Azul Reports Second Quarter Net Income of R$345 million

Revenue up 31% to R$2.6 billion and operating result up 70% to R$340 million

São Paulo, August 8th, 2019 - Azul S.A., "Azul" (B3:AZUL4, NYSE:AZUL), the largest airline in Brazil by number of cities and departures, announces today its results for the second quarter of 2019 ("2Q19"). The following financial information, unless stated otherwise, is presented in Brazilian reais and in accordance with International Financial Reporting Standards (IFRS). Prior periods presented have been adjusted to reflect the adoption of IFRS 16 accounting standards.

Financial and Operating Highlights for 2Q19

  • Operating income was R$339.9 million yielding a margin of 13.0%, compared with R$200.1 million and a margin of 10.0% in 2Q18.
  • Net income totaled R$345.5 million, compared to a net loss of R$791.4 million in 2Q18.
  • Passenger traffic (RPK) increased 21.3% on a capacity growth of 15.5%, representing a load factor of 84.1%, 4.0 percentage points higher than 2Q18.
  • In addition to the double-digit growth in capacity, RASK and PRASK increased 13.6% and 13.0% year over year, respectively. RASK adjusted for the increase in stage length increased 15.1% year over year.
  • CASK normalized for fuel, currency and the end of the payroll tax relief increased 0.9%, mostly due to higher depreciation expenses, hiring and training associated with our upcoming growth.
  • Total liquidity position was R$4.2 billion, up R$371.1 million, representing 42% of last twelve months’ revenue. Azul also generated R$386.9 million in free cash flow during the quarter.
  • Net debt to EBITDA leverage was 3.1x. Excluding the five aircraft received during the quarter, leverage would had been 2.9x.
  • Fitch assigned Azul a rating of BB- reinforcing the strength of our balance sheet.
  • Azul’s fleet in service totaled 130 aircraft, including 29 next-generation aircraft, representing 39% of total capacity.
  • TudoAzul recorded a 31% year-over-year increase in gross billings ex-Azul.
  • Azul Cargo recorded a 47% year-over-year increase in revenue.
  • For the ninth year in a row, Azul won the Skytrax award of Best Regional Airline in South America, and also Best Airline Staff. The Company also ranked best budget airline in the world by The Travel.

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