Azul (AZUL4) Investor Day 2024 summary

Strategic direction and business model

• Maintains a unique network, serving over 150 cities with 100+ exclusive destinations and 82% of routes without competition, enabling sustainable growth and high margins.

• Focuses growth on proprietary hubs and underserved regions, maximizing profitability through network and fleet flexibility while reducing exposure to non-strategic airports.

• Diversifies revenue streams with business units in loyalty, vacations, logistics, and MRO, reducing reliance on passenger fares and increasing resilience.

• Expands international presence, especially in long-haul markets, leveraging partnerships and codeshares to grow non-Brazilian revenue and enhance connectivity.

• Pursues disciplined, profitable growth, cherry-picking markets and exiting unprofitable routes.

Financial guidance and capital structure

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

• Executed equitization of US$550M lessor/OEM instrument and planned equitization of US$807M in notes, targeting a total debt reduction of over US$1.5B and annual cash flow improvement of US$200M.

• Leverage (net debt/LTM EBITDA) projected to drop from 4.8x to 3.4x post-transaction, with 2025 interest expense cut by R$800M.

• Projects 2025 EBITDA of BRL 7.4 billion, up from BRL 5.2 billion post-pandemic and BRL 3.6 billion in 2019, with expectations for over BRL 1 billion in free cash flow.

• Reduced interest expense by over $100 million annually and renegotiated leases to market rates, improving liquidity and cash generation.

Operational and business developments

• 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.

• Accelerates fleet transformation, with E2 aircraft set to surpass E1 departures in 2025, doubling EBITDA per departure and enabling new market access.

• Business units (loyalty, vacations, cargo, MRO) now contribute 22% of revenue, with loyalty surpassing 18 million members and logistics holding 34% market share.

• Cargo business covers 94% of Brazil’s population, with 2 new A321 freighters launching in 2025 to expand capacity.

• Maintains lowest unit cost in the region, even with a diversified fleet, through efficiency gains and technology investments.