Azul Brazilian Airlines reported a net loss of 4.4bn Brazilian reais ($767.4 million) in the fourth quarter of 2024, widening significantly from 52.8 million reais ($9.2 million) a year prior. In addition, full year net losses widened 284.4% to 9.2bn reais ($1.6 million).
These results were driven by the depreciation of the Brazilian real against the US dollar, resulting in an increase in lease liabilities and loans denominated in foreign currency. Foreign currency exchange, net registered a net loss of 4.1bn reais ($714.8 million). In addition, the “extreme floods” in Rio Grande do Sul state, which resulted in the over six-month closure of the Porto Alegre airport, as well as the impact of supply chain and engine challenges impacted its results. In addition, fuel costs were 3.87 reis ($0.68) per litre in the quarter, and 4.21 reis ($0.73) in the full year, which the airline said was higher than expected.
These headwinds had “made for a very challenging year”, the company’s CEO John Rodgerson said.
The company recently completed its $2.4bn restructuring in January 2025, which included around $1.6bn reduction of debt from its balance sheet. The balance sheet restructuring also improved its cash generation up to $200 million per year. In addition, it closed an offering of $525 million of in superiority notes due 2030.
“The first step of the [restructuring] plan was the elimination of equity obligations, all to lessors and OEMs, totalling approximately 3.1bn reis ($541.1 million) in exchange for 96 million new preferred shares, which are being issued right now in the first quarter of 2025,” said Azul CFO Alex Malfitani in the earnings call. The value of these obligations is around 2.7bn reis ($471.3 million).
“The agreements also extinguished a significant part of the 2030 notes held by the lessors and OEMs, with the remaining notes being exchanged for new and secured notes due two years later in 2032 with an option for Azul to pay interest in kind,” continued Malfitani.
The company also reached an agreement with its bondholders to equity into preferred shares $785 million of the 2029 and 2030 notes.
“We reduced our debt by over 6.3bn reis ($1.1bn), including the new superiority notes we issued in January,” said Malfitani. “If you do this simple math, this represents an implied valuation of over $2bn. We have strengthened our margins and can now turn our attention to expanding our margins and generating positive free cash flow.”
Management in its earnings call said that with its restructuring complete and the balance sheet now “fixed”, the company is “off to the races”, adding, “We’re going to continue to grow a very profitable business”.
The company’s operating revenues totalled 5.5bn reais ($960.3 million), up 10.2% for the fourth quarter. Passenger revenue in the period was up 10.3% to 5.1bn reais ($890.4 million), as well as cargo revenue and other was up 9.9% to 401.2 million reais ($70.1 million).
For the full year, operating revenues totalled 19.5bn reais ($3.4bn), up 4.4% on the fourth quarter of 2023. Passenger revenues were 4.4% to 18.1bn reais ($3.2bn), while cargo revenue was up 5.4% to 1.4bn reais ($244.5 million).
The company highlighted “healthy revenues and margins” in its “growth beyond the metal”. Rodgerson said: “In 2024, our loyalty programme Azul Fidelidade had a 27% increase in gross billings compared to 2023, totalling more than 18 million members at the end of the year. We also saw continued strong demand for Azul’s cobranded credit card.”
The company said in its earnings call that it will not receive Airbus deliveries in 2025, instead focussing on the Embraer E2.
“In terms of deliveries, really it’s only the E2,” said management on the call. “We have no Airbus deliveries this year, so our focus is going to be an on the E2.” Management said it has “constant monitoring and constant engagement” with Embraer.
“In terms of retirements, we do have E1 retirements this year,” management continued. “We are selling some aircraft, and we have some ATR retirements as well.”
Overall capacity is set to be up 10-12% for 2025, mostly driven by international, with domestic up around 8%.
“The reason international is much higher is because one of the largest OEM impacts we had last year was on the widebodies,” management said. “We had delays early in the year with aircraft that we were expecting that we didn’t get. And then we had impact late in the year with the Rolls Royce engines severely impacting our widebody fleet.”
As of the end of 2024, the company had 181 aircraft in its operating fleet. This consisted of 12 Airbus widebodies, 56 Airbus narrowbodies, 28 E2 jets, 29 E1 jets, 32 ATR jets, and 24 Cessna jets.
Operating expenses were up 3.8%, totalling 4.3bn reais ($751 million) in the quarter and were up 1.4% to 16bn reais ($2.8bn) in the full year. Operating margin for the quarter was up 4.8 percentage points to 22.3% and up 2.5 percentage points to 18% in the full year.
EBITDA for the quarter was up 33% to 2bn reais ($349.2 million), and up 16.4% to 6.1bn reais ($1.1bn) in the full year.
The company’s immediate liquidity improved 22.5% in the quarter to 3.1bn reais ($541.3 million). Total liquidity was 7.5bn reis ($1.3bn) as of the end of the year. Gross debt was 33.7bn reis ($5.9bn) and net debt totalled 30bn reis ($5.2bn). Net debt to EBITDA was 4.9x as of the end of 2024.
Capacity was up 11% in the quarter and up 5.2% for the full year. Revenue passenger kilometres (RPK) were up 6.7%. Load factor was up 4.2 percentage points to 84.2% for the quarter. For the full year, load factor averaged 81.6%, up 1.2 percentage point.
Unit costs were down 6.5% to 34.93 reis cents for the quarter and down 3.6% to 34.60 cents. Unit revenues were flat, down 0.7%, to 44.98 cents for the quarter. Full year unit revenues were flat, down 0.7%, to 42.18 cents.
Cash and cash equivalents at the end of the period was 1.2bn reis ($209.6 million).