Azul reports record earnings for 2018

Lauren Eldershaw
By Lauren Eldershaw March 15, 2019 15:37

Azul reports record earnings for 2018

Azul has reported operating income of R$282.9 million for the fourth quarter of 2018, representing a margin of 11.4%, even with the 17.3% devaluation of the Brazilian real and the 37.2% increase in fuel price per liter. Operating margin was 8.8% for the full year.

EBITDAR increased 14.5% to R$762.7 million, representing a margin of 30.7% in 4Q18, making Azul one of the most profitable carriers in the Americas. For the full year, adjusted EBITDAR increased 13.5% reaching R$ 2.6 billion.

Net income totalled R$138.2 million, compared to R$297.4 million in 4Q17, mainly due to a R$154.4 million non-recurring gain recorded in 4Q17 related to the expiration of a call option on its TAP bonds. Adjusted net income in 2018 came in at R$703.6 million, compared to R$516.3 million the year before.

On a stage-length adjusted basis RASK increased 7.6% in 2018 and 2.7% in 4Q18 compared to 2017 and 4Q17, respectively.

Passenger traffic grew 14.5% on a capacity increase of 14.1% resulting in a load factor of 83.0%, 0.3 percentage points higher than in 4Q17.

CASK ex-fuel decreased 8.1% despite the 17.3% depreciation of the Brazilian real. For the full year, CASK ex-fuel decreased 2.4%, in line with the company’s guidance.
At the end of 4Q18, total liquidity position was R$4.0 billion, representing 43.9% of the last twelve months’ revenues. The company generated R$266.2 million in free cash flow during the year.

Total debt considering the effect of currency swaps decreased R$63.6 million in the quarter to R$3.4 billion while Azul’s adjusted net debt to EBITDAR leverage ratio remained flat at 4.2x.

Azul’s operating fleet totalled 125 aircraft at the end of the quarter, including 20 next-generation A320neo aircraft, which represented 30% of total capacity.

On March 11, 2019, Azul announced that it has signed a non-binding agreement with Avianca Brasil to acquire certain assets of Avianca Brasil for the indicative purchase price of up to US$ 105 million.

“2018 was another milestone year for Azul as we celebrated the tenth anniversary of our first flight,” said CEO, John Rodgerson. “In 2018, we continued to successfully execute on our margin expansion plan consisting of three strategic pillars: transforming our fleet by replacing smaller aircraft with larger, more fuel-efficient next generation aircraft; growing our loyalty program TudoAzul; and expanding cargo and ancillary revenues. As a result, even with the year-over-year increase in jet fuel of 30% and the strengthening of the U.S. dollar of 15%, we delivered a record adjusted net income of R$ 703.6 million in 2018.”

Lauren Eldershaw
By Lauren Eldershaw March 15, 2019 15:37