SAO PAULO (Reuters) -Brazilian airline Azul SA said on Monday its fourth-quarter adjusted net loss had deepened on a yearly basis, but it expects bluer skies ahead thanks to a fresh deal with aircraft lessors to reduce payments.
Shares in the company soared more than 20% after the news, making it the top gainer on Brazil’s Bovespa stock index, as market participants welcomed both overall quarterly figures and the lessors deal.
JPMorgan analysts said the company’s margins had beaten their forecasts for the fourth quarter, “but more importantly, the company announced a commercial agreement with leasing companies”.
The carrier revealed the agreement late on Sunday, saying lessors responsible for 90% of its obligations had agreed to receive equity and tradeable debt in exchange for lower payments.
Azul said in a securities filing the deal should allow its cash flow to be positive in 2024 and beyond, while also projecting a “measurable reduction” in capital expenditure in the period.
“We are encouraged by the strong demand environment and important milestones in our route network” in 2023, Chief Executive John Rodgerson said in a statement, noting the company has added routes to Paris and Curacao and is set to increase flights to the United States.
Azul expects to generate record revenue of 20 billion reais ($3.84 billion) this year and record earnings before interest, taxes, depreciation, and amortization (EBITDA) of more than 5 billion reais, roughly 40% above 2019 pre-pandemic levels, Rodgerson said.
In the fourth quarter, the company reported an adjusted net loss of 610.5 million reais, deeper than the 436 million-real loss seen a year earlier and also larger than the 562.81 million forecast by analysts polled by Refinitiv.
Total operating revenue rose 19.4% to 4.45 billion reais in the period, slightly below analysts’ forecasts, while EBITDA matched expectations at 1.1 billion, up 6.9%.
($1 = 5.2017 reais)
(Reporting by Gabriel Araujo; Additional reporting by Alberto Alerigi Jr.; Editing by Jon Boyle, Sharon Singleton and Jan Harvey)
