Azul (AZUL4) released its results for the fourth quarter of 2023 this Thursday (28), reporting an adjusted net loss of R$270.6 million, explained, above all, by the increase in operating costs divided by CASK (seats per km offered by the company). The company’s shares, around 4 pm, fell more than 7%, quoted at R$ 13.02.
The company’s report also presented guidance for 2024, with a projected growth of 11% for CASK in 2024 and earnings before interest, taxes, depreciation and amortization (EBITDA) of R$6, 5 billion.
In the conference call to comment on the results, management explained that the company has a habit of “promising little and presenting a lot”.
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“We are significantly increasing our capacity. And we should see drops in fuel prices in 2024. This should bring improvements at the margin”, said Alexandre Malfitani, CFO of Azul Linhas Aéreas.
Regarding the increase in operational costs, Malfitani highlighted that the use of its own personnel for some services, such as maintenance, allows more aircraft to fly. The positive dynamics offset the increase in the salary line.
“We are in talks with the Government, which has quoted between R$ 6 and 8 billion in credit line”, stated the CEO, John Rodgerson.
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The credit line must be divided between the airlines and be fixed, according to the executive. In the results conference call, Rodgerson stated that there has never been this type of incentive for the airline sector and this is an opportunity for the Government to help the sector grow.
“Negotiations are going in the right direction,” said Rodgerson, regarding conversations with the Government. “We have maintained a good dialogue with the Brazilian government. They were very responsive to our concerns. The government has been working a lot with the airlines,” he said.
The executive highlighted that there is still no definition as to whether the credit line would come from the National Bank for Economic and Social Development (BNDES) or private banks. “We are looking for alternatives to have a win-win, until today it was just lose-lose”, said the executive.
The CEO stated that the airlines were called individually for negotiations and that, next week, he will be in Brasília for meetings on financing.
Among the points discussed are the development of the Voa Brasil program, the possible fixed credit line and some questions, such as the price of fuel.
“We are asking questions that have never been asked. Why does Brazil have the most expensive kerosene in the world? This is the type of thing we are questioning with the government”, says Malfitani.
Fly Brazil
“We are working together to expand the industry”, stated the CEO. In the executive’s view, Brazilians still fly very little when compared to other countries, such as Chile and Mexico.
Rodgerson believes that Brazilians can be educated regarding purchasing tickets in advance, flexibility in purchase dates and choice of destinations.
“Brazilians fly very little compared to other countries, Voa Brasil is something that can be done for Brazil to grow more”, stated the CEO.
One of the points highlighted by the executive is that solutions are being studied so that other Brazilians do not “bank” the program.
“We are working on a project for Brazil to truly grow and change its level. It needs to have more capacity and, to achieve this, new factors need to be addressed, such as more aircraft,” she says.
Industry scenario
Asked about the market, the company’s CFO, Alexandre Malfitani stated that he is seeing all companies focused on “maximizing results” and that it is possible to expect a “positive” revenue per passenger (Rask) indicator in the annual comparison and “higher” in the second quarter.
“The industry is doing the right things on the tariff side, in my opinion. I’m very comfortable with the landscape of the industry at the moment. I see the industry focusing on where everyone is strongest and I believe we can be very satisfied,” said Malfitani.
According to him, the second quarter, seasonally the weakest for the sector in the country, this year should present stronger demand than expected, partly due to calendar effects, in the domestic market. Internationally, the expectation is stability.
Embraer purchases
The airline considers Embraer (EMBR3) to be the best-positioned supplier to deliver planes without delays this year, Malfitani said. “We believe that Embraer is better positioned than other suppliers to deliver aircraft on time,” said the executive. “We are comfortable with Embraer, for now, deliveries seem in order.”, he stated.
According to him, most of the deliveries should take place from the second half of the year, although the company put three Embraer planes into operation in January. In the executive’s view, the new purchases should boost growth in hubs that Azul wants to invest in, such as Recife.
(With Reuters)
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