0001292814-23-002269.txt : 20230515 0001292814-23-002269.hdr.sgml : 20230515 20230515075731 ACCESSION NUMBER: 0001292814-23-002269 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20230331 FILED AS OF DATE: 20230515 DATE AS OF CHANGE: 20230515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AZUL SA CENTRAL INDEX KEY: 0001432364 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, SCHEDULED [4512] IRS NUMBER: 000000000 STATE OF INCORPORATION: D5 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38049 FILM NUMBER: 23918464 BUSINESS ADDRESS: STREET 1: EDIFICIO JATOBA, 8TH FL, CASTELO BRANCO STREET 2: OFFICE PARK, AVENIDA MARCOS PENTEADO DE CITY: BARUERI STATE: D5 ZIP: 06460-040 BUSINESS PHONE: 55 11 4831 2880 MAIL ADDRESS: STREET 1: EDIFICIO JATOBA, 8TH FL, CASTELO BRANCO STREET 2: OFFICE PARK, AVENIDA MARCOS PENTEADO DE CITY: BARUERI STATE: D5 ZIP: 06460-040 FORMER COMPANY: FORMER CONFORMED NAME: SALEB II PARTICIPACOES SA DATE OF NAME CHANGE: 20080415 6-K 1 azuler1q23_6k.htm FORM 6-K

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

For the month of May, 2023

Commission File Number: 001-38049

 

Azul S.A.

(Name of Registrant)

 

Edifício Jatobá, 8th floor, Castelo Branco Office Park

Avenida Marcos Penteado de Ulhôa Rodrigues, 939

Tamboré, Barueri, São Paulo, SP 06460-040, Brazil.

+55 (11) 4831 2880

 (Address of Principal Executive Office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x                       Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes ¨                     No x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes ¨                     No x

 

 
 

First Quarter

Results

2023

 

 

Azul Reports 74% Increase In EBITDA
Driven by Strong Demand

São Paulo, May 15, 2023 – Azul S.A., “Azul” (B3:AZUL4, NYSE:AZUL), the largest airline in Brazil by number of cities and departures, announces today its results for the first quarter of 2023 (“1Q23”). The following financial information, unless stated otherwise, is presented in Brazilian reais and in accordance with International Financial Reporting Standards (IFRS).

Financial and Operating Highlights

§  In 1Q23, operating revenue reached once again an all-time record as travel demand remained robust. Total operating revenue reached R$4.5 billion, 40.3% higher than in 1Q22.

§PRASK and RASK were at record levels for a first quarter, up 23.1% and 17.7% respectively compared to 1Q22, even with a capacity increase of 19.1%.

§  Yield also reached an all-time record for a first quarter at R$48.5 cents, an increase of 24.2% compared to 1Q22 and up 35.6% versus 1Q19.

Highlights¹ 1Q23 1Q22 Change
Total operating revenue (R$ million) 4,478.3 3,193.0 40.3%
Operating income (R$ million)  462.4 70.7  391.8
Operating margin (%) 10.3% 2.2% +8.1 p.p.
EBITDA (R$ million) 1,030.1  592.7  437.4
EBITDA margin (%) 23.0% 18.6% +4.4 p.p.
ASKs (million)  10,799  9,064 19.1%
Average fare (R$)  590.8  449.1 31.6%
RASK (R$ cents)  41.47  35.23 17.7%
PRASK (R$ cents)  38.61  31.37 23.1%
Yield (R$ cents)  48.50  39.03 24.2%
CASK (R$ cents)  37.19  34.45 8.0%
CASK ex-fuel (R$ cents)  21.69  21.33 1.7%
Fuel cost per liter (R$) 5.25 4.25 23.6%

¹ Operating results and EBITDA were adjusted for non-recurring items. Please refer to page 10 for additional details.

§EBITDA was R$1,030.1 million in the quarter, representing a margin of 23.0%. EBITDA was up 73.8% compared to 1Q22, even with a 23.6% increase in fuel prices. Operating income was R$462.4 million in the quarter, representing a margin of 10.3%.
§CASK in 1Q23 was 37.19 cents, up 8.0% compared to 1Q22, mainly due to the 23.6% increase in fuel prices. CASK ex-fuel increased only 1.7% mainly driven by our cost reduction initiatives and productivity gains.
§As a result of these efficiency gains, productivity measured in ASKs per FTE increased 13.0%. Fuel consumption per ASK dropped 4.4% in 1Q23 versus 1Q22, as a result of the higher number of next-generation aircraft in our fleet.
§Immediate liquidity ended the quarter at R$1.8 billion. Our operational cash inflows surpassed outflows by over R$1.4 billion, and we continued to deleverage with around R$1.0 billion in debt amortizations, current and COVID-related deferral lease payments, and R$765.5 million in supply chain financing repayment.
§Gross debt decreased R$194.5 million in the quarter to R$21.6 billion. Excluding the impact of new aircraft entering the fleet, gross debt reduced R$378.3 million. Azul’s leverage, measured as net debt to LTM EBITDA, decreased 0.5x in the quarter from 5.7x in 4Q22 to 5.2x in 1Q23.
1 
 

First Quarter

Results

2023

Management Comments

I would like to start by thanking our incredible and passionate Crewmembers for their dedication and hard work during the first quarter of 2023. Again, we delivered an industry-leading operation and a world-class customer experience, all of this as a more efficient airline. For the quarter, our FTEs per aircraft decreased 3.8% versus 1Q22 even with a 19% increase in our ASKs. In addition, in March we were the most on-time airline in the world, following our recognition as “World’s Most On-Time Airline for 2022” from Cirium.

The first quarter of 2023 continued to demonstrate the strength of our business model. We once again achieved record revenues, at R$4.5 billion, 40% up versus 2022. RASK reached R$41.47 cents, an 18% increase from the same period in 2022. PRASK for the quarter increased 23% versus the same period last year, even with a 121% increase in our international capacity. Our EBITDA increased 74% year over year, reaching over R$1.0 billion, resulting in a margin of 23%, even with a 24% increase in fuel prices compared to 1Q22.

On the revenue side, we continue to see a healthy demand environment. While overall PRASK increased 23% versus 1Q22, our domestic PRASK increased an impressive 28%. Demand in the international markets continues very strong, highlighted by our new Paris service, which debuted on April 26th. Together with our recently doubled presence at Congonhas airport, our product offering has never been more relevant, allowing us to showcase to new customers our superior product, broad network, award-winning loyalty program, and unique travel and logistics offerings.

We also continued to efficiently manage our costs during the quarter. Compared to 1Q22, our unit cost ex-fuel was flat, mainly driven by efficiency initiatives and productivity gains implemented during the past few years. Productivity measured in ASKs per full-time employee increased 13% compared to the same period last year. Our call center today handles 25% more calls per crewmember than we did in 2019. Our airports are selling over 40% more in ancillary revenues with the same crewmember compared to 2019 – all of this while maintaining a market-leading Net Promoter Score around 60.

We ended the quarter with immediate liquidity of R$1.8 billion, while our total liquidity, including long-term investments and sublease receivables, security deposits, and maintenance reserves, reached R$5.2 billion. Our operational cash inflows surpassed outflows by over R$1.4 billion, a contribution margin of 29%, and we continued our deleveraging process with around R$1.0 billion in debt amortizations, current and COVID-related deferral lease payments, and R$766 million in supply chain financing repayment.

Our wholly-owned business units maintained their growth trends in 1Q23. TudoAzul, our loyalty program, saw nearly 50% growth in gross billings compared to 1Q22. Azul Viagens had an impressive quarter, growing over 40% in gross bookings versus 1Q22. Azul Cargo, our logistics business, grew 10% in the domestic market compared to the same period in 2022, maintaining its position as the largest air-logistics provider in Brazil with an impressive 33% market share. We also announced the launch of Azul TecOps, a business unit responsible for aircraft maintenance, repairs, and overhauls. This is another high-growth business which leverages Azul’s expertise, operational scale and fleet flexibility to offer high-quality technical services to external customers.

During the first months of 2023, we continued the implementation of our permanent restructuring plan to address the remaining effects from COVID-19 in our capital structure. We published today pro-forma estimates for our gross debt and annual lease payments reflecting commercial agreements with lessors and suppliers to restructure debt and lease payments, subject to certain conditions. We remain committed to this effort, which will make Azul’s financial position mirror our superior operational performance.

Looking ahead, we could not be more excited with the trends we are seeing in the demand environment combined with the steep fall in fuel prices. For example, as we look ahead, fuel prices in the back half of the year are currently 29% below the levels we saw in the first quarter. This, combined with our efficient cost structure, a disciplined capacity environment and our increased presence in Congonhas, lead us to be very optimistic for the rest of the year and beyond.

John Rodgerson, CEO of Azul S.A.

2 
 

First Quarter

Results

2023

Consolidated Financial Results

The following income statement and operating data should be read in conjunction with the quarterly results comments presented below.

Income statement (R$ million)¹ 1Q23 1Q22 % Δ
Operating Revenue      
Passenger revenue 4,169.9 2,843.0 46.7%
Cargo revenue and other  308.5  350.1 -11.9%
Total operating revenue 4,478.3 3,193.0 40.3%
Operating Expenses      
 Aircraft fuel 1,673.4 1,189.0 40.7%
 Salaries and benefits  537.5  434.2 23.8%
 Depreciation and amortization  567.7  522.0 8.7%
 Airport fees  262.4  199.1 31.8%
Traffic and customer servicing  195.6  133.0 47.1%
 Sales and marketing  174.0  126.9 37.2%
 Maintenance and repairs  157.9  147.2 7.3%
 Other  447.5  371.0 20.6%
Total Operating Expenses 4,015.9 3,122.4 28.6%
Operating Result  462.4 70.7 554.4%
Operating margin 10.3% 2.2% +8.1 p.p.
EBITDA 1,030.1  592.7 73.8%
EBITDA margin 23.0% 18.6% +4.4 p.p.
Financial Result²      
Financial income 53.5 48.9 9.3%
Financial expenses (1,195.7) (969.1) 23.4%
Derivative financial instruments, net (193.9)  209.9 n.a.
Foreign currency exchange, net  551.5 3,298.4 -83.3%
Result Before Income Taxes² (322.2) 2,658.8 n.a.
Income tax and social contribution - - n.a.
 Deferred income tax and social contribution - - n.a.
Net Result² (322.2) 2,658.8 n.a.
Net margin -7.2% 83.3% n.a.
Adjusted Net Result³ (727.6) (808.4) -10.0%
Adjusted net margin³ -16.2% -25.3% +9.1 p.p.
Fully diluted shares⁴  424.2  406.0 4.5%
Diluted EPS (0.76) 6.55 n.a.
Diluted EPS (US$) (0.15) 1.25 n.a.
Diluted EPADR (US$) (0.44) 3.75 n.a.
Adjusted EPS³ (1.72) (1.99) -13.8%
Adjusted EPS³ (US$) (0.33) (0.38) -13.2%
Adjusted EPADR (US$)³ (0.99) (1.14) -13.2%

¹ Operating results and EBITDA were adjusted for non-recurring items. Please refer to page 10 for additional details.

² Financial results adjusted for convertible debenture expenses.

³ Net result and EPS/EPADR adjusted for unrealized derivative results and foreign currency. One ADR equals three preferred shares (PNs).

4 Fully diluted shares adjusted for convertible debentures.

3 
 

First Quarter

Results

2023

 

 

Operating Data¹ 1Q23 1Q22 % Δ
ASK (million)  10,799  9,064 19.1%
Domestic  8,505  8,024 6.0%
International  2,294  1,040 120.7%
RPK (million)  8,598  7,284 18.0%
Domestic  6,703  6,442 4.1%
International  1,895 842 125.1%
Load factor (%) 79.6% 80.4% -0.7 p.p.
Domestic 78.8% 80.3% -1.5 p.p.
International 82.6% 81.0% +1.6 p.p.
Average fare (R$)  590.8  449.1 31.6%
Passengers (thousands)  7,058  6,331 11.5%
Block hours 137,703 117,301 17.4%
Aircraft utilization (hours per day) 9.7 8.5 13.6%
Departures  78,739  67,981 15.8%
Average stage length (km)  1,160  1,128 2.9%
End of period operating passenger aircraft 182 166 9.6%
Fuel consumption (thousands of liters) 318,462 279,613 13.9%
Fuel consumption per ASK  29.5  30.8 -4.4%
Full-time-equivalent employees  13,651  12,944 5.5%
End of period FTE per aircraft  75  78 -3.8%
Yield (cents)  48.50  39.03 24.2%
RASK (cents)  41.47  35.23 17.7%
PRASK (cents)  38.61  31.37 23.1%
CASK (cents)  37.19  34.45 8.0%
CASK ex-fuel (cents)  21.69  21.33 1.7%
Fuel cost per liter (R$)  5.25  4.25 23.6%
Break-even load factor (%) 71.4% 78.6% -7.2 p.p.
Average exchange rate (R$ per US$)  5.20  5.23 -0.7%
End of period exchange rate  5.08  4.74 7.2%
Inflation (IPCA/LTM) 5.96% 11.30% -5.3 p.p.
WTI (average per barrel, US$)  77.20  95.01 -18.7%
Heating oil (US$ per gallon)  2.92  3.07 -4.8%

¹ Other operating expenses were adjusted for non-recurring items. Please refer to page 10 for additional details.

Operating Revenue

In 1Q23, Azul´s operating revenue reached once again an all-time record, totaling R$4.5 billion compared to R$3.2 billion in the same period last year, an increase of 40.3%.

Passenger revenue also reached an all-time record, increasing 46.7% on 19.1% higher capacity compared to the same period last year.

PRASK reached record levels for a first quarter, increasing 23.1% compared to 1Q22, enabled by our rational capacity deployment and the sustainable competitive advantages of our business model.

Total RASK also reached record levels for a first quarter, increasing 17.7% compared to 1Q22.

In 1Q23, domestic cargo revenue grew 9.7% year-over-year due to strong domestic demand for our logistics solutions and our exclusive network. Cargo revenue and other totaled R$308.5 million, 11.9% lower than 1Q22, as we redeployed widebody aircraft from dedicated cargo operations to passenger service to take advantage of the faster than expected recovery in international travel.

 

4 
 

First Quarter

Results

2023

 

R$ cents¹ 1Q23 1Q22 % Δ
Operating revenue per ASK      
Passenger revenue  38.61  31.37 23.1%
Cargo revenue and other  2.86  3.86 -26.0%
Operating revenue (RASK)  41.47  35.23 17.7%
Operating expenses per ASK¹      
Aircraft fuel  15.50  13.12 18.1%
Salaries and benefits  4.98  4.79 3.9%
Depreciation and amortization  5.26  5.76 -8.7%
 Airport fees  2.43  2.20 10.6%
Traffic and customer servicing  1.81  1.47 23.5%
Sales and marketing  1.61  1.40 15.1%
Maintenance and repairs  1.46  1.62 -10.0%
Other operating expenses  4.14  4.09 1.2%
Total operating expenses (CASK)  37.19  34.45 8.0%
Operating income per ASK (RASK/CASK)  4.28  0.78 449.3%

¹ Other operating expenses were adjusted for non-recurring items. Please refer to page 10 for additional details.

Operating Expenses

In 1Q23, we recorded operating expenses of R$4.0 billion compared to R$3.1 billion in 1Q22, representing an increase of 28.6% mainly driven by a 23.6% increase in fuel prices in addition to our capacity increase of 19.1%, partially offset by lower fuel burn, higher employee productivity and cost reduction initiatives.

The breakdown of our main operating expenses compared to 1Q22 is as follows:

§Aircraft fuel increased 40.7% to R$1,673.4 million, mostly due to a 23.6% increase in fuel price per liter and a 19.1% increase in total capacity, partially offset by the reduction in fuel burn as a result of our more efficient next-generation fleet.
§Salaries and benefits increased 23.8% to R$537.5 million, driven by our capacity increase of 19.1% and a 7.9% union increase in salaries as a result of collective bargaining agreements with labor unions applicable to all airline employees in Brazil in 2022, partially offset by higher employee productivity.
§Depreciation and amortization increased 8.7% or R$ 45.6 million, driven by the increase in the size of our fleet compared to 1Q22.

§  Airport fees increased 31.8% or R$ 63.3 million, mostly due to the increase in capacity, especially the 120.7% increase in international capacity, which drives higher fees.

§  Traffic and customer servicing increased to R$195.6 million, primarily due to the resumption of Azul’s renowned onboard service after a two-year suspension due to the pandemic, a 15.8% increase in the number of departures, and the inflation in the period.

§  Sales and marketing increased 37.2% to R$174.0 million, mostly driven by the 46.7% growth in passenger revenue, leading to an increase in credit card fees and commissions, and the increase in international traffic, which generates higher distribution costs.

§Maintenance and repairs increased 7.3% or R$10.7 million compared to 1Q22. Maintenance and repairs per ASK decreased 10.0%, mostly due to savings from the insourcing of maintenance events and from the renegotiation of our engine maintenance agreements.
§Other increased 20.6% or R$76.5 million, mainly due to the 19.1% increase in capacity and higher training expenses as we increased our operations over 1Q22, partially offset by a 44% reduction in our international cargo capacity, lower claims in the period, and the 0.7% average appreciation of the real against the dollar. On a per-ASK basis, other increased 1.2%.

 

5 
 

First Quarter

Results

2023

Non-Operating Results

Net financial results (R$ million)¹ 1Q23 1Q22 % Δ
Net financial expenses (1,142.2)  (920.2) 24.1%
Derivative financial instruments, net  (193.9)  209.9 n.a.
Foreign currency exchange, net  551.5 3,298.4 -83.3%
Net financial results  (784.6) 2,588.1 n.a.

¹ Excludes convertible debentures expenses.

Net financial expenses were R$1,142.2 million in the quarter, mainly from the R$655.1 million interest expense on leases and R$146.3 million in interest on loans and financing in 1Q23.

Derivative financial instruments resulted in a net loss of R$193.9 million in 1Q23 mostly due to fuel hedge losses recorded during the period. As of March 31, 2023, Azul had hedged approximately 18% of its expected fuel consumption for the next twelve months by using forward contracts and options.

Foreign currency exchange, net registered a non-cash foreign currency gain of R$551.5 million in 1Q23 due to the 2.6% end of period appreciation of the Brazilian real against the US dollar in the quarter, resulting in a decrease in lease liabilities and loans denominated in foreign currency.

Liquidity and Financing

The information below does not reflect the expected impact of commercial agreements with lessors and suppliers to restructure debt and lease payments, subject to certain conditions. Please refer to the material fact released today for additional details.

Azul ended the quarter with R$1.8 billion in immediate liquidity, including cash and cash equivalents, short-term receivables, and short-term investments, R$743.3 million lower than 4Q22, mainly due to the repayment of R$765.5 million in supply chain financing and around R$1.0 billion payment in leases, loans, COVID-related deferral repayments and interest. This immediate liquidity represented 10.4% of our LTM revenue.

Total liquidity including long-term investments and receivables, security deposits, and maintenance reserves, was R$5.2 billion as of March 31, 2023. Recently, an independent firm appraised our TudoAzul, Azul Cargo and Azul Viagens business units and our brands at more than R$25 billion.

 

Liquidity (R$ million) 1Q23 4Q22 % Δ
Cash, cash equivalents and short-term investments  466.4 668.3 -30.2%
Accounts receivable and sublease receivables 1,332.9  1,874.2 -28.9%
 Immediate liquidity 1,799.2  2,542.5 -29.2%
 Cash as % of LTM revenue 10.4% 15.9% -5.5 p.p.
Long-term investments and sublease receivables  843.7 838.9 0.6%
Security deposits and maintenance reserves 2,563.7  2,539.6 1.0%
Total Liquidity 5,206.6  5,921.0 -12.1%

 

 

 

 

 

6 
 

First Quarter

Results

2023

 

Azul’s debt amortization schedule as of March 31, 2023 is set out below. The chart converts our dollar-denominated debt to reais using the quarter-end foreign exchange rate of R$5.08.

Loans and financial debt amortization as of March 31, 2023
(R$ million converted at 5.08 reais per dollar)¹

 

 

¹ Excludes convertible debentures.

 

Gross debt decreased R$194.5 million to R$21.6 billion in the quarter, mostly due to our continued deleveraging process with R$958.6 million in payments of loans and leases during the quarter, and by the 2.6%end of period appreciation of the Brazilian real, partially offset by the addition of R$183.7 million in lease liabilities related to new aircraft entering our fleet. Excluding the impact of the new aircraft entering in the fleet, gross debt reduced by R$378.3 million.

 

 

Loans and financing (R$ million)¹ million)restructuring, R$ million)¹ 1Q23 4Q22 % Δ 1Q22 % Δ
Operating lease liabilities 13,765.5 13,771.3 0.0% 11,804.8 16.6%
Finance lease liabilities 734.6 811.5 -9.5% 903.1 -18.7%
Other aircraft loans and financing 793.8 792.2 0.2%  1,026.0 -22.6%
Loans and financing 6,327.1  6,440.5 -1.8%  6,339.6 -0.2%
% of non-aircraft debt in local currency 19% 19% -0.7 p.p. 25% -5.9 p.p.
% of total debt in local currency 6% 6% -0.2 p.p. 8% -2.6 p.p.
Gross debt  21,621.0  21,815.5 -0.9%  20,073.6 7.7%

¹ Considers the effect of hedges on debt. Excludes convertible debentures.

 

As of March 31, 2023, Azul’s average debt maturity excluding lease liabilities and convertible debentures was 2.0 years, with an average interest rate of 8.2%. Average interest rate on local and dollar-denominated obligations were equivalent to CDI + 5% and 6.5%, respectively.

7 
 

First Quarter

Results

2023

The table below presents additional information related to our leases and includes both current and COVID-related deferral lease payments.

Lease payments (R$ million) 1Q23 4Q22 % Δ 1Q22 % Δ
Operating leases          
Payments made 471.4  868.3 -45.7% 939.7 -49.8%
Weighted average remaining lease term 7.3  7.4 -0.5%  7.8 -6.2%
Finance leases          
Payments made 52.7  43.9 20.0% 60.6 -13.1%
Weighted average remaining lease term 5.5  5.5 0.0%  5.5 0.3%

 

Azul’s leverage ratio measured as net debt to LTM EBITDA decreased 2.6x year-over-year, from 7.8x to 5.2x. We are confident in our ability to continue reducing leverage organically, a process that should be accelerated by our permanent restructuring plan.

Key financial ratios (R$ million) 1Q23 4Q22 % Δ 1Q22 % Δ
Cash¹ 2,642.9  3,381.4 -21.8%  4,134.5 -36.1%
Gross debt² 21,621.0  21,815.5 -0.9% 20,073.6 7.7%
Net debt 18,978.1  18,434.1 3.0% 15,939.1 19.1%
Net debt / EBITDA³ (LTM) 5.2x 5.7x 0.5x 7.8x -2.6x

¹ Includes cash, cash equivalents, receivables, short and long-term investments.

² Excludes convertible debentures.

³ EBITDA was adjusted for non-recurring items.

Fleet and Capital Expenditures

As of March 31, 2023, Azul had a passenger operating fleet of 182 aircraft and a passenger contractual fleet of 194 aircraft, with an average aircraft age of 7.2 years excluding Cessna aircraft. At the end of 1Q23, the 12 aircraft not included in our operating passenger fleet consisted of 4 ATRs subleased to TAP, 3 Embraer E1s subleased to Breeze, 2 Embraer E1s and 3 Airbus A330ceo in the processing of exiting the fleet.

Azul ended 1Q23 with approximately 76% of its capacity coming from next-generation aircraft, far higher than any competitor in the region.

Passenger Contractual Fleet¹ 1Q23 4Q22 % Δ 1Q22 % Δ
Airbus widebody 14 14 - 12 16.7%
Airbus narrowbody 53 52 1.9% 49 8.2%
Embraer E2 15 14 7.1% 9 66.7%
Embraer E1 47 49 -4.1% 50 -6.0%
ATR 41 41 - 39 5.1%
Cessna 24 24 - 19 26.3%
Total¹ 194 194 - 178 9.0%
Aircraft under operating leases 168 168 - 152 10.5%

¹ Includes 7 subleased aircraft.

 

 

Passenger Operating Fleet 1Q23 4Q22 % Δ 1Q22 % Δ
Airbus widebody 11 11 - 11 -
Airbus narrowbody 53 51 3.9% 49 8.2%
Embraer E2 15 13 15.4% 9 66.7%
Embraer E1 42 43 -2.3% 45 -6.7%
ATR 37 37 - 33 12.1%
Cessna 24 22 9.1% 19 26.3%
Total 182 177 2.8% 166 9.6%
8 
 

First Quarter

Results

2023

Capex

Capital expenditures totaled R$81.8 million in 1Q23, mostly due to the capitalization of engine overhaul events and the acquisition of spare parts in the quarter.

(R$ million) 1Q23 4Q22 % Δ
Aircraft and maintenance and checks 35.9 334.8 -89.3%
Intangible assets 40.2 65.0 -38.2%
Other 5.7 27.0 -78.9%
 CAPEX 81.8 426.9 -80.8%

 

 

Environmental, Social and Governance (“ESG”) Responsibility

The table below presents Azul’s key ESG information according to the Sustainability Accounting Standards Board (SASB) standard for the airline industry:

ESG Key Indicators 1Q23 4Q22 % Δ
Environmental      
Fuel      
Total fuel consumed per ASK (GJ / ASK) 1,108 1,134 -2%
Total fuel consumed (GJ x 1000) 11,963 11,823 1%
Fleet      
Average age of operating fleet¹ 7.2 7.1 1%
Social      
Labor Relations      
Employee gender: male 59.9% 59.4% 0.5 p.p.
Employee gender: female 40.1% 40.6% -0.5 p.p.
Employee monthly turnover 0.9% 0.9% -
% of employee covered under collective bargaining agreements 100% 100% -
Volunteers 4,722 4,324 9%
Governance      
Management      
Independent directors 91% 91% -
Percent of Board members that are women 18% 18% -
Board of Directors' average age 59 58 0.4%
Director meeting attendance 97% 96% 1 p.p.
Board size 11 11 -
Participation of women in leadership positions 40% 40% -

¹ Excludes Cessna aircraft



9 
 

First Quarter

Results

2023

 

Non-Recurring Items Reconciliation

Our results include the impacts of charges that we deem non-recurring items and should not be considered to compare to prior periods as well as future periods.

In 1Q23, our operating results presented in this release have been adjusted for non-recurring items totaling a net loss of R$294.4 million, mainly due to the fleet adjustments related to our permanent restructuring plan, in addition to advisors fees and other related expenses, and a one-time adjustment related to an engine maintenance agreement terminated in 1Q23 and expected to be replaced before year-end, when this amount should be reversed.

The table below provides a reconciliation of our reported amounts to the adjusted amounts excluding non-recurrent items:

1Q23 Non-recurring adjustments As recorded Adjustments Adjusted
 Operating revenue 4,478.3 - 4,478.3
 Operating expense 4,310.3 (294.4) 4,015.9
 Other expense  741.9 (294.4)  447.5
 Operating income  168.0  294.4  462.4
 Operating Margin 3.8% +6.6 p.p. 10.3%
 EBITDA  735.7  294.4 1,030.1
 EBITDA Margin 16.4% +6.6 p.p. 23.0%

 

10 
 

First Quarter

Results

2023

 

Forward Outlook

In 2023 we expect our capacity to grow approximately 14% vs. 2022, and combined with the continued revenue growth, our cost-cutting initiatives, and a rational competitive environment, we remain confident of an expected EBITDA for 2023 of around R$5.5 billion excluding non-recurring items.

Forward Outlook  
2023 Total ASK vs. 2022 ~14%
2023 EBITDA¹ ~R$5.5 billion
2023 Leverage² ~3.5x
2024 Leverage² ~3.0x

¹ Excludes non-recurring items.

² Includes cash and cash equivalents, short-term and long-term investments, and receivables. Excludes convertible debentures.

 

 

 

 

 

 

11 
 

First Quarter

Results

2023

 

Conference Call Details

 

Monday, May 15, 2023

11:00 a.m. (EDT) | 12:00 p.m. (Brasília time)

USA: +1 253 215-8782

Brazil: +55 11 4632-2236 or +55 21 3958-7888

Code: 891 8192 2198

Webcast: https://ri.voeazul.com.br/en/

 

 

 

About Azul

Azul S.A. (B3: AZUL4, NYSE: AZUL), the largest airline in Brazil by number of flight departures and cities served, offers 1,000 daily flights to over 150 destinations. With an operating fleet of over 170 aircraft and more than 14,000 Crewmembers, the Company has a network of 300 non-stop routes as of March 2023. Azul was named by Cirium (leading aviation data analysis company) as the most on-time airline in the world in 2022, being the first Brazilian airline to obtain this honor. In 2020 Azul was awarded best airline in the world by TripAdvisor, first time a Brazilian Flag Carrier earns number one ranking in the Traveler’s Choice Awards. For more information visit www.voeazul.com.br/ir.

 

 

Contact:

 

Investor Relations

Tel: +55 11 4831 2880

invest@voeazul.com.br

  

Media Relations

Tel: +55 11 4831 1245

imprensa@voeazul.com.br

 		  

 

 

 

12 
 

First Quarter

Results

2023

 

 

 

Balance Sheet – IFRS

 (R$ million) March 31, 2023 December 31, 2022 March 31, 2022
Assets 17,402.2  18,721.3  17,785.6
Current assets 3,949.7  4,871.9  5,030.2
Cash and cash equivalents  466.4  668.3  1,857.8
Short-term investments - -  1.5
Accounts receivable 1,267.1  1,804.0  1,329.4
Sublease receivables 65.8  70.2  69.6
Inventories  718.9  721.7  601.8
Security deposits and maintenance reserves  941.0  1,025.2  315.1
Taxes recoverable  234.7  234.9  152.6
Derivative financial instruments 21.2  36.1  261.1
Prepaid expenses  150.2  182.9  226.5
Other current assets 84.5  128.7  214.8
Non-current assets 13,452.5  13,849.4  12,755.4
Long-term investments  753.8  733.0  722.1
Sublease receivables 89.9  105.9  154.1
Security deposits and maintenance reserves 1,622.8  1,514.4  1,561.9
Derivative financial instruments -  235.9  227.4
Prepaid expenses  194.0  319.0  358.3
Other non-current assets 8.8  9.0  126.3
Right of use assets – leased aircraft and other assets 6,629.6  6,773.4  5,635.8
Right of use assets – maintenance of leased aircraft  764.5  779.2  605.5
Property and equipment 1,925.5  1,953.1  1,991.1
Intangible assets 1,463.7  1,426.5  1,372.9
Liabilities and equity 17,402.2  18,721.3  17,785.6
Current liabilities 15,884.4  15,056.1  11,796.1
Loans and financing 1,441.8  1,127.7  1,510.2
Leases 4,578.7  4,025.9  3,010.4
Accounts payable 2,715.7  2,432.8  1,561.6
Factoring -  753.4  165.5
Air traffic liability 4,091.9  4,140.0  3,048.0
Salaries and benefits  491.7  479.4  478.9
Insurance payable 62.8  85.0  44.5
Taxes payable  135.4  193.6  88.9
Derivative financial instruments  139.9  69.4  66.0
Provisions 1,079.1  834.3  970.1
Airport fees 1,033.7  831.9  615.7
Other  113.7  82.7  236.3
Non-current liabilities 21,244.5  22,672.7  21,628.3
Loans and financing 7,202.8  7,508.7  7,499.7
Leases 9,921.4  10,556.9  9,697.5
Accounts payable  403.2  517.0  540.8
Derivative financial instruments -  175.2  186.9
Provision 2,140.4  2,408.7  2,112.5
Airport fees  504.9  502.9  477.4
Other non-current liabilities 1,071.8  1,003.4  1,113.5
Equity (19,726.8)  (19,007.5)  (15,638.8)
Issued capital 2,314.0  2,313.9  2,291.0
Advance for future capital increase -  0.1  22.9
Capital reserve 1,990.4  1,970.1  1,950.8
Treasury shares (13.1)  (10.2)  (12.0)
Accumulated other comprehensive result 5.3  5.3  5.8
Accumulated losses (24,023.3)  (23,286.7)  (19,897.3)
13 
 

First Quarter

Results

2023

 

Cash Flow Statement – IFRS

 (R$ million) 1Q23 1Q22 % Δ
Cash flows from operating activities      
Net profit (loss) for the period (736.6)  2,667.0 n.a.
Total non-cash adjustments      
Depreciation and amortization 567.7  522.0 8.7%
Unrealized derivatives 275.0  (306.0) n.a.
Exchange gain and (losses) in foreign currency (583.3)  (3,424.6) -83.0%
Interest on assets and liabilities, net 975.9  905.9 7.7%
Provisions  97.7 80.3 21.6%
Result of lease agreements modification  (22.4)  (0.8) 2646.4%
Other  214.7  15.4 1294.8%
Changes in operating assets and liabilities      
Trade and other receivables 439.3 (361.3) n.a.
Sublease receivables  11.2  15.0 -25.0%
Security deposits and maintenance reserves 9.4 (75.2) n.a.
Prepaid expenses  (45.4) (58.5) -22.4%
Other assets (497.2)  0.5 n.a.
Derivatives  (47.8) 41.1 n.a.
Accounts payable 349.4  253.0 38.1%
Salaries and benefits  53.8  15.5 247.7%
Air traffic liability  (93.7) (93.0) 0.8%
Contingencies  (49.9) (37.4) 33.3%
Other liabilities 246.5 (183.2) n.a.
Interest paid  (120.9) (213.7) -43.4%
Net cash generated (used) by operating activities 1,043.1  (237.9) n.a.
       
Cash flows from investing activities      
Acquisition of intangible  (40.2) (42.8) -6.0%
Acquisition of property and equipment (41.6) (184.2) -77.4%
Net cash generated (used) in investing activities (81.8)  (227.0) -64.0%
       
Cash flows from financing activities      
Loans and financing      
Proceeds 302.3  200.0 51.1%
Repayment  (327.1)  (83.1) 293.7%
Lease repayment (407.7)  (820.5) -50.3%
Factoring (727.4) - n.a.
Treasury shares (2.9)  (0.0) 7102.5%
Net cash generated (used) in financing activities (1,162.8)  (703.6) 65.3%
       
Exchange gain (loss) on cash and cash equivalents (0.6) (47.5) -98.8%
       
Net decrease in cash and cash equivalents  (202.0)  (1,216.0) -83.4%
       
Cash and cash equivalents at the beginning of the period 668.3  3,073.8 -78.3%
       
Cash and cash equivalents at the end of the period 466.4 1,857.8 -74.9%
14 
 

First Quarter

Results

2023

 

Glossary

 

Aircraft Utilization
Average number of block hours per day per aircraft operated.

 

Available Seat Kilometers (ASK)

Number of aircraft seats multiplied by the number of kilometers flown.

 

Completion Factor

Percentage of accomplished flights.

 

Cost per ASK (CASK)
Operating expenses divided by available seat kilometers.

 

Cost per ASK ex-fuel (CASK ex-fuel)

Operating expenses divided by available seat kilometers excluding fuel expenses.

 

EBITDA

Earnings before interest, taxes, depreciation, and amortization, adjusted to exclude non-recurring items.

 

FTE (Full-Time Equivalent)

Equivalent number of employees assuming all work full-time.

 

Immediate Liquidity

Cash, cash equivalents, short-term investments and receivables

 

Load Factor

Number of passengers as a percentage of number of seats flown (calculated by dividing RPK by ASK).

 

LTM

Last twelve months ended on the last day of the quarter presented.

 

Revenue Passenger Kilometers (RPK)

One-fare paying passenger transported one kilometer. RPK is calculated by multiplying the number of revenue passengers by the number of kilometers flown.

 

Passenger Revenue per Available Seat Kilometer (PRASK)

Passenger revenue divided by available seat kilometers (also equal to load factor multiplied by yield).

 

Revenue per ASK (RASK)
Operating revenue divided by available seat kilometers.

 

Stage Length
The average number of kilometers flown per flight.

 

Trip Cost
Average cost of each flight calculated by dividing total operating expenses by total number of departures.

 

Yield

Average amount paid per passenger to fly one kilometer. Usually, yield is calculated as average revenue per revenue passenger kilometer, or cents per RPK.

15 
 

First Quarter

Results

2023

 

 

This press release includes estimates and forward-looking statements within the meaning of the U.S. federal securities laws. These estimates and forward-looking statements are based mainly on our current expectations and estimates of future events and trends that affect or may affect our business, financial condition, results of operations, cash flow, liquidity, prospects and the trading price of our preferred shares, including in the form of ADSs. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to many significant risks, uncertainties and assumptions and are made in light of information currently available to us. In addition, in this release, the words “may,” “will,” “estimate,” “anticipate,” “intend,” “expect,” “should” and similar words are intended to identify forward-looking statements. You should not place undue reliance on such statements, which speak only as of the date they were made. Azul is not under the obligation to update publicly or to revise any forward-looking statements after we distribute this press release because of new information, future events or other factors. Our independent public auditors have neither examined nor compiled the forward-looking statements and, accordingly, do not provide any assurance with respect to such statements. In light of the risks and uncertainties described above, the future events and circumstances discussed in this release might not occur and are not guarantees of future performance. Because of these uncertainties, you should not make any investment decision based upon these estimates and forward-looking statements.

In this press release, we present EBITDA and EBITDA margin, which are non-IFRS performance measures and are not financial performance measures determined in accordance with IFRS and should not be considered in isolation or as alternatives to operating income or net income or loss, or as indications of operating performance, or as alternatives to operating cash flows, or as indicators of liquidity, or as the basis for the distribution of dividends. Accordingly, you are cautioned not to place undue reliance on this information.

 

16 
  

 

SIGNATURES

 

                Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date:    May 15, 2023

 

                                                                                                                Azul S.A.

 

                                                                                                                By:   /s/ Alexandre Wagner Malfitani                                 
                                                                                                                Name: Alexandre Wagner Malfitani
                                                                                                                Title: Chief Financial Officer

 

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