São Paulo, March 16, 2020 – Azul S.A., “Azul”, (B3: AZUL4, NYSE: AZUL), announces today that in response to the economic impact following the outbreak of COVID-19 in Brazil, the company is taking additional steps to preserve its financial position.
“While our top priority remains the health and safety of our crewmembers and customers, we continue to focus on adjusting capacity to demand and preserving our cash position during this challenging time. We ended 2019 as one of the most profitable airlines in the world. Our strong liquidity position, combined with the expertise and dedication of our team give me confidence that we will come out of this crisis a lot stronger as an airline”, said John Rodgerson, CEO of Azul.
We are reducing consolidated capacity by 20%-25% in March and by 35% to 50% in April and beyond until the situation normalizes. As of March 16th, all international flights, except flights leaving from Campinas, will be suspended.
The company will continue to monitor demand trends on a daily basis adjusting capacity and its network as needed and will keep the market updated on further developments. For up-to-the-minute flight and schedules information, visit www.voeazul.com.br
Fixed costs reduction
In addition to flight cancelations, Azul is taking several measures to reduce its fixed costs, which represent approximately 40% of total operating cost.
- Executive management team salary cut of 25% until situation normalizes
- Hiring freeze
- Payment deferral of 2019 profit sharing
- Voluntary unpaid leave program with over 600 requests approved so far
- Suspension of travel and discretionary spending
- Grounding aircraft
- Suspending all new aircraft deliveries
Balance sheet and cash flow
Azul ended 2019 with R$2.8 billion in liquid assets, including cash and cash equivalents and accounts receivables. As of December 31, 2019, the company had no restricted cash and also held deposits and maintenance reserves totaling R$1.7 billion, and long-term investments totaling R$1.4 billion.
The company is preemptively negotiating new payment terms with its partners. In addition, the company is closing new line of credits with financial institutions to further strengthen its cash cushion.