that's of that a the It also XXXX instrument much. gating lessors, of bit the unsecured negotiated. we the issuing

are have need we to signed, conditions on those but of kind to we that those So the then agreements now subsequent deliver mechanisms. all all

here. of than recurrent CapEx, our going year this to CapEx is terms In lower sort of be still

In I terms of billion in about modeling, your mean, CapEx something to we billion. talked the recurring for BRLX BRLX.X

coming maintenance leases. are time, to do from We and Over going like the all that aircraft capital, some are most It's don't expect outflow all about don't but CapEx. to is of finance - be overhauls. would new maintenance to especially we have you some from any aircraft engine we need remind leases, new coming cash under because aircraft. everyone, operating CapEx this To

follow And agreements. is already I finalized, documentation the happened the Mike, we're new celebratory of agreement the there. acting dinners because in although under paying thing, the from capital had kind with rents. We've We're if just on lessors one add all the and raise new July, this the suit can still being

issues disclosure, no all. one for full so lessor. at have And And we

We over X.X%. as didn't it's somebody leases. pointed actually, X% line, that of get total less our out represents the just than It's

but still And we're to the so we're turned moving them, - we're We've forward. page, talking and done.

can of at of September? you and liquidity numbers in other, me billion of I I end mean your the One as be - could the There's BRLX.X some put will just a rough would June, base, end if use a which what be XXX tell probably was guide you there? provide sort and good you What liquidity the USD us? incorporate takes that the million.

we we payments that have paydown XXXX a There the exchange. note. Yes, some the accepted on was right on XX% who made

our gotten advances had have We we from that some of one lessors.

paying convertible down We are some our of debentures.

So when that billion of we're you kind bake going $X between be in, to billion. all of $X.X and

And quick last Okay. one. then one just

if by cargo. is cargo maybe what area I Your That's the ancillary being of my would down been of were obviously Can taking an pull strength you it businesses out up on other a questions. numbers? be revenue other your for driven has good obviously TudoAzul, to rough when Thank you basis, us we for tell think you about vacation year-over-year. and that business revenue

Yes.

all There's a cargo. is of basically that on But the domestic Abhi on bit that's essentially of terms cargo TudoAzul a So line passenger side, on charter right? in and it. lot. like is Everything as it's is that growing Mike, mentioned. growing, Cargo So else line, little growing is a lot. just TudoAzul charters.

you. Okay, thank

question. proceed. that question. So we so your microphone, will ask It can moving analyst, Please open to sell-side the JPMorgan. Guilherme, come will your from on Mendes, you Guilherme next

question. to thanks everyone, taking I related my follow-up morning, have for yield questions two Good actually and fuel.

And increase I think do you forward? how how additional think So a potential you mean, to on fuel Abhi, guys fast topic, your pass do to passing you your about managed same hedging the through going strategy on on costs, point your to prices?

the right of the so to turn, in things own because by Hi, in try recapturing costs our terms of the these our much Guilherme. of network course, terms and of done do industry is every benefits at right Look, I destiny has, things additional controlling think have We, ourselves.

and testing be not the having always we catch managing can be so wait industry up. to to always for our own, And

be at seasonally optimistic. and I'm in XQ, higher of terms mean what fares. to just achieve a last average had So a able post-Omicron we'll XQ fares we year, versus weaker XQ I in look average still

that so that corporate will capacity strong, more year survey the back tells corporate the second coming And discipline half in we seeing. us are with fly demand with corporations of our

process, going make continuous right a happen. to confident it's things are think I I'm do that industry to and the but the us it

a pricing together, going side, The to to hedging any go we less up why away whether they more I market, the better hedging right? to oil the are to I right? do, ability on And they you increases hedging tell makes right? cost think lot do think to is your the sense that fares, through prices or need we go would say that airline from pass they advantage, don't is that down question Yes. If have of because competitive than their to that's run going insurance. are predict kind able of because

expect cost bit and money of we cost hedging in terms us a money, to of insurance expect little to a of We little bit premium. us the

with together pass our increases fares our hedge monitor through to always we So ability to position. cost

We're quarter and strong seasonally much. demand coming to don't XX% to as Now that see we we be We strong now. XX%, hedged see be need in. continuing a around right

already last We whole we from to do yes, to the that hedge were of industry prices the that future back think continue the cannot think at on go they're hedges, did makes XXXX, sense. XXXX. it's that light try to we're sold confident still on quarter, it's inventory, Because, get anything But and I a that significantly but they to think have the down but to about. least ability inventory, expanding up higher they're still than margins very higher they lot I fuel want XXXX went we inventory our much in is right? much that year-over-year, the I to levels. true remember important somewhat than

day. you. Super great for Thank a you guys. Have

you. Thank

microphone, from Glynn, your Going Neil, on Control that next the question. your to sell-side ask come will question. will Tower. we Air open It so you may Neil analyst

You can proceed.

the to please, could two, capital I If negotiations questions. both the optimization. recent and respect taking for you ask with Thank

for first So of noticed at the on the And the the one obviously in first BRLX dollar lease since of strengthened end billion XXXX. you real this payments time. quarter, hoping has billion, the I really. currency BRLX.X against were Back

recovery the fully to if feel on the real whether the for of against could payments. you real exposure reflect give just recovery updated interested for these dollar. I'm And recent payments the So potential as us some further dollar to your

that over are part question, largely then are sheet, now flows that at of the security maintenance resolved any the your $X.X balance for second are - part of the the obviously billion about lessor deposits impact this a And months? course of now And ramifications reserves Should June. cash should have the negotiations next large balance and that few sheet?

reflect end on we presentation, of at payments The the the which lease QX. $X.XX, exchange Neil. Thanks, is provided an they that of rate do exchange rate the

all they are dollar-denominated, the exchange fluctuate rate. So do and they with

numbers further see rate today, exchange if strengthening those if is is you can where down. roughly So come the the of real, the

those the payments. 'XX the If and communication numbers 'XX out had which of last that you the lease quarter, we also breakdown sent compare to

But of you of also then security that the the numbers time the with time aircraft Normally, that there size negotiations mainly balance reserves, as There has latest delivery yes, information as from terms the those the FX, of you see with over would And frame. there. well. part are were the also fleet aged. changes a from should that fleet deposits we change and that increasing lessors those see is be maintenance but The the latest and in FX increase in right? we took of additional

returned. we to take then they now, on and but happen we those maintenance return drop the events delivered or add you reserves, that those go those are aircraft, will we maintenance as staying few to balance balance the are negotiated as execute It we the down. of for see will on stable. maintenance the then balance And should events reserves Right will a and aircraft down, maintenance maintenance will won't because go them maintenance years

not one big also with COVID-related as basis is that we dealt well. on thing, the deal big not leases, the do did security in not market going-forward deferrals, is deposits that's I reflected a we on maintenance we difference with only only think mark-to-market did and that reserves the

years. So that's the five a P&L but impact impact, over a not cash it's next certainly

lessors, a profile good understand for as so that's us. better the credit much we became And for that, they

reduction And - payments. those significant so forward there's a in going reduction

And so that's additional coming years. benefit the to our cash flow over

right. All

Moving question. on open your we're proceed. Please to going microphone, ask the Santander. next question. It can your so that will come Lucas, from Lucas to Barbosa, you analyst

is question online. Cates' Lucas

this read he around can I on million maintenance this the was was it much to XQ 'XX, in line Essentially, checks it should what there quarter. 'XX, related coming any maintenance be it. XQ and aircraft And like it know think in and concentration of to would well these quarters. BRLXXX was as the I and quarter So if In CapEx lower. levels more lower was

OEMs. stakeholders. was to were that negotiations going terms we we both Yes, of cash. particularly groups think low. lessors knew especially I those were have have with going I commercial We're XQ preserving to and mean of We with new

And was so I that it think was low. more XQ

is you I think includes total this I billion BRLX.X billion low. go-forward said, growth. XQ between still on basis project BRLX in to CapEx, think something I which should line, a Like

Okay.

session. So closes Q&A our this

John for move We the closing will to now on remarks.

seasonally dedication build continue we us, greatest the where to full are, this of management strongest about Alex, we everybody, excited We're the update the road part appreciate Thanks, to Thanks, many in further on will your everybody. of you months myself, year team you with call. of ahead of Thais world. time on meeting kind to on of and the today upcoming story. the the and be airline in the

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