- **Operational Recovery**: Irregular ops down 65% YoY, customer hotel nights reduced by 75%.
- **Revenue Resilience**: Flat RASK despite +16% capacity, beyond-the-metal units drive 35% of EBITDA.
- **Cost Control**: Fuel costs down 17% YoY, real appreciation reduces USD debt, cargo EBITDA doubles.
- **Guidance Confident**: Maintains R$7.4B EBITDA target, leveraging improving fuel and network efficiency.
- **Risks Mitigated**: Govt. credit line and OEM compensation to offset 2024 disruptions.

**【CEO Opening Remarks】**
- Q1 operational recovery: Irregular operations improved by 65% YoY, customer hotel nights reduced by 75%.
- Network optimization: Suspended 14 low-margin routes, upgauged to E2 aircraft, capacity +16% YoY with flat RASK.
- Business units growth: Beyond-the-metal revenue contributes 35% of EBITDA, loyalty program revenue +65% YoY, cargo EBITDA doubles YoY.

**【Financial Highlights】**
- Q1 Revenue: R$5.4B (flat YoY), EBITDA: R$1.4B (26% margin), EBIT: R$571M.
- Fuel costs: R$200M higher than expected, irregular ops costs: R$100M YoY increase.
- Currency impact: Real appreciation of 9.3% reduces USD-denominated debt, fuel prices down 17% YoY.

**【Cost Efficiency】**
- Aircraft utilization +5% YoY, headcount productivity +18.9% YoY.
- Operational reliability: 82% of routes with no non-stop competition, 77% of revenue from unique network.

**【Q&A Key Points】**
- EBITDA guidance: Maintains R$7.4B target, back-half loaded with improving fuel and ops.
- Demand trends: Steady corporate travel (34% market share), leisure growth (+56% gross bookings).
- Equity raise: No new capital in Q1, restructuring with bondholders ongoing.
- OEM compensation: Seeking recovery for R$330M in 2024 engine issues, 8 widebody removals resolved.
- Liquidity: Govt. credit line (~R$200M) expected Q2, TAP bond maturity in March 2026.

Azul S.A. (AZUL) Q1 2025 Earnings Call Transcript

- **Record Financials**: Q4 revenue up 10% YoY to BRL 5.5B, EBITDA hits BRL 2.0B (35.2% margin), driven by strong unit revenue and cost control.
- **Beyond Metal Growth**: Business units contribute 23% of RASK, up from 15% YoY, with BRL 450M incremental revenue.
- **Debt Restructuring Success**: BRL 6.3B debt reduction via equity swaps, 2025 EBITDA reaffirmed at BRL 7.4B.
- **Demand Resilience**: Q1 demand stable despite Carnival, international growth outpaces domestic (54% QoQ intl logistics growth).
- **M&A Potential**: Low network overlap with GOL (~20% shared routes) supports consumer benefit case for merger.

**【CEO & Management Overview】**
- Azul achieved record Q4 revenue of BRL 5.5 billion (+10% YoY), driven by strong unit revenue (RASK of BRL 0.45) despite 11% capacity growth.
- EBITDA reached BRL 2.0 billion (35.2% margin), with EBIT of BRL 1.2 billion, both all-time highs.
- Business units beyond core airline operations contributed 23% of RASK, up from 15% YoY, generating BRL 450 million in incremental revenue.
- CASK ex-fuel remained flat YoY at BRL 1.6, despite 18% BRL devaluation and 5% inflation, driven by 13% aircraft utilization improvement and 10% productivity gains.

**【CFO Capital Restructuring】**
- Debt reduced by BRL 6.3 billion through equity swaps and new $500 million super-priority notes, lowering leverage and improving liquidity.
- Share dilution from restructuring: 55% of company exchanged for debt reduction, resulting in 2.3 billion fully diluted shares.
- 2025 EBITDA reaffirmed at BRL 7.4 billion, with focus on converting EBITDA to free cash flow.

**【Q&A Highlights】**
- **Demand Trends**: Q1 demand resilient despite Carnival timing, with disciplined pricing and stable international bookings.
- **Capacity Growth**: 10-12% YoY, skewed to international (high single-digit domestic, 54% QoQ intl logistics growth).
- **M&A Synergies**: Low network overlap with GOL (~20% shared routes) positions for market expansion; technical case highlights consumer benefits of combined network.
- **Currency Impact**: 3% BRL devaluation requires ~2% fare increase to maintain free cash flow guidance, feasible given demand trends.


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