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  • Joe Breitfeller

Azul Reports Third Quarter Earnings of R$559 Million on Revenue of R$3 Billion

Updated: Jan 11, 2020

On Thursday, São Paulo based Azul reported a 30% increase in operating income to R$559 versus the third quarter of 2018. Operating revenue increased 25.5% to R$3.03B and Margins improved to 18.5% versus 17.6% in Q3 2018.

Azul Airbus A330-900 - Courtesy Airbus

Azul S.A. (B3:AZUL4, NYSE: AZUL) reported third quarter earnings last Thursday R$559M ($134.9M) on revenues of R$3B ($723.9M). Operating income increased 30% year-over year (YoY), while revenue increased 25.5%. The airline also reported an improvement in operating margin to 18.5% versus 17.6% in Q3 2018. Earnings before interest, taxes, interest, depreciation and amortization (EBITDA) rose 24.4% to R$935.8M ($225.5M). Revenue passenger kilometers (RPKs) or passenger traffic increased 27.1% on a capacity increase of 26.1% and load factor increased 0.6% to 84.3% versus Q3 2018. Revenue per available seat kilometer (RASK) increased 1.7%, while cost per available seat kilometer (CASK) decreased 1.5%.

During the third quarter, Azul generated $R187 million ($45M) in free cash flow and ended the third quarter with R$4.4 billion ($1.06B) in total liquidity. Net debt to EBITDA leverage was 3.3x at the close of the quarter. Azul currently has a fleet of 133 aircraft, including 33% next generation aircraft, representing around 45% of capacity during the quarter. Azul Cargo reported a 42% increase in YoY cargo revenue and TudoAzul (Azul's frequent flyer program) reported a 40% increase in gross billings (ex-Azul).

In the third quarter report Azul’s CEO, John Rodgerson stated in part,

“Thanks to the dedication of our crewmembers, we delivered another set of strong results in 3Q19. Total revenue grew an impressive 25% year over year reaching R$3.0 billion, while operating margin expanded to 18.5%, maintaining our position as one of the most profitable airlines in the world. The strong growth performance was driven by our industry-leading operations and the successful execution of our fleet transformation strategy.”

“…We are also excited with our investment in TAP [TAP Air Portugal] as it continues to make progress on its own fleet transformation plan. The recent consolidation news in Europe further reinforce the value of our investment given TAP’s strategic location and leadership position between Europe and Brazil. In addition, today we have submitted for shareholders’ approval of a proposal for a joint venture with TAP, which we believe will be revenue accretive for both carriers in the coming years.”

Azul was founded in 2008 by airline magnate David Neeleman who also founded or co-founded Morris Air, JetBlue and WestJet. Mr. Neeleman also has a substantial equity stake in TAP Air Portugal and is in the process of launching a new U.S. based regional carrier code-named ‘Moxy.’

Source: Azul S.A.

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