• Revenue: Record revenue of 5.5 billion reais, up 10% year over year.
• EBITDA: Record quarterly EBITDA of 2 billion reais with a margin of 35.2%.
• EBIT: EBIT of 1.2 billion reais.
• RASC: Strong RASC of BRL0.45 cents.
• Capacity Growth: Capacity growth of 11% year over year.
• Fuel Prices: Fuel prices dropped 17% year over year.
• High-Margin Business Units: Contribution to RASC grew from 15% in 4Q23 to 23% in 4Q24.
• Loyalty Program: Over 18 million members, with a 27% increase in gross billings ex-airline year over year.
• Co-branded Credit Card: Total spending represents 0.5% of Brazil's GDP.
• Vacations Business: 63% growth in gross billings in 2024.
• Logistics Business: 9% increase in international revenue for the full year and 54% growth quarter over quarter.
• CASK: Overall CASK down 6.5% year over year; CASK ex-fuel remained flat.
• Aircraft Utilization: Increased by almost 13% year over year.
• Productivity: 10% more productive in terms of ASKs per FTE compared to last year.
• Debt Reduction: Almost BRL8.5 billion in debt extinguished.
• Capital Structure: $500 million of new capital raised.
• Share Count: Total share count on equivalent preferred basis will be 2.3 billion shares.

• Warning! GuruFocus has detected 5 Warning Signs with AZUL.

Release Date: February 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Azul SA (NYSE:AZUL) reported record revenue, EBITDA, and EBIT for the fourth quarter, with revenue up 10% year over year to 5.5 billion reais.
• The company achieved a record quarterly EBITDA of 2 billion reais, with a margin of 35.2%, highlighting its strong profitability.
• Azul SA (NYSE:AZUL) has a unique network advantage, being the only carrier on 82% of its routes, which strengthens its market position.
• The company's loyalty program and co-branded credit card have shown significant growth, contributing to revenue diversification.
• Azul SA (NYSE:AZUL) successfully completed a comprehensive capital restructuring, reducing debt by over 6.3 billion reais and improving its capital structure.

Negative Points

• Azul SA (NYSE:AZUL) faced significant challenges in 2024, including OEM supply chain issues and engine challenges, impacting operations and finances.
• The company was affected by a devaluation of the local currency and extreme weather events, which disrupted operations and financial performance.
• Despite improvements, the company still faces headwinds from currency fluctuations, which could impact free cash flow.
• Azul SA (NYSE:AZUL) has a significant amount of debt, and while restructuring has improved the situation, it remains a concern.
• The company is reliant on successful execution of its strategic plans, including fleet transformation and cost management, to maintain profitability.

Q & A Highlights

Q: Could you provide an update on the major cash flow components for 2025 and 2026 after the capital restructuring? A: Alexandre Malfitani, CFO, explained that the guidance for free cash flow remains consistent with previous projections, reaffirming a $7.4 billion EBITDA. Despite currency fluctuations, a minor fare increase could offset the impact, maintaining the free cash flow target.

Q: What are the expectations for fleet deliveries and retirements this year, and how should we think about domestic versus international growth? A: Abhi Shah, Chief Revenue Officer, stated that growth will be higher in the first half of the year, driven by Porto Alegre. The focus is on E2 deliveries, with some E1 and ATR retirements. Overall capacity growth is expected to be 10-12%, with domestic growth around 8% and higher international growth due to previous OEM impacts.

Q: Can you comment on the status of the BRL200 million equity raise and the issuance of ON shares as part of the restructuring plan? A: John Rodgerson, CEO, confirmed that controlling shareholders are investing in the company, indicating confidence in Azul's future. Alexandre Malfitani added that several capital raises are underway, allowing shareholders to participate under the same conditions as lessors and bondholders.

Q: Regarding the M&A proposal with GOL, what are the expectations for the analysis and potential synergies? A: Abhi Shah highlighted the low network overlap between Azul and GOL, emphasizing growth potential and consumer benefits. The merger aims to expand service to more cities and enhance global competitiveness in fleet and capital access.

Q: Could you provide more color on the current demand environment, particularly for leisure and business travel? A: Abhi Shah noted a positive demand environment, with strong close-in revenue builds and disciplined discounting. Corporate demand remains robust, with no signs of slowdown, and international demand is stable despite currency fluctuations.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.