Brazil airline Azul hikes 2024 earnings forecast

SAO PAULO: Brazilian carrier Azul bumped up its estimate for core earnings in 2024 as air travel demand in Latin America’s largest economy remains at robust levels, helping Azul despite capacity bottlenecks in the industry.

Azul said it expects earnings before interest, taxes, depreciation and amortization (EBITDA) of around 6.5 billion reais this year, representing nearly 25 per cent growth over 2023 and above the 6.3 billion reais previously projected.

The upward revision, the company said in a securities filing, reflects strong demand, improving fuel prices, expected growth in capacity and a greater number of fuel-efficient aircraft entering its fleet.

For the fourth quarter of 2023, the airline reported 74.5 per cent growth in net profit to 403.3 million reais, while net revenue rose 13% to 5.03 billion reais, topping the estimate of analysts polled by LSEG of 4.93 billion.

Sao Paulo-traded shares of Azul slipped some 5 per cent ater the report, making the stock the biggest decliner on Brazil’s Bovespa stock index, but sell-side analysts welcomed the results.

“Azul reported decent results,” Jpmorgan analysts said in a note to clients, adding that the company offers “significant asymmetry to the upside” even ater an upcoming equity dilution related to a deal with lessors.

Azul wrapped up restructuring obligations last year with lessors and equipment manufacturers in a bid to boost its capital structure and cash flow, giving equity and tradable debt in exchange for lower payments.