Azul SA’s Earnings Call: Growth Amid Challenges

Azul SA ((AZUL)) has held its Q1 earnings call. Read on for the main highlights of the call.

Azul SA’s recent earnings call painted a picture of robust operational performance and revenue growth, despite facing challenges from currency devaluation and operational disruptions. The company showcased its ability to navigate through these issues while maintaining a focus on efficiency and expansion.

Operational Excellence Restored

Azul SA has successfully returned to operational excellence, demonstrating significant improvements in efficiency and reliability. This recovery follows the OEM challenges the company faced in 2024, marking a notable turnaround in its operational capabilities.

Revenue Growth and Capacity Increase

The company reported impressive revenues of R$5.4 billion, with a RASK of R$0.42, alongside a 16% year-over-year increase in capacity. This growth underscores Azul’s strategic focus on expanding its operational footprint and enhancing revenue streams.

Business Units Performance

Azul’s high-margin business units have shown remarkable growth, increasing from 19% of RASK in Q1 2024 to 23% in Q1 2025. These units contributed over R$480 million in the quarter, highlighting their importance to the company’s overall financial health.

Loyalty Program and Ancillary Revenue

The loyalty program has expanded significantly, reaching 19 million members, with flown revenue surging by 65% year-over-year. Additionally, ancillary revenue saw a 22% increase, reflecting Azul’s successful strategies in diversifying income sources.

Cargo and Logistics Business Expansion

Azul Cargo experienced a 20% revenue increase year-over-year, with international revenue up by 62% and EBITDA doubling compared to Q1 2024. This growth underscores the strength and potential of Azul’s logistics operations.

Improved Macroeconomic Conditions

The Brazilian real appreciated by 9.3% in 2025, and heating oil prices decreased by over 17%, providing a favorable macroeconomic backdrop that supported Azul’s operational and financial performance.

Currency Devaluation Impact

Despite the positive macroeconomic conditions, Azul was significantly impacted by a higher-than-expected devaluation of the local currency, which posed challenges to its financial stability.

Operational Disruptions and OEM Challenges

The company faced operational disruptions due to OEM challenges and irregular operations, leading to increased operational costs and customer litigation, which affected its overall performance.

Natural Disasters Impact

Floods in Southern Brazil resulted in 10% of the network going offline, impacting operations in a profitable region and posing additional challenges to Azul’s operational capabilities.

Equity Raise Challenges

Azul encountered difficulties in raising additional equity capital, hindered by market conditions and anti-dilution clauses, which limited its financial flexibility.

Forward-Looking Guidance

Looking ahead, Azul remains committed to maintaining its revenue growth and operational efficiency. The company achieved an EBITDA of R$1.4 billion, reflecting a 26% margin, and reported an EBIT of R$571 million. Despite the challenges, Azul’s strategic focus on efficiency and revenue growth from business units is expected to drive continued strong performance.

In conclusion, Azul SA’s earnings call highlighted a resilient performance marked by strong revenue growth and operational improvements. While challenges such as currency devaluation and operational disruptions posed hurdles, the company’s strategic initiatives in business unit expansion and efficiency enhancements have positioned it well for future success.