Azul (AZUL4) Investor Day 2024 summary

Strategic Positioning, Network, and Growth Opportunities

• Operates in over 150 cities, with exclusive presence in 100+ markets and leadership in 91% of routes, leveraging a diversified fleet to match aircraft size to demand and maximize profitability.

• Growth is focused on proprietary hubs and underserved regions, avoiding direct competition and enabling sustainable expansion with high fares and strong margins.

• International network is expanding, with new destinations and partnerships, increasing revenue in USD/EUR and reducing reliance on the domestic market.

• Significant growth potential remains as Brazil’s air travel per capita is below regional peers; reaching Chile’s ratio would require 6.8x current capacity.

• Strategic focus on exclusive markets and rational capacity deployment, reducing exposure to non-strategic airports.

Financial Restructuring and Capital Structure

• Completed a comprehensive balance sheet fix, converting over $1.3 billion of debt into equity, reducing leverage by 1.5 turns, and raising $500 million in new capital to strengthen liquidity.

• Executed equitization of US$550M lessor/OEM instrument and planned equitization of US$807M in 2029/2030 notes, targeting a total annual cash flow improvement of US$200M from reduced obligations and interest.

• Comprehensive transaction expected to eliminate over US$1.5B in debt, reduce gross debt from R$30.3B to R$24.9B, and cut 2025 interest expense by R$800M.

• Leverage (net debt/LTM EBITDA) projected to drop from 4.8x to 3.4x post-transaction, accelerating deleveraging and strengthening the balance sheet.

• Lease renegotiations and partner contributions are expected to improve annual cash flow by $100 million, with additional savings from lower interest expenses and CapEx.

Operational Performance and Efficiency

• Achieved record 3Q24 revenue of R$5.1B, EBITDA of R$1.7B (32.2% margin), and EBIT of R$1.0B (20% margin), maintaining industry-leading profitability.

• Reduced ground time and increased aircraft utilization, boosting domestic capacity by over 3% per month.

• Current ASK per FTE is up 10% versus 2019, with further efficiency gains from ongoing fleet transformation.

• Maintains the lowest CASK in the region, with additional margin upside from next-generation aircraft deployment.

• The company’s flexible, next-generation fleet supports cost leadership and operational efficiency, with ongoing transition to more E2 aircraft for further margin gains.