Azul Reports First Quarter 2020 Results and Outlines Plan to Get through the COVID-19 Crisis

Editor -

São Paulo, May 14th, 2020 – Azul S.A., “Azul” (B3:AZUL4, NYSE:AZUL) announces today its results for the first quarter of 2020 (“1Q20”). The following financial information, unless stated otherwise, is presented in Brazilian reais and in accordance with International Financial Reporting Standards (IFRS), including the recently adopted IFRS 16 standard. Financial and Operating Highlights for 1Q20

  • 1Q20 operating income was R$173.6 million, representing a margin of 6.2%. Normalizing for the impact of COVID-19 and the 18% average depreciation of the real year over year, operating margin would have been 14.9%, 1.2 points higher than 1Q19.
  • Net loss excluding currency and mark-to-market variations was R$975.3 million mostly due to the R$618.5 million fair value adjustment of our participation in TAP and fuel hedge losses.

1 Adjusted for non-recurring items totaling R$14.8 million in 1Q20.

2 Results normalized for 1Q19 exchange rate and for COVID-19 (excluding results from March 14 to March 31, 2020).

3 Excludes mark-to-market and exchange rate gains and losses, as they have no cash impact.

  • RASK decreased 1.5% with a capacity increase of 12% year over year. On a stage-length adjusted basis, RASK increased 1.6%.

  • CASK increased 7% year over year mostly due to the 18% average depreciation of the Brazilian real. CASK decreased 2.1% controlling for currency and COVID-19.

  • Azul’s total cash and investments position was R$3.1 billion as of March 31st, 2020. Including deposits and unencumbered assets our total liquidity position was R$6.7 billion. The Company ended April with a cash position slightly above March and expects to have a net cash burn of R$3 million to R$4 million per day including interest expenses in May and June. Based on its projections, Azul believes it has the ability to withstand the current demand environment for over a year.

  • Azul’s operating commercial fleet totaled 138 aircraft at the end of the quarter, including 49 next-generation aircraft, which represented 55% of total 1Q20 capacity. Since April, Azul has been operating approximately 15 to 20 aircraft.

  • TudoAzul ended the quarter with more than 12 million members and recorded an 18% year-over-year increase in gross billings ex-Azul.

  • Azul Cargo revenue grew 41% in 1Q20 compared to 1Q19.