DALLAS – Brazil’s largest low-cost carrier Azul Linhas Aéreas (AD), has published its First-Quarter (Q1) 2023 financial results, announcing a total operating revenue of R$4.5bn (US$0.92bn), a 40.3% rise compared to last year. It also represents the highest revenue in the company’s history.
Azul is optimistic about the strength of its business model. The airline continues to see healthy demand due in part to its doubled presence at Sao Paulo-Congonhas Airport (CGH) and its newly launched service to Paris-Orly (ORY).
Passenger Revenue per Available Seat Kilometer (PRASK) has also risen by 23.1% compared to Q1 2022. This translates into a very good performance of the airline’s newly launched routes to the total passenger demand, even with a capacity increase of 19.1%.
However, like most airlines, expenses were up for AD, coming in at R$4.02bn (US$821m). Fuel alone cost AD a whopping R$1.67bn (US$341m), an increase of 41% since Q1 2022.
John Rodgerson, AD CEO, stated, “Again, we delivered an industry-leading operation and a world-class customer experience, all of this as a more efficient airline. Looking ahead, we could not be more excited with the trends we are seeing in the demand environment combined with the steep fall in fuel prices. This, combined with our efficient cost structure, a disciplined capacity environment, and our increased presence in Congonhas, lead us to be very optimistic for the rest of the year and beyond.”
Expectations for the End of the Year
Azul has gained its position as the largest airline in Brazil by the number of flights and cities served. By the end of 2023, it aims to increase total capacity by 14%. It expects the most significant rise in its international market, focused on serving neighboring Latin American countries, North America and Europe.
The airline has also assigned a concrete number to their net earnings for this full year; R$5.5bn (US$1.12bn), which is a very ambitious goal to achieve. But the number isn’t unachievable, with demand already surpassing 2019 levels on some routes. Indeed, capacity, measured in available seat kilometres (ASKs), stood at 10.8 billion, an increase of 19%.
In late 2022, AD took delivery of the first two Airbus A350-900s, both second-handed from Hong Kong Airlines (HX). It is waiting to receive two more units during 2023.
Azul’s Up-To-Date Route Network
Thanks to the arrival of the fuel-efficient Airbus A330neo and A350 jets, AD has positioned itself as another airline fighting in the transatlantic long-haul low-cost market, with other players such as Norse Atlantic Airways (N0), LEVEL (IB) or the TUI Group.
Despite this, AD is still the carrier with the most extensive domestic air network anywhere in Brazil. After the massive merger with the former airline Trip (8R), the route map of Azul now includes more than 105 destinations across the country.
Moving towards long-haul, the Brazilian LCC is still introducing itself into the market, including at the moment of writing just four destinations in Europe and the United States; Fort Lauderdale (FLL), Orlando (MCO), Lisbon (LIS), and Paris (ORY). While Europe is only reachable from its main hub in Sao Paulo-Campinas (VCP), flights to the US depart daily from five different bases stretching through all of Brazil.
Featured image: Azul (PR-AIU) Airbus A330-200 (Azul Viagens Livery). Photo: Otto Kirchof/Airways.