UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
For the month of August, 2024
Commission File Number: 001-38049
Azul S.A.
(Name of Registrant)
Edifício Jatobá, 8th floor, Castelo Branco Office Park
Avenida Marcos Penteado de Ulhôa Rodrigues, 939
Tamboré, Barueri, São Paulo, SP 06460-040, Brazil.
+55 (11) 4831 2880
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ¨ No x
Contents
Declaration of the officers on the interim condensed individual and consolidated financial statements | 3 |
Declaration of the officers on the independent auditor’s report | 4 |
Summary report of the statutory audit committee | 5 |
Independent auditor report | 6 |
Statements of financial position | 8 |
Statements of operations | 10 |
Statements of comprehensive income | 12 |
Statements of changes in equity | 13 |
Statements of cash flows | 14 |
Statements of value added | 15 |
Notes to the interim condensed individual and consolidated financial statements | 16 |
2 |
AZUL S.A. Declaration of the officers June 30, 2024 | |
Declaration of the officers on the interim condensed individual and consolidated financial statements
In accordance with item VI of article 27 of CVM Resolution No. 80, of March 29, 2022, the Board of Directors declares that it reviewed, discussed and agreed with the interim condensed individual and consolidated financial statements for the three and six months ended June 30, 2024.
Barueri, August 10, 2024.
John Peter Rodgerson
CEO
Alexandre Wagner Malfitani
Vice President of Finance and Investor Relations
Antonio Flavio Torres Martins Costa
Technical Vice President
Abhi Manoj Shah
Vice President of Revenue
3 |
AZUL S.A. Declaration of the officers June 30, 2024 | |
Directors' statement on the independent auditor's report
In accordance with item V of article 27 of CVM Resolution No. 80, of March 29, 2022, the Board of Directors declares that it reviewed, discussed and agreed with the opinion expressed in the independent auditor's report of the interim condensed individual and consolidated financial statements relating to for the three and six months ended June 30, 2024.
Barueri, August 10, 2024.
John Peter Rodgerson
CEO
Alexandre Wagner Malfitani
Vice President of Finance and Investor Relations
Antonio Flavio Torres Martins Costa
Technical Vice President
Abhi Manoj Shah
Vice President of Revenue
4 |
AZUL S.A. Summary report of the statutory audit committee June 30, 2024 | |
Opinion of the statutory audit committee
In compliance with the legal provisions, the Statutory Audit Committee declares that it has reviewed, discussed and agreed to the reviewed the management report and the interim condensed individual and consolidated financial statements for the three and six months ended June 30, 2024 independent auditor's reports issued by Grant Thornton Auditores Independentes Ltda. recommending its approval to the Board of Directors.
Barueri, August 10, 2024.
Sergio Eraldo de Salles Pinto
Member, Coordinator of the Audit Committee and Financial Specialist
Gilberto Peralta
Member of the Audit Committee
Renata Faber Rocha Ribeiro
Member of the Audit Committee
5 |
Independent auditor's report on review of interim financial
information
Grant Thornton Auditores Independentes Ltda. Avenida José de Souza Campos - 507 - 5º andar Cambuí, Campinas (SP) Brazil T +55 19 2042 1036 www.grantthornton.com.br |
To the Shareholders, Board of Directors, and Management of
Azul S.A.
São Paulo – SP
Introduction
We have reviewed the accompanying individual and consolidated interim financial information of Azul S.A. (the Company), comprised in the Quarterly Information Form for the quarter ended July 30, 2024, comprising the balance sheet as of July 30, 2024, and the respective statements of income and of comprehensive income for the three and six-month periods then ended and of changes in shareholders’ equity and of cash flows for the period of six months then ended, including the footnotes.
Management is responsible for the preparation of the individual and consolidated interim financial information in accordance with NBC TG 21 – Interim Financial Reporting and with the international standard IAS 34 – Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB), such as for the presentation of these information in accordance with the standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of interim financial information. Our responsibility is to express a conclusion on this interim financial information based on our review.
Review scope
We conducted our review in accordance with the Brazilian and International standards on reviews of interim information (NBC TR 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is significantly less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
6 |
Conclusion on the individual and consolidated interim financial information
Based on our review, nothing has come to our attention that causes us to believe that the individual and consolidated interim financial information included in the quarterly information form referred to above has not been prepared, in all material respects, in accordance with NBC TG 21 and IAS 34 applicable to the preparation of interim financial information and presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission.
Other matters
Statements of value added
The quarterly information referred to above includes the individual and consolidated statements of value added for the six months period ended July 30, 2024, prepared under the responsibility of the Company's management and presented as supplementary information for the purposes of IAS 34. These statements were submitted to the same review procedures in conjunction with the review of the Company's interim financial information to conclude they are reconciliated to the interim financial information and to the accounting records, as applicable, and whether the structure and content are in accordance with the criteria established in the NBC TG 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that the accompanying statements of value added were not prepared, in all material respects, in accordance with the criteria defined in that standard and consistently in relation to the individual and consolidated interim financial information taken as a whole.
Audit and review of values corresponding to the comparative year and period
The amounts corresponding to the year ended December 31, 2023, and the three- and six-month periods ending June 30, 2023, presented for comparison purposes were, respectively, audited and reviewed by another independent auditor, whose reports on the audit and reviews were, respectively, issued on April 12, 2024, and August 10, 2023, without modifications.
São Paulo, August 10, 2024
Grant Thornton Auditores Independentes Ltda.
CRC 2SP-025.583/O-1
Élica Daniela da Silva Martins
Accountant CRC 1SP-223.766/O-0
7 |
AZUL S.A. Statements of financial position June 30, 2024 and December 31, 2023 | |
Parent company | Consolidated | ||||
Assets | Note | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Current assets | |||||
Cash and cash equivalents | 5 | 2,174 | 2,809 | 1,439,581 | 1,897,336 |
Short-term investments | 6 | - | - | 35,931 | - |
Accounts receivable | 7 | - | - | 1,033,976 | 1,109,408 |
Aircraft sublease | 8 | - | - | 8,330 | 14,592 |
Inventories | 9 | - | - | 1,000,425 | 799,208 |
Deposits | 10 | 8,959 | 7,802 | 698,585 | 515,692 |
Taxes recoverable | 11 | 106 | 4,984 | 218,354 | 219,433 |
Derivative financial instruments | 23 | - | - | 4,303 | 21,909 |
Related parties | 29 | 741,309 | 216,388 | - | - |
Advances to suppliers | 12 | - | - | 193,458 | 221,051 |
Other assets | 7,158 | 2,079 | 321,560 | 245,518 | |
Total current assets | 759,706 | 234,062 | 4,954,503 | 5,044,147 | |
Non-current assets | |||||
Long-term investments | 6 | - | - | 956,315 | 780,312 |
Aircraft sublease | 8 | - | - | 5,551 | 16,210 |
Deposits | 10 | - | 70 | 2,200,391 | 1,777,803 |
Derivative financial instruments | 23 | - | - | 88 | - |
Related parties | 29 | 1,836,107 | 1,578,332 | - | - |
Other assets | - | - | 530,869 | 143,781 | |
Investments | 14 | 759,785 | 760,782 | - | - |
Property and equipment | 15 | - | - | 2,787,127 | 2,295,851 |
Right-of-use assets | 16 | - | - | 9,892,683 | 9,011,558 |
Intangible assets | 17 | - | - | 1,503,692 | 1,463,247 |
Total non-current assets | 2,595,892 | 2,339,184 | 17,876,716 | 15,488,762 | |
Total assets | 3,355,598 | 2,573,246 | 22,831,219 | 20,532,909 |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
8 |
AZUL S.A. Statements of financial position June 30, 2024 and December 31, 2023 | |
Parent company | Consolidated | ||||
Liabilities and equity | Note | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Current liabilities | |||||
Loans and financing | 18 | 248,428 | - | 1,495,194 | 1,100,051 |
Reverse factoring | 22 | - | - | 45,493 | 290,847 |
Leases | 19 | 712,974 | 216,388 | 4,494,473 | 3,687,392 |
Convertible debt instruments | 20 | 28,994 | 25,807 | 28,994 | 25,807 |
Accounts payable | 21 | 39,233 | 10,651 | 3,194,382 | 2,277,841 |
Airport taxes and fees | 24 | - | - | 757,492 | 588,404 |
Air traffic liability and loyalty program | 25 | - | - | 5,821,495 | 5,205,876 |
Salaries and benefits | 26 | 2,450 | 2,344 | 533,168 | 474,797 |
Taxes payable | 27 | 298 | 506 | 161,816 | 142,168 |
Derivative financial instruments | 23 | - | - | 35,499 | 68,905 |
Provisions | 28 | - | - | 624,708 | 736,430 |
Related parties | 29 | - | 52,129 | - | - |
Other liabilities | - | - | 210,916 | 150,362 | |
Total current liabilities | 1,032,377 | 307,825 | 17,403,630 | 14,748,880 | |
Non-current liabilities | |||||
Loans and financing | 18 | - | - | 11,098,565 | 8,598,861 |
Leases | 19 | 1,659,882 | 1,443,351 | 13,391,358 | 11,459,019 |
Convertible debt instruments | 20 | 971,997 | 1,175,803 | 971,997 | 1,175,803 |
Accounts payable | 21 | 118,033 | 119,841 | 1,329,969 | 1,320,927 |
Airport taxes and fees | 24 | - | - | 913,129 | 1,171,679 |
Taxes payable | 27 | - | - | 89,446 | 112,287 |
Derivative financial instruments | 23 | - | - | 20 | 840 |
Deferred income tax and social contribution | 13 | - | 39,526 | - | 39,526 |
Provisions | 28 | 15 | 30 | 2,972,949 | 2,404,423 |
Related parties | 29 | 744,894 | 683,763 | - | - |
Provision for loss on investments | 14 | 24,994,966 | 20,130,955 | - | - |
Other liabilities | - | - | 826,722 | 828,512 | |
Total non-current liabilities | 28,489,787 | 23,593,269 | 31,594,155 | 27,111,877 | |
Equity | 30 | ||||
Issued capital | 2,315,628 | 2,314,821 | 2,315,628 | 2,314,821 | |
Advance for future capital increase | - | 789 | - | 789 | |
Capital reserve | 2,053,308 | 2,029,610 | 2,053,308 | 2,029,610 | |
Treasury shares | (11,568) | (9,041) | (11,568) | (9,041) | |
Other comprehensive income | 3,106 | 3,106 | 3,106 | 3,106 | |
Accumulated losses | (30,527,040) | (25,667,133) | (30,527,040) | (25,667,133) | |
(26,166,566) | (21,327,848) | (26,166,566) | (21,327,848) | ||
Total liabilities and equity | 3,355,598 | 2,573,246 | 22,831,219 | 20,532,909 |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
9 |
AZUL S.A. Statements of operations Periods ended June 30, 2024 and 2023 | |
Parent company | |||||
Three-month periods ended | Six-month periods ended | ||||
Note | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |
Administrative expenses | (11,028) | (12,202) | (29,313) | (25,818) | |
Other income (expenses), net | (29) | 71,699 | (132) | 71,699 | |
34 | (11,057) | 59,497 | (29,445) | 45,881 | |
Equity | 14 | (3,803,883) | 149,385 | (4,888,775) | (454,910) |
Operating profit (loss) | (3,814,940) | 208,882 | (4,918,220) | (409,029) | |
Financial income | 2,329 | 102 | 2,619 | 1,829 | |
Financial expenses | (79,006) | (65,013) | (143,195) | (127,035) | |
Derivative financial instruments, net | 205,598 | (188,798) | 357,171 | (269,837) | |
Foreign currency exchange, net | (156,340) | 68,735 | (197,808) | 91,340 | |
Financial result | 35 | (27,419) | (184,974) | 18,787 | (303,703) |
Profit (loss) before income IR and CSLL | (3,842,359) | 23,908 | (4,899,433) | (712,732) | |
Deferred income tax and social contribution |
13 | 32,746 | - | 39,526 | - |
Net profit (loss) for the period | (3,809,613) | 23,908 | (4,859,907) | (712,732) | |
Basic earnings (loss) per common share – R$ | 31 | (0.15) | - | (0.19) | (0.03) |
Diluted earnings (loss) per common share – R$ | 31 | (0.15) | - | (0.19) | (0.03) |
Basic earnings (loss) per preferred share – R$ | 31 | (10.96) | 0.07 | (13.99) | (2.05) |
Diluted earnings (loss) per preferred share – R$ | 31 | (10.96) | 0.07 | (13.99) | (2.05) |
10 |
AZUL S.A. Statements of operations Periods ended June 30, 2024 and 2023 | |
Consolidated | |||||
Three-month periods ended | Six-month periods ended | ||||
Note | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |
Passenger revenue | 3,859,064 | 3,939,865 | 8,216,104 | 8,108,165 | |
Other revenues | 313,681 | 314,330 | 635,053 | 624,358 | |
Total revenue | 33 | 4,172,745 | 4,254,195 | 8,851,157 | 8,732,523 |
Cost of services | 34 | (3,413,132) | (3,588,001) | (6,848,228) | (7,482,825) |
Gross profit | 759,613 | 666,194 | 2,002,929 | 1,249,698 | |
Selling expenses | (200,724) | (188,778) | (415,099) | (370,766) | |
Administrative expenses | (147,245) | (75,690) | (274,310) | (189,887) | |
Other income (expenses), net | 29,537 | (100,509) | (71,603) | (219,797) | |
34 | (318,432) | (364,977) | (761,012) | (780,450) | |
Operating profit | 441,181 | 301,217 | 1,241,917 | 469,248 | |
Financial income | 50,994 | 50,983 | 95,918 | 104,449 | |
Financial expenses | (1,334,329) | (1,198,099) | (2,558,252) | (2,455,683) | |
Derivative financial instruments, net | 168,497 | (235,616) | 358,440 | (510,588) | |
Foreign currency exchange, net | (3,168,414) | 1,105,423 | (4,037,168) | 1,679,842 | |
Financial result | 35 | (4,283,252) | (277,309) | (6,141,062) | (1,181,980) |
Profit (loss) before income IR and CSLL | (3,842,071) | 23,908 | (4,899,145) | (712,732) | |
Current income tax and social contribution |
13 | (288) | - | (288) | - |
Deferred income tax and social contribution | 13 | 32,746 | - | 39,526 | - |
Net profit (loss) for the period | (3,809,613) | 23,908 | (4,859,907) | (712,732) | |
Basic earnings (loss) per common share – R$ | 31 | (0.15) | - | (0.19) | (0.03) |
Diluted earnings (loss) per common share – R$ | 31 | (0.15) | - | (0.19) | (0.03) |
Basic earnings (loss) per preferred share – R$ | 31 | (10.96) | 0.07 | (13.99) | (2.05) |
Diluted earnings (loss) per preferred share – R$ | 31 | (10.96) | 0.07 | (13.99) | (2.05) |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
11 |
AZUL S.A. Statements of comprehensive (loss) income Periods ended June 30, 2024 and 2023 | |
Parent company and Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | |
Net profit (loss) for the period | (3,809,613) | 23,908 | (4,859,907) | (712,732) |
Other comprehensive income | - | - | - | - |
Total comprehensive income | (3,809,613) | 23,908 | (4,859,907) | (712,732) |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements
12 |
AZUL S.A. Statements of changes in equity Periods ended June 30, 2024 and 2023 | |
Description | Note | Issued capital |
AFAC (a) | Treasury shares |
Capital reserve |
Other comprehensive income | Accumulated losses | Total |
At December 31, 2023 | 2,314,821 | 789 | (9,041) | 2,029,610 | 3,106 | (25,667,133) | (21,327,848) | |
Net loss for the period | - | - | - | - | - | (4,859,907) | (4,859,907) | |
Total comprehensive income | - | - | - | - | - | (4,859,907) | (4,859,907) | |
Buyback and sale of shares | 30 | - | - | (2,527) | (69) | - | - | (2,596) |
Share-based payment (b) | 32 | 807 | (789) | - | 23,767 | - | - | 23,785 |
At June 30, 2024 | 2,315,628 | - | (11,568) | 2,053,308 | 3,106 | (30,527,040) | (26,166,566) |
Description | Note | Issued capital |
AFAC (a) | Treasury shares |
Capital reserve |
Other comprehensive income | Accumulated losses | Total |
At December 31, 2022 | 2,313,941 | 61 | (10,204) | 1,970,098 | 5,281 | (23,286,677) | (19,007,500) | |
Net loss for the period | - | - | - | - | - | (712,732) | (712,732) | |
Total comprehensive income | - | - | - | - | - | (712,732) | (712,732) | |
Share buyback | 30 | - | - | (2,881) | - | - | - | (2,881) |
Share-based payment (b) | 32 | 61 | 758 | - | 40,294 | - | - | 41,113 |
At June 30, 2023 | 2,314,002 | 819 | (13,085) | 2,010,392 | 5,281 | (23,999,409) | (19,682,000) |
(a) | Advance for future capital increase |
(b) | Refers to the receipt of the exercise of share options and the vesting of share-based compensation plans (Stock option and RSU). |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
13 |
AZUL S.A. Statements of cash flows Periods ended June 30, 2024 and 2023 | |
Parent company | Consolidated | ||||
Six-month periods ended | |||||
June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||
Cash flows from operating activities | |||||
Loss for the period | (4,859,907) | (712,732) | (4,859,907) | (712,732) | |
Result reconciliation items | |||||
Depreciation and amortization | - | - | 1,225,914 | 1,194,819 | |
Gain (loss) from impairment of assets | - | - | (14,274) | - | |
Derivative financial results, net | (357,171) | 269,837 | (358,440) | 510,588 | |
Share-based payment | - | - | 22,244 | 42,604 | |
Foreign currency exchange, net | 197,711 | (91,088) | 3,989,508 | (1,679,991) | |
Financial result | 149,089 | 125,050 | 2,414,826 | 2,219,057 | |
Movement of provisions, net | (15) | 3,192 | 33,768 | 134,121 | |
Recovery of expenses and write-offs of other assets | - | - | (481,690) | 169,999 | |
Result from modification of lease | - | - | (88,924) | (50,002) | |
Result in the write-off of fixed assets, right of use, intangible assets and inventories | - | - | (38,999) | 40,978 | |
Deferred income tax and social contribution | (39,526) | - | (39,526) | - | |
Sale and leaseback | - | - | (27,441) | - | |
Others | - | - | 38,809 | - | |
Equity | 4,888,775 | 454,910 | - | - | |
Reconciled result | (21,044) | 49,169 | 1,815,868 | 1,869,441 | |
Changes in operating assets and liabilities | |||||
Accounts receivable | - | - | 248,018 | 522,793 | |
Aircraft sublease | - | - | - | 16,828 | |
Inventories | - | - | (161,432) | 3,935 | |
Deposits | - | 7 | (230,541) | (121,927) | |
Taxes recoverable | 4,878 | 2,805 | 1,305 | 47,574 | |
Derivative financial results, net | - | - | (15,439) | (122,564) | |
Advances to suppliers | - | - | (840,355) | (924,679) | |
Other assets | (5,083) | (8,833) | (167,740) | (121,859) | |
Accounts payable | 30 | 4,550 | 1,215,661 | 924,519 | |
Airport taxes and fees | - | - | (19,895) | 314,893 | |
Air traffic liability and loyalty program | - | - | 497,690 | 294,587 | |
Salaries and benefits | 106 | (3,055) | 96,413 | 31,374 | |
Taxes payable | (206) | (160) | (3,261) | (1,136) | |
Provisions | - | - | (200,105) | (249,132) | |
Other liabilities | - | - | 1,850 | (2,967) | |
Total changes in operating assets and liabilities | (275) | (4,686) | 422,169 | 612,239 | |
Interest paid | (86,469) | (52,591) | (1,123,122) | (845,257) | |
Net cash provided (used) by operating activities | (107,788) | (8,108) | 1,114,915 | 1,636,423 | |
Cash flows from investing activities | |||||
Short and long-term investments | |||||
Acquisition of short and long-term investments | - | - | (107,424) | - | |
Cash received in the sale and leaseback operation | - | - | 10,322 | - | |
Acquisition of intangible assets | - | - | (78,398) | (92,525) | |
Acquisition of property and equipment | - | - | (450,594) | (102,727) | |
Acquisition of capitalized maintenance | - | - | (222,736) | (108,358) | |
Net cash used by investing activities | - | - | (848,830) | (303,610) | |
Cash flows from financing activities | |||||
Loans and financing | |||||
Proceeds | 250,000 | - | 2,279,918 | 902,252 | |
Repayment | - | - | (1,021,728) | (565,030) | |
Reverse factoring | - | - | (402,814) | (727,368) | |
Lease payment | - | - | (1,533,554) | (975,146) | |
Payment of costs with proceeds | (4,446) | - | (46,953) | (15,493) | |
Related parties | (135,944) | 5,007 | - | - | |
Advance for future capital increase | 18 | 819 | 18 | 819 | |
Treasury shares | (2,596) | (2,881) | (2,596) | (2,881) | |
Net cash provided (used) by financing activities | 107,032 | 2,945 | (727,709) | (1,382,847) | |
Exchange rate changes on cash and cash equivalents | 121 | (149) | 3,869 | (2,104) | |
Decrease in cash and cash equivalents | (635) | (5,312) | (457,755) | (52,138) | |
Cash and cash equivalents at the beginning of the period | 2,809 | 8,117 | 1,897,336 | 668,348 | |
Cash and cash equivalents at the end of the period | 2,174 | 2,805 | 1,439,581 | 616,210 |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
14 |
AZUL S.A. Statements of value added Periods ended June 30, 2024 and 2023 | |
Parent company | Consolidated | |||||
Six-month periods ended | ||||||
Note | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 | ||
Gross sales revenue | ||||||
Passenger revenue | 33 | - | - | 8,217,591 | 8,120,213 | |
Other revenues | 33 | - | - | 700,673 | 707,732 | |
Expected loss with accounts receivable | 7 | - | - | 1,169 | (2,648) | |
- | - | 8,919,433 | 8,825,297 | |||
Inputs acquired from third parties | ||||||
Aircraft fuel | - | - | (2,726,854) | (3,011,619) | ||
Materials, energy, third-party services and others | (9,109) | 61,445 | (2,207,738) | (2,882,154) | ||
Insurances | (2,642) | - | (44,378) | (26,463) | ||
34 | (11,751) | 61,445 | (4,978,970) | (5,920,236) | ||
Gross value added | (11,751) | 61,445 | 3,940,463 | 2,905,061 | ||
Retentions | 34 | |||||
Depreciation and amortization | - | - | (1,225,914) | (1,194,819) | ||
Impairment of assets | - | - | 14,274 | - | ||
Net value added | (11,751) | 61,445 | 2,728,823 | 1,710,242 | ||
Value added received in transfers | ||||||
Equity | 14 | (4,888,775) | (454,910) | - | - | |
Financial income | 35 | 2,619 | 1,829 | 95,918 | 104,449 | |
(4,886,156) | (453,081) | 95,918 | 104,449 | |||
Value added to be distributed | (4,897,907) | (391,636) | 2,824,741 | 1,814,691 | ||
Distribution of value added: | ||||||
Personnel (a) | ||||||
Salaries and wages | 14,599 | 9,337 | 885,037 | 765,625 | ||
Benefits | 1,708 | 4,783 | 187,841 | 138,419 | ||
F.G.T.S. | 276 | 286 | 78,516 | 68,493 | ||
34 | 16,583 | 14,406 | 1,151,394 | 972,537 | ||
Taxes, fees and contributions | ||||||
Federal (b) | (38,415) | 1,158 | 144,682 | 166,261 | ||
State | - | - | 24,957 | 24,836 | ||
Municipal | - | - | 6,658 | 2,811 | ||
(38,415) | 1,158 | 176,297 | 193,908 | |||
Third party capital | ||||||
Financial expenses | 35 | 143,195 | 127,035 | 2,558,252 | 2,455,683 | |
Derivative financial instruments, net | 35 | (357,171) | 269,837 | (358,440) | 510,588 | |
Foreign currency exchange, net | 35 | 197,808 | (91,340) | 4,037,168 | (1,679,842) | |
Rentals | 34 | - | - | 119,977 | 74,549 | |
(16,168) | 305,532 | 6,356,957 | 1,360,978 | |||
Own capital | ||||||
Loss for the period | (4,859,907) | (712,732) | (4,859,907) | (712,732) |
(a) | Not including INSS in the amount of R$1,022 in the parent company R$ 179,192 in the consolidated, as it is in the federal tax line. |
(b) | Includes deferred income tax and social contribution accounted for in the parent company. |
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
16 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
1. | OPERATIONS |
Azul S.A. (“Azul”), together with its subsidiaries (“Company”) is a corporation governed by its bylaws, as per Law No. 6404/76 and by the corporate governance level 2 listing regulation of B3 S.A. – Brasil, Bolsa, Balcão (“B3”). The Azul was incorporated on January 3, 2008, and its core business comprises the operation of regular and non-regular airline passenger services, cargo or mail, passenger charter, provision of maintenance and hangarage services for aircraft, engines, parts and pieces, aircraft acquisition and lease, development of frequent-flyer programs, development of related activities and equity holding in other companies since the beginning of its operations on December 15, 2008.
The Azul carries out its activities through its subsidiaries, mainly Azul Linhas Aéreas Brasileiras S.A. (“ALAB”) and Azul Conecta Ltda. (“Conecta”), which hold authorization from government authorities to operate as airlines and ATS Viagens e Turismo Ltda (“Azul Viagens”) for travel packages.
The Azul shares are traded on B3 and on the New York Stock Exchange (“NYSE”) under tickers AZUL4 and AZUL, respectively.
The Azul is headquartered at Avenida Marcos Penteado de Ulhôa Rodrigues, 939, 8th floor, in the city of Barueri, state of São Paulo, Brazil.
1.1 | Organizational structure |
The Company organizational structure as of June 30, 2024 is as follows:
17 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
The table below lists the operational activities in which the Azul subsidiaries are engaged, as well as the changes in ownership that occurred in period, when applicable.
% equity interest | ||||||
Company |
Type of investment | Main activity |
State |
Country |
June 30, 2024 | December 31, 2023 |
Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Direct | Holding of equity interests in other companies | George Town | Cayman Islands | 24.8% | 24.8% |
Azul IP Cayman Ltd. (Azul Cayman) | Indirect | Intellectual property owner | George Town | Cayman Islands | 100.0% | 100.0% |
IntelAzul S.A. (IntelAzul) | Direct | Frequent-flyer program | São Paulo | Brazil | 100.0% | 100.0% |
Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Indirect | Holding of equity interests in other companies | George Town | Cayman Islands | 25.0% | 25.0% |
Azul Linhas Aéreas Brasileiras S.A. (ALAB) | Direct | Airline operations | São Paulo | Brazil | 100.0% | 100.0% |
Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Indirect | Holding of equity interests in other companies | George Town | Cayman Islands | 25.0% | 25.0% |
Azul Conecta Ltda. (Conecta) | Indirect | Airline operations | São Paulo | Brazil | 100.0% | 100.0% |
ATS Viagens e Turismo Ltda. (Azul Viagens) | Indirect | Travel packages | São Paulo | Brazil | 99.9% | 99.9% |
ATSVP Viagens Portugal, Unipessoal LDA (Azul Viagens Portugal) | Indirect | Travel packages | Lisbon | Portugal | 100.0% | 100.0% |
Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Indirect | Holding of equity interests in other companies | George Town | Cayman Islands | 25.0% | 25.0% |
Cruzeiro Participações S.A (Cruzeiro) | Indirect | Holding of equity interests in other companies | São Paulo | Brazil | 99.9% | 99.9% |
Azul Investments LLP (Azul Investments) | Indirect | Funding | Delaware | USA | 100.0% | 100.0% |
Azul SOL LLC (Azul SOL) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Azul Finance LLC (Azul Finance) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Azul Finance 2 LLC (Azul Finance 2) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Blue Sabiá LLC (Blue Sabiá) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Canela Investments LLC (Canela) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Canela Turbo Three LLC (Canela Turbo) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Azul Saira LLC (Azul Saira) | Indirect | Aircraft financing | Delaware | USA | 100.0% | 100.0% |
Azul Secured Finance LLP (Azul Secured) | Indirect | Funding | Delaware | USA | 100.0% | 100.0% |
1.2 | Seasonality |
The Company’s operating revenues depend substantially on the general volume of passenger and cargo traffic, which is subject to seasonal changes. Our passenger revenues are generally higher during the summer and winter holidays, in January and July respectively, and in the last two weeks of December, which corresponds to the holiday season. Considering the distribution of fixed costs, this seasonality tends to cause variations in operating results between periods of the fiscal year.
18 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
2. | GOING CONCERN |
2.1 | Management Statement |
In view of the above, management assessed and concluded that the Company is capable of continuing its operations and fulfilling its obligations in accordance with the contracted maturities. This assessment is based on the Company's business plan approved by the Board of Directors in December, 2023. The Company's business plans include planned future actions, macroeconomic and aviation sector assumptions, such as level of demand for air transport with corresponding increase in traffic and fares, estimated exchange rates and fuel prices. The Company's Management monitors and informs the Board of Directors about performance in relation to the approved plan.
Based on this conclusion, this interim condensed individual and consolidated financial statements were prepared based on the going concern principle operational.
Management confirms that all relevant information specific to interim condensed individual and consolidated financial statements is being disclosed, and corresponds to that used by it in the development of its business management activities.
2.2 | Debt restructuring |
Until June 30, 2024, Azul's Management continued the process of restructuring its debts, as presented in detail in these interim condensed individual and consolidated financial statements.
2.3 | Extreme weather event |
During the quarter ended June 30, 2024, there was an extreme weather event with heavy rains in the central region of the State of Rio Grande do Sul in Brazil, making it impossible to provide air services, due to flooding and the consequent closure of its main airport.
In order to face this challenging scenario, the Company began to monitor and establish operational and financial strategies to get through this period until the resumption of operations, increasing flights to nearby cities, in order to serve affected passengers.
The Company dedicated humanitarian efforts with the aim of supporting actions carried out by local authorities who acted in response to the emergency with the affected population.
19 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
2.4 | Net working capital and capital structure |
As of June 30, 2024, the Company's working capital and liquid equity position are as shown below:
Description | June 30, 2024 | December 31, 2023 | Variation | |
Net working capital | (12,449,127) | (9,704,733) | (2,744,394) | |
Equity | (26,166,566) | (21,327,848) | (4,838,718) |
The negative variation in the balance of net working capital, is mainly due to the increase in liabilities in foreign currency, due to the 14.8% devaluation of the real against the US dollar and the postponement of accounts payable.
The negative variation of equity is mainly, due to the Company's negative financial result, which exceeds by R$4,899,145 due to foreign currency exchange and interest on leases and loans and financing.
3. BASIS OF PREPARATION AND PRESENTATION OF THE INTERIM CONDENSED INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS
The Company’s interim condensed individual and consolidated financial statements have been prepared in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”), specifically IAS 34 – Interim Financial Reporting. The accounting practices adopted in Brazil include those included in the Brazilian corporation law and the technical pronouncements, guidelines and interpretations issued by the Accounting Pronouncements Committee (“CPC”), approved by the Federal Accounting Council (“CFC”) and the Brazilian Securities and Exchange Commission (“CVM”).
The Company’s interim condensed individual and consolidated financial statements have been prepared based on the real (“R$”) as a functional and presentation currency. All currencies shown are expressed in thousands unless otherwise noted.
The Company operates mainly through its aircraft and other assets that support flight operations, making up its cash generating unit (CGU) and its only reportable segment: air transport.
The preparation of the Company's interim condensed individual and consolidated financial statements requires Management to make judgments, use estimates and adopt assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. However, the uncertainty related to these judgments, assumptions and estimates can lead to results that require a significant adjustment to the carrying amount of assets, liabilities, income, and expenses in future years.
When preparing these interim condensed individual and consolidated financial statements of the Company, Management used the following disclosure criteria to understand the changes observed in the equity and in its performance, since the end of the last fiscal year ended December 31, 2023, disclosed on April 12, 2024: (i) regulatory requirements; (ii) relevance and specificity of the information on the operations; (iii) informational needs of users of the interim condensed individual and consolidated financial statements; and (iv) information from other entities participating in the passenger air transport market.
20 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
As a consequence of the improvements made to the presentation of some items in the statements of cash flows and costs and expenses by nature, the following reclassifications were carried out to ensure comparability of balances from the previous period:
Parent company | |||
June 30, 2023 | |||
Statements of Cash Flows | As reported |
Reclassifications |
Reclassified |
Changes in operating assets and liabilities | |||
Prepaid expenses | (8,833) | 8,833 | - |
Other assets | - | (8,833) | (8,833) |
Total | (8,833) | - | (8,833) |
Consolidated | |||
June 30, 2023 | |||
Statements of Cash Flows | As reported |
Reclassifications |
Reclassified |
Changes in operating assets and liabilities | |||
Prepaid expenses | (118,423) | 118,423 | - |
Other assets | (3,436) | (118,423) | (121,859) |
Insurance payable | (54,169) | 54,169 | - |
Accounts payable | 978,688 | (54,169) | 924,519 |
Total | 802,660 | - | 802,660 |
Consolidated | |||
June 30, 2023 | |||
Costs and expenses by nature | As reported |
Reclassifications |
Reclassified |
Cost of services | |||
Rental | - | (74,549) | (74,549) |
Other | (955,135) | 74,549 | (880,586) |
(955,135) | - | (955,135) |
The interim condensed individual and consolidated financial statements have been prepared based on the historical cost, except for the items significant:
Fair value:
· Short-term investments –TAP Bond;
· Derivative financial instruments; and
21 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
· Debenture conversion right.
Other:
· Investments accounted for under the equity method.
3.1 | Approval and authorization for issue of the interim condensed individual and consolidated financial statements |
The approval and authorization for issue of these interim condensed individual and consolidated financial statements occurred by the board of directors on August,10 2024.
4. | MATERIAL ACCOUNTING POLICIES |
The interim condensed individual and consolidated financial statements of the company was prepared based on the policies, practices and methods of calculating estimates adopted and presented in detail in the financial statements for the year ended December 31, 2023 and disclosed on April 12, 2024 and, therefore, must be read together.
4.1 | New, changes and interpretations of relevant accounting standards and pronouncements |
The following accounting standards came into effect on January 1, 2024 and did not significantly impact the Company's balance sheet or income statement.
Norm | Charge |
CPC 26 (R1) – equivalent to IAS 1 | Classification of liabilities as current and non-current |
CPC 06 (R2) – equivalent to IFRS 16 | Lease liabilities in a sale and leaseback transaction |
CPC 03 (R2) – equivalent to IAS 7 e CPC 40 - equivalent to IFRS 7 | Reverse factoring |
4.2 | Foreign currency transactions |
Foreign currency transactions are recorded at the exchange rate in effect at the date the transactions take place. Monetary assets and liabilities designated in foreign currency are determined based on the exchange rate in effect on the balance sheet date, and any difference resulting from currency conversion is recorded under the heading “Foreign currency exchange, net” in the statements of operation.
The exchange rates to Brazilian reais are as follows:
Final exchange rates | ||||||
Description | June 30, 2024 | December 31, 2023 | Variation % | |||
U.S. dollar | 5.5589 | 4.8413 | 14.8% | |||
Euro | 5.9547 | 5.3516 | 11.3% | |||
Average exchange rates | ||||||
Three-month periods ended | Six-month periods ended | |||||
Description | June 30, 2024 | June 30, 2023 | Variation % | June 30, 2024 | June 30, 2023 | Variation % |
U.S. dollar | 5.2129 | 4.9485 | 5.3% | 5.0843 | 5.0744 | 0.2% |
Euro | 5.6132 | 5.3867 | 4.2% | 5.4969 | 5.4831 | 0.3% |
5. | CASH AND CASH EQUIVALENTS |
Parent company | Consolidated | ||||
Description | Weighted average rate p.a. |
June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Cash and bank deposits | - | 927 | 1,709 | 266,814 | 271,857 |
Cash equivalents: | |||||
Bank Deposit Certificate - CDB | 100.2% do CDI | - | - | 657,564 | 1,354,020 |
Repurchase agreements | 97.8% do CDI | 1,247 | 1,100 | 198,011 | 268,432 |
Time Deposit (a) | 5.0% | - | - | 42,497 | 2,985 |
Investments funds | 11.6% | - | - | 274,695 | 42 |
2,174 | 2,809 | 1,439,581 | 1,897,336 |
(a) Investment in U.S. dollar.
6. | SHORT AND LONG-TERM INVESTMENTS |
Consolidated | ||||
Description | Weighted average rate p.a. |
Maturity | June 30, 2024 | December 31, 2023 |
TAP Bond | 7.5% | Mar-26 | 884,454 | 780,312 |
Investments funds | 16.9% | Jun-26 | 107,792 | - |
992,246 | 780,312 | |||
Current | 35,931 | - | ||
Non-current | 956,315 | 780,312 |
22 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
7. | ACCOUNTS RECEIVABLE |
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
Local currency | ||
Credit card companies | 244,278 | 498,609 |
Cargo and travel agencies | 291,646 | 282,654 |
Travel package financing entities | 736 | 29,203 |
Loyalty program partners | 115,372 | 114,932 |
Others | 53,998 | 40,121 |
Total local currency | 706,030 | 965,519 |
Foreign currency | ||
Credit card companies | 16,672 | 18,556 |
Reimbursement receivable for maintenance reserves | 27,874 | 57,528 |
Airline partner companies | 5,633 | 8,612 |
Clearinghouse - agencies and cargo | 24,883 | 30,533 |
Others | 278,949 | 55,894 |
Total foreign currency | 354,011 | 171,123 |
Total | 1,060,041 | 1,136,642 |
Allowance for expected credit losses | (26,065) | (27,234) |
Total net | 1,033,976 | 1,109,408 |
The increase in “Other” accounts receivable in foreign currency mainly refers to contractual guarantees from aeronautical items.
In Brazil, credit card receivables are not exposed to credit risk of the cardholder. The balances can easily be converted into cash, when necessary, through advance payment with credit card companies.
During the six months ended June 30, 2024, the Company anticipated the receipt of R$5,783,793 in accounts receivable from credit card administrators, without right of return, with an average cost of 0.9% p.m. on the anticipated amount. On the same date, the balance of accounts receivable is net of R$3,226,034 due to such advances (R$3,349,391 on December 31, 2023).
The breakdown of accounts receivable by maturity, net of allowance for expected losses, is as follows:
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
Not past due | 890,577 | 970,145 |
Over 1 to 90 days | 106,466 | 122,040 |
Over 90 days | 36,933 | 17,223 |
Total | 1,033,976 | 1,109,408 |
23 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
The movement of expected losses is presented below:
Consolidated | ||
Description | June 30, 2024 | June 30, 2023 |
Balances at the beginning the period | (27,234) | (24,084) |
Additions | (15,094) | (2,654) |
Reversal | 15,873 | - |
Write-off of uncollectible amounts | 390 | 6 |
Balances at the end of the period | (26,065) | (26,732) |
8. | AIRCRAFT SUBLEASE |
Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | |
2024 | 4,419 | 15,386 | |
2025 | 8,838 | 15,386 | |
2026 | 2,132 | 4,001 | |
Gross sublease | 15,389 | 34,773 | |
Accrued interest | (1,508) | (3,971) | |
Net sublease | 13,881 | 30,802 | |
Current | 8,330 | 14,592 | |
Non-current | 5,551 | 16,210 |
9. | INVENTORIES |
Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | |
Maintenance materials and parts | 1,032,740 | 825,499 | |
Flight attendance, uniforms and others | 27,835 | 21,367 | |
Provision for losses | (60,150) | (47,658) | |
Total net | 1,000,425 | 799,208 |
24 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
10. | DEPOSITS |
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Security deposits | 8,959 | 7,872 | 529,746 | 418,537 |
Maintenance reserves | - | - | 2,634,541 | 2,153,310 |
Total | 8,959 | 7,872 | 3,164,287 | 2,571,847 |
Provision for loss | - | - | (265,311) | (278,352) |
Total net | 8,959 | 7,872 | 2,898,976 | 2,293,495 |
Current | 8,959 | 7,802 | 698,585 | 515,692 |
Non-current | - | 70 | 2,200,391 | 1,777,803 |
The movement of security deposits and maintenance reserves is as follows:
Parent company | Consolidated | |||
Description | Security deposits |
Security deposits | Maintenance reserves | Total |
At December 31, 2023 | 7,872 | 418,537 | 1,874,958 | 2,293,495 |
Additions | - | 93,506 | 214,545 | 308,051 |
Returns | (70) | (34,852) | (50,186) | (85,038) |
Provision movement | - | - | 54,350 | 54,350 |
Use by the lessor | - | - | (10,511) | (10,511) |
Foreign currency exchange | 1,157 | 52,555 | 286,074 | 338,629 |
At June 30, 2024 | 8,959 | 529,746 | 2,369,230 | 2,898,976 |
At June 30, 2024 | ||||
Current | 8,959 | 63,373 | 635,212 | 698,585 |
Non-current | - | 466,373 | 1,734,018 | 2,200,391 |
At December 31, 2023 | ||||
Current | 7,802 | 64,788 | 450,904 | 515,692 |
Non-current | 70 | 353,749 | 1,424,054 | 1,777,803 |
The movement of the allowance for maintenance reserves losses is as follows:
Consolidated | ||||
Description | June 30, 2024 | June 30, 2023 | ||
Balances at the beginning of the period | (278,352) | (446,342) | ||
Additions | (21,287) | (86,046) | ||
Reversals | 68,566 | 57,415 | ||
Use by the lessor | 7,071 | 64,624 | ||
Foreign currency exchange | (41,309) | 34,820 | ||
Balances at the end of the period | (265,311) | (375,529) |
25 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
11. | TAXES RECOVERABLE |
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
PIS and COFINS | - | - | 63,003 | 73,029 |
IRPJ and CSLL | 27 | 4,917 | 385 | 8,315 |
ICMS | - | - | 17,832 | 19,940 |
Taxes withheld | 79 | 67 | 140,765 | 121,216 |
Provision for losses for taxes with held | - | - | (4,464) | (3,875) |
Others | - | - | 833 | 808 |
106 | 4,984 | 218,354 | 219,433 |
12. | ADVANCE TO SUPPLIERS |
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
Local currency | 87,920 | 118,442 |
Foreign currency | 105,538 | 102,609 |
193,458 | 221,051 |
These amounts are presented net of provisions for losses in the amount of R$45,990 (R$28,676 as of December 31, 2023).
26 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
13. | INCOME TAX AND CONTRIBUTION |
13.1 | Breakdown of deferred taxes |
Parent company | Consolidated | |||||||
Description | December 31, 2023 | Profit or loss | June 30, 2024 | December 31, 2023 | Profit or loss | June 30, 2024 | ||
Deffered liabilities | ||||||||
Breakage | - | - | - | (195,923) | (40,096) | (236,019) | ||
Foreign currency exchange | (191,219) | (154,413) | (345,632) | (191,219) | (154,413) | (345,632) | ||
Leases | - | - | - | (3,034,585) | (296,781) | (3,331,366) | ||
Others | - | - | - | (1,057) | - | (1,057) | ||
(191,219) | (154,413) | (345,632) | (3,422,784) | (491,290) | (3,914,074) | |||
Deffered assets | ||||||||
Impairment | - | - | - | 48,889 | (9,319) | 39,570 | ||
Financial instruments | - | - | - | 21,112 | (9,885) | 11,227 | ||
Foreign currency exchange | 149,986 | 200,705 | 350,691 | 149,986 | 200,705 | 350,691 | ||
Temporary provisions | 1,707 | (205) | 1,502 | 1,403,989 | 168,076 | 1,572,065 | ||
Leases | - | - | - | 4,199,370 | 627,171 | 4,826,541 | ||
151,693 | 200,500 | 352,193 | 5,823,346 | 976,748 | 6,800,094 | |||
Deffered assets reducer | - | (6,561) | (6,561) | (2,440,088) | (445,932) | (2,886,020) | ||
151,693 | 193,939 | 345,632 | 3,383,258 | 530,816 | 3,914,074 | |||
Total income tax and deferred social contribution | (39,526) | 39,526 | - | (39,526) | 39,526 | - | ||
13.2 | Reconciliation of the effective income tax rate |
Parent company | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Profit (loss) before income tax and social contribution | (3,842,359) | 23,908 | (4,899,433) | (712,732) |
Combined nominal tax rate | 34% | 34% | 34% | 34% |
Taxes calculated at nominal rates | 1,306,402 | (8,129) | 1,665,807 | 242,329 |
Adjustments to determine the effective rate | ||||
Equity | (1,293,320) | 50,791 | (1,662,184) | (154,669) |
Unrecorded and recorded benefit no tax losses and temporary differences | (41,457) | 34,032 | (67,147) | 28,446 |
Mark to market of convertible instruments | 69,903 | (64,191) | 121,438 | (91,744) |
Permanent differences | (8,782) | (12,503) | (18,388) | (24,362) |
32,746 | - | 39,526 | - | |
Deferred income tax and social contribution |
32,746 | - | 39,526 | - |
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Profit (loss) before income tax and social contribution | (3,842,071) | 23,908 | (4,899,145) | (712,732) |
Combined nominal tax rate | 34% | 34% | 34% | 34% |
Taxes calculated at nominal rates | 1,306,304 | (8,129) | 1,665,709 | 242,329 |
Adjustments to determine the effective rate | ||||
Unrecorded and recorded benefit no tax losses and temporary differences | (1,339,576) | 90,226 | (1,758,128) | (159,522) |
Mark to market of convertible instruments | 69,903 | (64,191) | 121,438 | (91,744) |
Permanent differences | (9,770) | (16,727) | (19,690) | 436 |
Others | 5,597 | (1,179) | 29,909 | 8,501 |
32,458 | - | 39,238 | - | |
Current income tax and social contribution | (288) | - | (288) | - |
Deferred income tax and social contribution |
32,746 | - | 39,526 | - |
32,458 | - | 39,238 | - |
The Company has tax losses that are available indefinitely for offset against 30% of future taxable profits on which deferred tax assets were not created as it is not probable that future taxable profits will be available for the Company to use the benefits thereof, as below:
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Tax losses and negative bases | 1,044,741 | 924,637 | 21,061,248 | 18,325,916 |
Tax loss (25%) | 261,185 | 231,159 | 5,265,312 | 4,581,479 |
Negative social contribution base (9%) | 94,027 | 83,217 | 1,895,512 | 1,649,332 |
27 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
14. | INVESTMENTS |
14.1 | Direct investments |
Company equity interest | ||||
Description | Paid-up capital | Voting capital | Equity | |
December 31, 2023 | ||||
ALAB | 100.0% | 100.0% | (20,130,955) | |
IntelAzul | 100.0% | 100.0% | (20,209) | |
Goodwill – IntelAzul | 100.0% | 100.0% | 780,991 | |
Azul Cayman Holdco (a) | 24.8% | 24.8% | - | |
Total | (19,370,173) | |||
June 30, 2024 | ||||
ALAB | 100.0% | 100.0% | (24,994,966) | |
IntelAzul | 100.0% | 100.0% | (21,206) | |
Goodwill – IntelAzul | 100.0% | 100.0% | 780,991 | |
Azul Cayman Holdco (a) | 24.8% | 24.8% | - | |
Total | (24,235,181) |
(a) Considering indirect investments, the Company's share totals 99.8%.
14.2 | Movement of the investments |
Description | ALAB | IntelAzul | Total | |
December 31, 2023 | (20,130,955) | 760,782 | (19,370,173) | |
Equity | (4,887,778) | (997) | (4,888,775) | |
Share-based payment | 23,767 | - | 23,767 | |
June 30, 2024 | (24,994,966) | 759,785 | (24,235,181) | |
Investments | 759,785 | |||
Provision for loss on investment | (24,994,966) |
28 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
15. | PROPERTY AND EQUIPMENT |
Consolidated | ||||||
Description | Weighted average rate (p.a.) | December 31, 2023 | Acquisitions | Write-offs | Transfers (b) | June 30, 2024 |
Cost | ||||||
Aircraft (a) | 2,674,113 | 297,082 | (110,474) | (42,333) | 2,818,388 | |
Improvements | 555,412 | 23,868 | (5,400) | 55,780 | 629,660 | |
Equipment and facilities | 195,810 | 14,478 | (2,866) | - | 207,422 | |
Others | 29,231 | 12,334 | (3,229) | - | 38,336 | |
Construction in progress | 96,095 | 9,079 | (59,036) | (21,845) | 24,293 | |
Advance payments for acquisition of aircraft | 298,040 | 434,063 | - | - | 732,103 | |
3,848,701 | 790,904 | (181,005) | (8,398) | 4,450,202 | ||
Depreciation | ||||||
Aircraft (a) | 7% | (1,075,924) | (99,790) | 19,604 | - | (1,156,110) |
Improvements | 15% | (188,987) | (40,846) | 4,764 | - | (225,069) |
Equipment and facilities | 13% | (120,860) | (13,095) | 2,861 | - | (131,094) |
Others | 8% | (23,289) | (1,219) | 3,222 | - | (21,286) |
(1,409,060) | (154,950) | 30,451 | - | (1,533,559) | ||
Property and equipment | 2,439,641 | 635,954 | (150,554) | (8,398) | 2,916,643 | |
Impairment | (143,790) | - | 14,274 | - | (129,516) | |
Total property and equipment, net | 2,295,851 | 635,954 | (136,280) | (8,398) | 2,787,127 |
(a) Includes aircraft, engines, simulators and equipment flight.
(b) The transfer balances are between the groups “Property and equipment” and “Right-of-use assets”.
During the six months ended June 30, 2024, the Company carried out “sale and leaseback” transactions for an engine, where the revenue, net of sales costs, corresponds to a gain of R$27,441 (there were no operations of this nature on June 30, 2023) and is recognized under the heading “Other costs of services provided”.
29 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
16. | RIGHT-OF-USE ASSETS |
Consolidated | |||||||
Description | Weighted average rate (p.a.) | December 31, 2023 | Acquisitions | Write-offs | Modifica-tions | Transfers (b) | June 30, 2024 |
Cost | |||||||
Aircraft (a) | 14,279,939 | 1,025,062 | (370,242) | 181,553 | 53,391 | 15,169,703 | |
Maintenance of aircraft and engines | 1,552,036 | 260,774 | (27,271) | (7,005) | - | 1,778,534 | |
Restoration of aircraft and engines | 1,699,610 | 285,575 | (20,406) | (86,624) | - | 1,878,155 | |
Others | 324,650 | 34,022 | (5,203) | 643 | - | 354,112 | |
17,856,235 | 1,605,433 | (423,122) | 88,567 | 53,391 | 19,180,504 | ||
Depreciation | |||||||
Aircraft (a) | 8% | (7,417,554) | (582,160) | 370,242 | - | - | (7,629,472) |
Maintenance of aircraft and engines | 20% | (616,379) | (151,996) | 27,271 | - | - | (741,104) |
Restoration of aircraft and engines | 24% | (701,501) | (204,400) | 20,406 | 104,101 | - | (781,394) |
Others | 18% | (109,243) | (28,906) | 2,298 | - | - | (135,851) |
(8,844,677) | (967,462) | 420,217 | 104,101 | - | (9,287,821) | ||
Right-of-use assets, net | 9,011,558 | 637,971 | (2,905) | 192,668 | 53,391 | 9,892,683 |
(a) | Includes aircraft, engines and simulators. |
(b) | The transfer balances are between the groups “Aircraft sublease”, “Property and equipment”, “Right-of-use assets”, “Inventories” and “Other assets”. |
17. | INTANGIBLE ASSETS |
Consolidated | |||||
Description | Weighted average rate (p.a.) | December 31, 2023 | Acquisitions | Write-offs | June 30, 2024 |
Cost | |||||
Goodwill | - | 901,417 | - | - | 901,417 |
Slots | - | 126,547 | - | - | 126,547 |
Software | - | 776,311 | 145,009 | (133,513) | 787,807 |
1,804,275 | 145,009 | (133,513) | 1,815,771 | ||
Amortization | |||||
Software | 27% | (341,028) | (104,321) | 133,270 | (312,079) |
(341,028) | (104,321) | 133,270 | (312,079) | ||
Total intangible assets, net | 1,463,247 | 40,688 | (243) | 1,503,692 |
30 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
18. | LOANS AND FINANCING |
Parent company | |||||||||
Description | Average nominal rate p.a. |
Effective rate | Maturity | December 31, 2023 | Funding (–) costs |
Payment of interest | Interest incurred | Amortized cost | June 30, 2024 |
In local currency - R$ | |||||||||
Debentures | CDI + 6% | 20.7% | Sep-24 | - | 245,554 | (10,087) | 10,568 | 2,393 | 248,428 |
Total in R$ | - | 245,554 | (10,087) | 10,568 | 2,393 | 248,428 | |||
Current | - | 248,428 | |||||||
Non-current | - | - |
31 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
Consolidated | ||||||||||||
Description | Average nominal rate p.a. | Effective rate | Maturity | December 31, 2023 | Funding (–) costs |
Payment of principal | Payment of interest | Interest incurred | Foreign currency exchange | Effects of restructuring | Amortized cost | June 30, 2024 |
In foreign currency – US$ | ||||||||||||
Senior notes – 2024 | 5.9% | 6.3% | Oct-24 | 332,099 | - | - | (10,331) | 9,866 | 49,811 | - | 495 | 381,940 |
Senior notes – 2026 | 7.3% | 7.8% | Jun-26 | 152,572 | - | - | (6,172) | 6,325 | 22,698 | - | 324 | 175,747 |
Senior notes – 2028 | 11.9% | 13.5% | Aug-28 | 3,922,731 | 727,296 | - | (280,011) | 292,455 | 689,184 | - | 17,068 | 5,368,723 |
Senior notes – 2029 | 11.5% | 11.5% | May-29 | 1,165,545 | - | - | (69,278) | 70,338 | 171,702 | - | - | 1,338,307 |
Senior notes – 2030 | 10.9% | 10.9% | May-30 | 2,777,513 | - | - | (156,204) | 158,594 | 409,306 | - | - | 3,189,209 |
Aircraft, engines and others | 4.9% | 5.8% | Mar-29 | 284,279 | - | (144,828) | (7,058) | 5,648 | 28,033 | - | 763 | 166,837 |
Sofr 1M + 4.6% | 10.0% | May-26 | 79,086 | 221,108 | - | (10,159) | 12,260 | 33,423 | - | - | 335,718 | |
8,713,825 | 948,404 | (144,828) | (539,213) | 555,486 | 1,404,157 | - | 18,650 | 10,956,481 | ||||
In local currency - R$ | ||||||||||||
Working capital | CDI + 1.6% | 18.6% | Jan-25 | 27,491 | 982,796 | (477,191) | (9,811) | 9,862 | - | - | 4,353 | 537,500 |
Sep-25 | 2,157 | - | - | - | - | - | - | - | 2,157 | |||
Debentures | CDI + 5.6% | 16.7% | Dec-28 | 919,072 | 522,873 | (387,676) | (68,805) | 60,357 | - | 18,173 | 10,674 | 1,074,668 |
Aircraft, engines and others | Selic + 5.5% | 17.4% | May-25 | 12,771 | - | (2,734) | (2,203) | 838 | - | - | 18 | 8,690 |
6.4% | 6.4% | Mar-27 | 23,596 | - | (9,299) | (648) | 614 | - | - | - | 14,263 | |
985,087 | 1,505,669 | (876,900) | (81,467) | 71,671 | - | 18,173 | 15,045 | 1,637,278 | ||||
Total in R$ | 9,698,912 | 2,454,073 | (1,021,728) | (620,680) | 627,157 | 1,404,157 | 18,173 | 33,695 | 12,593,759 | |||
Current | 1,100,051 | 1,495,194 | ||||||||||
Non-current | 8,598,861 | 11,098,565 |
32 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
18.1 Schedule of amortization of debt
Parent company | ||
Description | June 30, 2024 | |
2024 | 248,428 |
There was no comparative balance as of December 31, 2023.
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
2024 | 772,395 | 1,100,051 |
2025 | 984,539 | 222,201 |
2026 | 754,332 | 355,930 |
2027 | 141,937 | 116,146 |
2028 | 5,455,082 | 3,998,142 |
After 2028 | 4,485,474 | 3,906,442 |
12,593,759 | 9,698,912 | |
Current | 1,495,194 | 1,100,051 |
Non-current | 11,098,565 | 8,598,861 |
18.2 | New funding |
18.2.1 Senior notes 2028
In February 2024, the subsidiary Azul Secured issued additional notes in the principal amount of R$740,585 (equivalent to US$148,700), with costs of R$13,289. These notes were issued to qualified institutional investors and there was no change in payment and interest conditions.
18.2.2 Aircraft and engines
In January and April 2024, the subsidiary Azul Finance funding R$77,175 and R$143,933, respectively, with interest of 4.6% p.a. plus the variation in the Secured Overnight Financing Rate (“SOFR”) and maturity in May 2026.
18.2.3 Working capital
In March 2024, the subsidiary ALAB funding R$450,000, with costs of R$1,802, with interest equivalent to CDI+1.5% p.a. and single payment of interest and principal in the second quarter of 2024. In April 2024, the debt was renegotiated, resulting in the postponement of the payment deadline to June 2024 with additional costs of R$2,354. In June 2024 the balance was paid off.
In June 2024, the subsidiary ALAB funding R$556,000, with costs of R$19,048, interest equivalent to CDI+1.6% p.a. and single payment of interest and principal in January 2025.
33 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
18.2.4 Debentures
In March 2024, the Board of Directors approved the issuance of simple debentures not convertible into shares, of the type with real guarantee, with additional personal guarantee, in a single series, in the total amount of R$250,000, with fundraising costs of R$4,446, with a nominal unit value of R$1, rate equivalent to CDI+6.0% p.a., payment of quarterly interest from June 2024 and maturity in March 2027. In June 2024, the expiration date was changed to September 2024.
In June 2024, the Board of Directors approved the issuance of simple debentures not convertible into shares, of the type with real guarantee, with additional personal guarantee, in a single series, from the subsidiary ALAB, in a total value of up to R$600,000. In June 2024, the subsidiary ALAB issued the amount of R$283,333, with costs of R$3,417, nominal unit value of R$1, rate equivalent to CDI+6.3% p.a., payment of monthly interest from July 2024, maturity in June 2026 and annual measurement of restrictive clauses (“covenants”).
18.3 | Renegotiations |
18.3.1 Debentures
During the second quarter, the subsidiary ALAB renegotiated the terms of the debentures, with a total value of R$700,000, with costs of R$2,597 in order to postpone the due date of the principal installments from 2024 to March 2025. There was no change in rates of interest.
In accordance with CPC 48 – Financial Instruments, equivalent to IFRS 9, the Company concluded that the renegotiation does not fall within the scope of debt extinguishment.
18.4 | Covenants |
In the quarter, the Company did not measure restrictive clauses (“covenants”) in its loan and financing contracts, therefore, the related debt continues to be classified in these interim condensed individual and consolidated financial statements in accordance with the contractual flow originally established.
34 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
19. LEASES
In 2023, the Company defined the renegotiation conditions and began to sign definitive agreements with the lessors, who agreed to receive negotiable debt securities maturing in 2030 (“Notes”) and debt with the possibility of settlement in Azul preferred shares or cash, at the discretion of the Company (“Equity”) in order to reflect the Company's new cash generation, its better capital structure and the reduction in its credit risk. During the six months ended June 30, 2024, the Company renegotiated 17 lease contracts under these conditions.
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Leases | - | - | 14,309,033 | 12,455,827 |
Leases – Notes | - | - | 1,203,942 | 1,030,845 |
Leases – Equity | 2,372,856 | 1,659,739 | 2,372,856 | 1,659,739 |
2,372,856 | 1,659,739 | 17,885,831 | 15,146,411 | |
Current liabilities | 712,974 | 216,388 | 4,494,473 | 3,687,392 |
Non-current assets | 1,659,882 | 1,443,351 | 13,391,358 | 11,459,019 |
35 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
19.1 | Leases |
Consolidated | |||||||||||
Description | Average remaining term | Weighted average rate | December 31, 2023 | Additions | Modifications | Payments | Interest incurred | Transfers (b) | Write-offs | Foreign currency exchange | June 30, 2024 |
Lease without purchase option: | |||||||||||
Aircraft (a) | 7.5 | 15.9% | 11,567,882 | 1,022,742 | 142,123 | (1,658,934) | 867,437 | (287,035) | (17,942) | 1,687,801 | 13,324,074 |
Others | 4.4 | 10.7% | 237,254 | 34,022 | 643 | (31,800) | 11,410 | - | (4,117) | 21,570 | 268,982 |
Lease with purchase option: | |||||||||||
Aircraft (a) | 4.6 | 12.8% | 650,691 | - | 27,794 | (101,937) | 45,848 | - | - | 93,581 | 715,977 |
12,455,827 | 1,056,764 | 170,560 | (1,792,671) | 924,695 | (287,035) | (22,059) | 1,802,952 | 14,309,033 | |||
Current | 3,349,056 | 3,642,153 | |||||||||
Non-current | 9,106,771 | 10,666,880 |
(a) Includes aircraft, engines and simulators.
(b) Transfer balances are between the “Leases” classifications.
19.2 | Leases – Notes |
Consolidated | |||||||
Description | Average remaining term | Weighted average rate | December 31, 2023 | Payments | Interest incurred | Foreign currency exchange | June 30, 2024 |
Financing with lessors – Notes | 6.0 | 14.8% | 1,030,845 | (53,931) | 74,992 | 152,036 | 1,203,942 |
Total | 1,030,845 | (53,931) | 74,992 | 152,036 | 1,203,942 | ||
Current | 121,948 | 139,346 | |||||
Non-current | 908,897 | 1,064,596 |
36 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
19.3 | Leases – Equity |
Parent Company and Consolidated | |||||||
Description | Average remaining term | Weighted average rate | December 31, 2023 | Interest incurred | Transfers (a) | Foreign currency exchange | June 30, 2024 |
Financing with lessors – Equity | 3.1 | 14.4% | 1,659,739 | 136,635 | 287,035 | 289,447 | 2,372,856 |
Total | 1,659,739 | 136,635 | 287,035 | 289,447 | 2,372,856 | ||
Current | 216,388 | 712,974 | |||||
Non-current | 1,443,351 | 1,659,882 |
(a) Transfer balances are classified as “Leases”.
37 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
19.4 | Schedule of amortization of leases |
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
2024 | 2,152,833 | 3,570,147 |
2025 | 3,425,632 | 2,851,258 |
2026 | 3,161,752 | 2,615,718 |
2027 | 2,746,008 | 2,226,313 |
2028 | 2,476,896 | 1,987,968 |
After 2028 | 10,054,103 | 7,606,103 |
Minimum lease payments | 24,017,224 | 20,857,507 |
Financial charges | (9,708,191) | (8,401,680) |
Present value of minimum lease payments | 14,309,033 | 12,455,827 |
Current | 3,642,153 | 3,349,056 |
Non-current | 10,666,880 | 9,106,771 |
19.5 | Schedule of amortization of leases – Notes |
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
2024 | 89,461 | 130,432 |
2025 | 119,282 | 103,883 |
2026 | 119,282 | 103,883 |
2027 | 119,282 | 103,883 |
2028 | 119,282 | 103,883 |
After 2028 | 1,769,342 | 1,540,940 |
Minimum lease payments | 2,335,931 | 2,086,904 |
Financial charges | (1,131,989) | (1,056,059) |
Present value of minimum lease payments | 1,203,942 | 1,030,845 |
Current | 139,346 | 121,948 |
Non-current | 1,064,596 | 908,897 |
19.6 | Schedule of amortization of leases – Equity |
Parent company and consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
2024 | 270,863 | 235,897 |
2025 | 972,453 | 726,247 |
2026 | 972,453 | 726,247 |
2027 | 701,591 | 490,348 |
Minimum lease payments | 2,917,360 | 2,178,739 |
Financial charges | (544,504) | (519,000) |
Present value of minimum lease payments | 2,372,856 | 1,659,739 |
Current | 712,974 | 216,388 |
Non-current | 1,659,882 | 1,443,351 |
38 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
19.7 | Covenants |
In the quarter, the Company does not measure covenants in its lease contracts, therefore, the related debt continues to be classified in these interim condensed individual and consolidated financial statements in accordance with the contractual flow originally established.
20. | CONVERTIBLE DEBT INSTRUMENTS |
Parent Company and Consolidated | |||||||||
Description | Average nominal rate p.a. | Effective rate (a) | Maturity | December 31, 2023 | Variation of conversion right | Payment of interest | Interest incurred | Foreign currency exchange | June 30, 2024 |
In foreign currency – US$ | |||||||||
Debentures | 12.3% | 12.3% | Oct-28 | 1,201,610 | (357,171) | (76,382) | 128,033 | 104,901 | 1,000,991 |
Total in R$ | 1,201,610 | (357,171) | (76,382) | 128,033 | 104,901 | 1,000,991 | |||
Current | 25,807 | 28,994 | |||||||
Non-current | 1,175,803 | 971,997 |
(a) | Does not consider the conversion right. |
The balance includes the right to convert the debt into Company shares in the amount of R$131,604 (R$488,775 as of December 31, 2023).
20.1 | Schedule of amortization |
Parent Company and Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | |
2024 | 28,994 | 25,807 | |
2028 | 971,997 | 1,175,803 | |
1,000,991 | 1,201,610 | ||
Current | 28,994 | 25,807 | |
Non-current | 971,997 | 1,175,803 |
39 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
21. | ACCOUNTS PAYABLE |
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Accounts payable | 10,942 | 10,651 | 3,916,152 | 3,077,225 |
Accounts payable - Notes | - | - | 461,875 | 401,702 |
Accounts payable - Equity | 146,324 | 119,841 | 146,324 | 119,841 |
157,266 | 130,492 | 4,524,351 | 3,598,768 | |
Current | 39,233 | 10,651 | 3,194,382 | 2,277,841 |
Non-current | 118,033 | 119,841 | 1,329,969 | 1,320,927 |
22. REVERSE FACTORING
The Company promotes negotiations with suppliers with the aim of extending their payment terms. In this way, agreements were signed with financial institutions that allow their suppliers to advance the bonds, mainly fuel, with interest rates varying between 1.19% and 1.30% p.m.
Consolidated | ||||||
Description | December 31, 2023 | Addition | Payment | Interest paid | Interest incurred | June 30, 2024 |
Reverse factoring | 290,847 | 160,146 | (402,814) | (11,058) | 8,372 | 45,493 |
290,847 | 160,146 | (402,814) | (11,058) | 8,372 | 45,493 |
23. | DERIVATIVE FINANCIAL INSTRUMENTS |
Consolidated | ||||
Changes in fair value | Forward - fuel | Option fuel | Conversion right debentures (a) | Total |
At December 31, 2023 | (60,102) | 12,266 | (488,775) | (536,611) |
Gains (losses) recognized in result | 10,104 | (8,835) | 357,171 | 358,440 |
Payments (receipts) | 16,836 | (1,397) | - | 15,439 |
At June 30, 2024 | (33,162) | 2,034 | (131,604) | (162,732) |
Rights with current derivative financial instruments | 2,269 | 2,034 | - | 4,303 |
Rights with non-current derivative financial instruments | 88 | - | - | 88 |
Obligations with current derivative financial instruments | (35,499) | - | - | (35,499) |
Obligations with non-current derivative financial instruments | (20) | - | - | (20) |
Non-current convertible instruments |
- | - | (131,604) | (131,604) |
(33,162) | 2,034 | (131,604) | (162,732) |
(a) | Balance recorded in the parent company. |
40 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
24. | AIRPORT TAXES AND FEES |
Consolidated | ||
Description | June 30, 2024 | December 31, 2023 |
Airport fees | 1,377,365 | 1,490,514 |
Boarding tax | 270,965 | 248,689 |
Other taxes | 22,291 | 20,880 |
1,670,621 | 1,760,083 | |
Current | 757,492 | 588,404 |
Non-current | 913,129 | 1,171,679 |
25. | AIR TRAFFIC LIABILITY AND LOYALTY PROGRAM |
Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | |
Air traffic liability and loyalty program | 6,515,669 | 5,782,121 | |
Breakage | (694,174) | (576,245) | |
5,821,495 | 5,205,876 | ||
Average use term (a) | 65 days | 56 days |
(a) Does not consider the loyalty program.
26. | SALARIES AND BENEFITS |
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Short-term benefits | 2,450 | 2,344 | 532,954 | 473,060 |
Share-based payment | - | - | 214 | 1,737 |
2,450 | 2,344 | 533,168 | 474,797 |
41 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
27. | TAXES PAYABLE |
Parent company | Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Government installment payment program federal | - | - | 166,977 | 157,970 |
PIS and COFINS | 44 | 2 | 335 | 4,231 |
Taxes withheld | 211 | 421 | 64,669 | 76,520 |
Import taxes | 43 | 83 | 16,251 | 13,483 |
Others | - | - | 3,030 | 2,251 |
298 | 506 | 251,262 | 254,455 | |
Current | 298 | 506 | 161,816 | 142,168 |
Non-current | - | - | 89,446 | 112,287 |
28. | PROVISIONS |
28.1 Composition of provisions
Consolidated | ||||
Description | Return of aircrafts and engines (a) | Tax, civil, labor and risks (b) | Post-employment benefit | Total |
At December 31, 2023 | 2,573,170 | 557,773 | 9,910 | 3,140,853 |
Moviments | 218,767 | (6,203) | 77 | 212,641 |
Write-offs | (45,975) | (154,130) | - | (200,105) |
Interest incurred | 66,098 | (26,445) | 486 | 40,139 |
Foreign currency exchange | 404,129 | - | - | 404,129 |
At June 30, 2024 | 3,216,189 | 370,995 | 10,473 | 3,597,657 |
At June 30, 2024 | ||||
Current | 343,736 | 280,972 | - | 624,708 |
Non-current | 2,872,453 | 90,023 | 10,473 | 2,972,949 |
At December 31, 2023 | ||||
Current | 497,525 | 238,905 | - | 736,430 |
Non-current | 2,075,645 | 318,868 | 9,910 | 2,404,423 |
(a) Nominal discount rate 10.7% p.a. (10.7% p.a. as of December 31, 2023).
(b) Considers provision for civil risks in the amount of R$15 in the parent company.
42 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
28.1.1 Tax, civil and labor risks
The balances of the proceedings with estimates of probable and possible losses are shown below:
Consolidated | ||||
Probable loss | Possible loss | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Tax | 241,402 | 284,638 | 443,176 | 432,109 |
Civil | 63,549 | 131,464 | 100,214 | 49,930 |
Labor | 66,044 | 141,671 | 156,134 | 68,789 |
370,995 | 557,773 | 699,524 | 550,828 |
28.1.1.1 | Cível |
During the quarter ended June 30, 2024, the Company changed the risk of lawsuits involving flight delays and cancellations from probable to possible after a detailed analysis of recent court decisions.
28.1.1.2 | Labor |
During the quarter ended June 30, 2024, the Company changed the risk of a process involving crew hours on the ground, from probable to possible, taking into account the current stage of the process.
29. | RELATED-PARTY TRANSACTIONS |
29.1 | Transactions between companies |
Observing accounting standards, such transactions were duly eliminated for consolidation purposes:
Parent company | ||||
Creditor | Debtor | Type of operation | June 30, 2024 | December 31, 2023 |
Azul | Investment | Debt securities exchange offers – costs | 9,718 | 8,464 |
Azul | Secured | Issuance of debt securities 2028 – costs | 9,264 | 6,676 |
Azul | ALAB | Renegotiation of obligations with suppliers – Equity | 146,324 | 119,841 |
Azul | ALAB | Renegotiation of lease obligations – Equity | 2,372,856 | 1,659,739 |
Azul | ALAB | Loan | 39,254 | (86,659) |
ALAB | Azul | Renegotiation of convertible debentures – costs | - | (496) |
Secured | Azul | Renegotiation of convertible debentures – costs | (11,119) | (9,685) |
Secured | Azul | Loan | (733,775) | (639,052) |
1,832,522 | 1,058,828 | |||
Rights with related parties current | 741,309 | 216,388 | ||
Rights with related parties non-current | 1,836,107 | 1,578,332 | ||
Obligations with current related parties | - | (52,129) | ||
Obligations with related parties non-current | (744,894) | (683,763) |
43 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
Parent company | ||||
Revenue | Expense | Type of operation | June 30, 2024 | June 30, 2023 |
ALAB | Azul | Loan | - | 5,007 |
- | 5,007 |
29.2 | Compensation of key management personnel |
Key management personnel comprise the directors, officers and members of the Executive Committee and directors. Expenses incurred with remuneration and the respective charges, paid or payable, are shown below:
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Short-term benefits | 8,413 | 7,962 | 19,853 | 15,722 |
Post-employment benefit | 228 | - | 456 | - |
Share-based payment | 11,000 | 18,781 | 21,922 | 37,768 |
19,641 | 26,743 | 42,231 | 53,490 |
Stock-based compensation plan, considers the Stock Options, RSU and phantom shares. Such plans are expected to be settled in up to eight years and, therefore, and does not represent a cash outflow.
29.3 | Guarantees and pledges granted by the Parent Company |
The Company has granted guarantees on rental properties for some of its executives and the total amount involved is not significant.
29.4 | Ticket sales contract |
On March, 2018, the Company entered into a ticket sales contract with Caprioli Turismo Ltda., a travel agency owned by the Caprioli family (which holds an indirect stake in the Company through TRIP former shareholders), whereby Caprioli Turismo Ltda. is granted a R$20 credit line for the purchase and resale of tickets for flights operated by the Company. This credit line is guaranteed by a non-interest bearing promissory note in the same amount payable.
44 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
29.5 | Breeze |
The Company signed sublease agreements with Breeze Aviation Group (“Breeze”), an airline founded by the controlling shareholder of Azul, headquartered in the United States. The transaction was voted and approved by 97% of the Azul's shareholders at the Extraordinary General Meeting held on March 2020. Following good corporate practices, the controlling shareholder did not participate in the voting.
As of June 30, 2024, the operations with Breeze as recorded the following balances:
Consolidated | |||||
Creditor | Debtor | Type of operation | NE | June 30, 2024 | December 31, 2023 |
ALAB | Breeze | Aircraft sublease | Aircraft sublease | 13,881 | 30,802 |
ALAB | Breeze | Reimbursement receivable for maintenance reserves | Accounts receivable | 5,349 | 3,901 |
Breeze | ALAB | Reimbursement receivable for maintenance reserves | Other liabilities | (23,401) | (19,559) |
Consolidated | |||||
Revenues | Expenses | Type of operation | NE | June 30, 2024 | June 30, 2023 |
ALAB | Breeze | Interest incurred | Financial income | 1,579 | 3,232 |
29.6 | Lilium |
In August 2021, the Company announced plans to make a strategic partnership with Lilium GmbH, a wholly owned subsidiary of Lilium N.V. (“Lilium), which has ultimately become a related party as the Company’s Board of Directors’ Chairman was elected independent member of Lilium’s Board of Directors.
As of June 30, 2024, the Company has no outstanding balances with Lilium.
45 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
29.7 | Azorra |
In August 2022, the Company made agreements for purchase and sale of aircraft and engines with entities that are part of Azorra Aviation Holdings LLC. (“Azorra”), which has become a related party as the Company’s Board of Directors’ Chairman was elected independent member of Azorra’s Board of Directors.
The transactions between the Company and the Azorra group are shown below:
Consolidated | |||||
Creditor | Debtor | Type of operation | NE | June 30, 2024 | December 31, 2023 |
ALAB | Azorra | Security deposits | Deposits | 25,810 | 4,643 |
Azorra | ALAB | Leases | Leases | (342,219) | (302,947) |
Azorra | Azul Investments | Leases - Notes | Leases | (87,066) | (74,572) |
Azorra | Azul | Leases - Equity | Leases | (126,140) | (102,683) |
Revenues | Expenses | Type of operation | NE | June 30, 2024 | June 30, 2023 |
Azorra | ALAB | Interest incurred | Financial expense | 24,091 | 8,120 |
46 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
30. | EQUITY |
30.1 | Issued capital |
Parent company and Consolidated | ||||
Value | Quantity | |||
Description | Company’s capital | AFAC (a) | Common shares | Preferred shares |
At December 31, 2023 | 2,314,821 | 789 | 928,965,058 | 335,747,796 |
Capital payment | 807 | (807) | - | - |
Share-based payment | - | 18 | - | 3,000 |
At June 30, 2024 | 2,315,628 | - | 928,965,058 | 335,750,796 |
(a) Advance for future capital increase.
The Company's shareholding structure is presented below:
Parent company and Consolidated | |||||||
June 30, 2024 | December 31, 2023 | ||||||
Shareholder | Common shares | Preferred shares | % economic participation | Common shares | Preferred shares | % economic participation | |
- | |||||||
David Neeleman | 67.0% | 2.2% | 4.5% | 67.0% | 2.2% | 4.5% | |
Acionistas Trip (a) | 33.0% | 3.1% | 4.2% | 33.0% | 4.0% | 5.0% | |
United Airlines Inc | - | 5.5% | 5.4% | - | 8.0% | 7.8% | |
Blackrock | - | 5.0% | 4.8% | - | 5.0% | 4.8% | |
Others | - | 84.0% | 80.9% | - | 80.7% | 77.8% | |
Treasury shares | - | 0.2% | 0.2% | - | 0.1% | 0.1% | |
Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
(a) | This refers to Trip Participações S.A., Trip Investimentos Ltda. and Rio Novo Locações Ltda. |
47 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
30.2 | Treasury shares |
Parent company and Consolidated | |||
Description | Number of shares | Amount paid | Average cost (in R$) |
At December 31, 2023 | 499,999 | 9,041 | 18 |
Repurchase | 210,000 | 2,596 | 12 |
Alienation | (4,125) | (69) | - |
At June 30, 2024 | 705,874 | 11,568 | 16 |
In May 2024, the buyback plan for 1,300,000 preferred shares was approved, maturing in 18 months, in order to keep them in treasury to later meet the obligations of the RSU plan.
31. EARNINGS (LOSS) PER SHARE
Parent company and Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Numerator | ||||
Net profit (loss) for the period | (3,809,613) | 23,908 | (4,859,907) | (712,732) |
Denominator | ||||
Weighted average number of common shares | 928,965,058 | 928,965,058 | 928,965,058 | 928,965,058 |
Weighted average number of preferred shares | 335,124,985 | 335,648,075 | 335,062,078 | 335,635,741 |
Economic value of preferred shares | 75 | 75 | 75 | 75 |
Weighted average number of equivalent preferred shares (a) | 347,511,186 | 348,034,276 | 347,448,279 | 348,021,942 |
Weighted average number of equivalent common shares (b) | 26,063,338,933 | 26,102,570,683 | 26,058,620,908 | 26,101,645,633 |
Weighted average number of presumed conversions | 422,219,654 | 76,853,338 | 422,219,654 | 76,853,338 |
Weighted average number of shares that would have been issued at average market price |
152,780 | 4,776,446 | 950,420 | 2,668,627 |
Basic earnings (loss) per common share – R$ | (0.15) | - | (0.19) | (0.03) |
Diluted earnings (loss) per common share – R$ | (0.15) | - | (0.19) | (0.03) |
Basic earnings (loss) per preferred share – R$ | (10.96) | 0.07 | (13.99) | (2.05) |
Diluted earnings (loss) per preferred share – R$ | (10.96) | 0.07 | (13.99) | (2.05) |
(a) | This refers to the participation in the value of the Company's total equity, calculated as if all 928,965,058 common shares had been converted into 12,386,201 preferred shares at the conversion ratio of 75 common shares for each preferred share. |
(b) | This refers to the participation in the value of the Company's total equity, calculated as if the weighted average of preferred shares had been converted into common shares at the conversion ratio of 75 common shares for each one preferred share. |
48 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
The diluted result per share is calculated by adjusting the weighted average number of shares in circulation, except those in treasury, for instruments potentially convertible into shares. However, due to the losses recorded in the six months ended June 30, 2024 and 2023, these instruments issued by the Company have a non-dilutive effect and, therefore, were not considered in the total number of shares in circulation to determine the diluted loss per share.
32. SHARE-BASED PAYMENT
The conditions of the share-based grant plans remain unchanged during the six months ended June 30, 2024.
The movement of the plans is shown below:
Parent company and Consolidated | ||||
Number of shares | ||||
Description | Stock option | RSU | Phantom shares |
Total |
At December 31, 2023 | 20,521,684 | 1,544,065 | 246,930 | 22,312,679 |
Exercised | (3,000) | - | (18,177) | (21,177) |
Canceled | (52,368) | (70,053) | - | (122,421) |
At June 30, 2024 | 20,466,316 | 1,474,012 | 228,753 | 22,169,081 |
Parent Company and Consolidated | ||||
Description | June 30, 2024 | December 31, 2023 | ||
Share price (in reais) | 7.34 | 16.01 | ||
Weighted average price of the stock option (in reais) | 5.97 | 12.93 | ||
Weighted average price of the phantom shares (in reais) | 10.35 | 10.35 | ||
Cash inflow stock option | 18 | 1,608 | ||
Flat cash inflow of phantom shares | 188 | 237 | ||
Income tax regarding RSU transfer | - | 3,239 | ||
The expenses of share-based compensation plans are shown below:
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Stock option | 9,996 | 17,800 | 20,365 | 35,601 |
RSU | 1,529 | 2,223 | 3,402 | 4,693 |
Phantom shares | (736) | 1,988 | (1,523) | 2,310 |
10,789 | 22,011 | 22,244 | 42,604 |
49 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
32.1 | Assumptions |
32.1.1 Stock option
Date of grant | Option exercise price (in R$) |
Everage fair value of the option on the grant (in R$) |
Historical volatility | Expected dividend | Average risk-free rate of return |
Exercise rate per tranche | Deadline remainder of vesting period (in years) |
Purchasing period up to (years) | Total options granted | Total outstanding options | Total options available for exercise |
December 11, 2009 | 3.42 | 1.93 | 47.7% | 1.1% | 8.8% | 25.0% | - | 4.0 | 5,032,800 | 180,870 | 180,870 |
March 24, 2011 | 6.44 | 4.16 | 54.8% | 1.1% | 12.0% | 25.0% | - | 4.0 | 1,572,000 | 84,000 | 84,000 |
April 5, 2011 | 6.44 | 4.16 | 54.8% | 1.1% | 12.0% | 25.0% | - | 4.0 | 656,000 | 6,200 | 6,200 |
June 30, 2014 | 19.15 | 11.01 | 40.6% | 1.1% | 12.5% | 25.0% | - | 4.0 | 2,169,122 | 708,993 | 708,993 |
July 1, 2015 | 14.51 | 10.82 | 40.6% | 1.1% | 15.7% | 25.0% | - | 4.0 | 627,810 | 177,592 | 177,592 |
July 1, 2016 | 14.50 | 10.14 | 43.1% | 1.1% | 12.2% | 25.0% | - | 4.0 | 820,250 | 280,124 | 280,124 |
July 6, 2017 | 22.57 | 12.82 | 43.4% | 1.1% | 10.3% | 25.0% | - | 4.0 | 680,467 | 442,796 | 442,796 |
August 8, 2022 | 11.07 | 8.10 | 70.0% | - | 13.0% | 25.0% | 2.1 | 4.0 | 1,774,418 | 1,717,191 | 439,962 |
August 8, 2022 | 11.07 | 6.40 | 68.8% | - | 13.2% | 33.3% | 1.1 | 3.0 | 1,514,999 | 1,385,749 | 668,500 |
August 19, 2022 | 11.07 | 7.39 | 67.2% | - | 13.6% | 100.0% | - | 1.0 | 4,900,000 | 4,824,333 | 4,824,333 |
August 19, 2022 | 11.07 | 11.54 | 74.6% | - | 12.7% | 20.0% | 3.1 | 5.0 | 8,900,000 | 8,900,000 | - |
July 7, 2023 | 15.60 | 10.80 | 75.4% | - | 10.5% | 25.0% | 3.0 | 4.0 | 1,800,000 | 1,758,468 | - |
30,447,866 | 20,466,316 | 7,813,370 |
32.1.2 Restricted stock option
Date of grant |
Exercise rate per tranche | Fair value of share (in R$) |
Remaining term of the vesting period (in years) |
Purchasing period up to (years) | Total granted |
Total not exercised |
June 19, 2020 | 25.0% | 21.80 | - | 4.0 | 1,382,582 | 244,058 |
July 7, 2021 | 25.0% | 42.67 | 1.0 | 4.0 | 300,000 | 112,889 |
July 7, 2022 | 25.0% | 11.72 | 2.0 | 4.0 | 335,593 | 220,568 |
July 7, 2022 | 25.0% | 11.72 | 2.0 | 4.0 | 671,186 | 421,083 |
July 7, 2023 | 25.0% | 19.32 | 3.0 | 4.0 | 500,000 | 475,414 |
3,189,361 | 1,474,012 |
32.1.3 Phantom shares
Date of grant | Option exercise price (in reais) |
Average fair value of option | Historical volatility | Expected dividend | Average risk-free rate of return | Exercise rate per tranche | Remaining term of the vesting period (in years) |
Purchasing period up to (years) | Total options granted | Total outstanding | Total options available for exercise |
August 7, 2018 | 20.43 | 0.13 | 55.8% | - | 11.2% | 25.0% | - | 4.0 | 707,400 | 53,520 | 53,520 |
April 30, 2020 | 10.35 | 1.02 | 55.8% | - | 11.2% | 33.3% | - | 3.0 | 3,250,000 | 134,983 | 134,983 |
April 30, 2020 | 10.35 | 1.77 | 62.7% | - | 11.5% | 25.0% | - | 4.0 | 1,600,000 | 38,820 | 38,820 |
August 17, 2021 | 33.99 | 0.57 | 64.3% | - | 11.7% | 25.0% | 1.1 | 4.0 | 580,000 | 1,430 | 1,430 |
6,137,400 | 228,753 | 228,753 |
50 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
33. SALES REVENUE
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Revenue | ||||
Passenger revenue | 3,859,945 | 3,945,037 | 8,217,591 | 8,120,213 |
Other revenues | 344,694 | 358,231 | 700,673 | 707,732 |
Total | 4,204,639 | 4,303,268 | 8,918,264 | 8,827,945 |
Taxes levied | ||||
Passenger revenue (a) | (881) | (5,172) | (1,487) | (12,048) |
Other revenues | (31,013) | (43,901) | (65,620) | (83,374) |
Total taxes | (31,894) | (49,073) | (67,107) | (95,422) |
Total revenue | 4,172,745 | 4,254,195 | 8,851,157 | 8,732,523 |
(a) | As of January 1, 2023, the PIS and COFINS rates on revenues arising from regular passenger air transport activities were reduced to zero, in accordance with Law 14,592/2023. |
Revenues by geographical location are as follows:
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Domestic revenue | 3,420,602 | 3,305,766 | 7,233,915 | 6,810,712 |
Foreign revenue | 752,143 | 948,429 | 1,617,242 | 1,921,811 |
Total revenue | 4,172,745 | 4,254,195 | 8,851,157 | 8,732,523 |
51 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
34. COSTS AND EXPENSES BY NATURE
Parent company | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Administrative expenses | ||||
Salaries and benefits | (3,912) | (6,343) | (17,605) | (15,305) |
Insurance | (611) | - | (2,642) | - |
Others | (6,505) | (5,859) | (9,066) | (10,513) |
(11,028) | (12,202) | (29,313) | (25,818) | |
Other income (expenses), net | ||||
Others | (29) | 71,699 | (132) | 71,699 |
(29) | 71,699 | (132) | 71,699 | |
Total | (11,057) | 59,497 | (29,445) | 45,881 |
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2024 | June 30, 2024 | June 30, 2024 |
Cost of services | ||||
Aircraft fuel | (1,373,576) | (1,338,217) | (2,726,854) | (3,011,619) |
Salaries and benefits | (589,840) | (524,383) | (1,220,805) | (1,021,541) |
Airport taxes and fees | (239,604) | (249,392) | (481,843) | (511,753) |
Traffic and customer servicing | (207,190) | (189,490) | (414,734) | (385,086) |
Maintenance | (170,720) | (223,276) | (368,394) | (381,172) |
Depreciation and amortization (a) | (608,355) | (624,678) | (1,219,886) | (1,190,056) |
Impairment | 6,978 | - | 14,274 | - |
Insurance | (24,518) | (7,065) | (41,736) | (26,463) |
Rents | (64,505) | (59,337) | (119,977) | (74,549) |
Others | (141,802) | (372,163) | (268,273) | (880,586) |
(3,413,132) | (3,588,001) | (6,848,228) | (7,482,825) | |
Selling expenses | ||||
Salaries and benefits | (9,244) | (8,958) | (21,668) | (16,949) |
Sales and marketing | (191,480) | (179,820) | (393,431) | (353,817) |
(200,724) | (188,778) | (415,099) | (370,766) | |
Administrative expenses | ||||
Salaries and benefits | (56,832) | (35,116) | (88,113) | (67,439) |
Depreciation and amortization (a) | (3,062) | (2,488) | (6,028) | (4,763) |
Insurance | (611) | - | (2,642) | - |
Others | (86,740) | (38,086) | (177,527) | (117,685) |
(147,245) | (75,690) | (274,310) | (189,887) | |
Other income (expenses), net | ||||
Others | 29,537 | (100,509) | (71,603) | (219,797) |
29,537 | (100,509) | (71,603) | (219,797) | |
Total | (3,731,564) | (3,952,978) | (7,609,240) | (8,263,275) |
(a) Net of PIS and COFINS credits in the amount of R$428 in the quarter and R$819 in the six months.
52 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
35. | FINANCIAL RESULT |
Parent company | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Financial income | ||||
Short and long-term investments | 18 | 24 | 51 | 151 |
Others | 2,311 | 78 | 2,568 | 1,678 |
2,329 | 102 | 2,619 | 1,829 | |
Financial expenses | ||||
Interest on loans and financing | (10,568) | - | (10,568) | - |
Interest on convertible instruments | (66,038) | (61,877) | (128,033) | (122,608) |
Amortized cost of loans and financing | (2,392) | - | (2,392) | - |
Amortized cost of convertible instruments | - | (1,250) | - | (2,441) |
Cost of financial operations | (8) | (175) | (161) | (275) |
Others | - | (1,711) | (2,041) | (1,711) |
(79,006) | (65,013) | (143,195) | (127,035) | |
Derivative financial instruments, net | 205,598 | (188,798) | 357,171 | (269,837) |
Foreign currency exchange, net | (156,340) | 68,735 | (197,808) | 91,340 |
Financial result | (27,419) | (184,974) | 18,787 | (303,703) |
Consolidated | ||||
Three-month periods ended | Six-month periods ended | |||
Description | June 30, 2024 | June 30, 2023 | June 30, 2024 | June 30, 2023 |
Financial income | ||||
Short and long-term investments | 33,810 | 22,436 | 65,295 | 40,172 |
Interest on sublease receivables | 746 | 3,576 | 1,579 | 7,546 |
TAP Bond fair value | 1,865 | 15,569 | 3,005 | 43,607 |
Others | 14,573 | 9,402 | 26,039 | 13,124 |
50,994 | 50,983 | 95,918 | 104,449 | |
Financial expenses | ||||
Interest on loans and financing (a) | (325,383) | (137,654) | (617,799) | (283,909) |
Interest on lease | (596,070) | (635,882) | (1,136,322) | (1,291,024) |
Interest on convertible instruments | (66,038) | (61,877) | (128,033) | (122,608) |
Interest on factoring credit card receivables | (80,271) | (91,907) | (160,061) | (206,649) |
Interest on provisions | (3,930) | (74,031) | (40,139) | (140,727) |
Interest on reverse factoring | (3,111) | - | (8,372) | (12,258) |
Interest accounts payable and airport taxes and fees | (118,052) | (93,931) | (213,152) | (159,864) |
Guarantee commission | (41,875) | (37,230) | (63,036) | (87,347) |
Amortized cost of loans and financing | (21,683) | (7,318) | (33,695) | (15,082) |
Amortized cost of convertible instruments | - | (1,250) | - | (2,441) |
Cost of financial operations | (30,373) | (15,043) | (59,748) | (30,611) |
TAP Bond fair value | (738) | - | (6,609) | (10,628) |
Others | (46,805) | (41,976) | (91,286) | (92,535) |
(1,334,329) | (1,198,099) | (2,558,252) | (2,455,683) | |
Derivative financial instruments, net | 168,497 | (235,616) | 358,440 | (510,588) |
Foreign currency exchange, net | (3,168,414) | 1,105,423 | (4,037,168) | 1,679,842 |
Financial result | (4,283,252) | (277,309) | (6,141,062) | (1,181,980) |
(a) Net of PIS and COFINS credits in the amount of R$9,358.
53 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
36. | RISK MANAGEMENT |
36.1 | Fair value hierarchy of financial instruments |
The fair value hierarchy of the Company's consolidated financial instruments, as well as the comparison between book value and fair value, are identified below:
Parent company | ||||||
Carrying amount | Fair value | |||||
Description | Note | Level | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Liabilities | ||||||
Convertible debt instruments – conversion right | 23 | 2 | (131,604) | (488,775) | (131,604) | (488,775) |
Consolidated | ||||||
Carrying amount | Fair value | |||||
Description | Note | Level | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Assets | ||||||
Long-term investments – TAP Bond | 6 | 2 | 884,454 | 780,312 | 884,454 | 780,312 |
Derivative financial instruments | 23 | 2 | 4,391 | 21,909 | 4,391 | 21,909 |
Liabilities | ||||||
Loans and financing | 18 | 2 | (13,463,146) | (9,698,912) | (12,243,236) | (9,796,608) |
Convertible debt instruments – conversion right | 23 | 2 | (131,604) | (488,775) | (131,604) | (488,775) |
Derivative financial instruments | 23 | 2 | (35,519) | (69,745) | (35,519) | (69,745) |
Financial instruments whose fair value approximates their carrying value, based on established conditions, mainly due to the short maturity period, were not disclosed.
54 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
36.2 | Market risks |
36.2.1 Interest rate risk
36.2.1.1 Sensitivity analysis
As of June 30, 2024, the Company held financial assets and liabilities linked to various types of rates. In the sensitivity analysis of non-derivative financial instruments, the impact on annual interest was only considered on positions with values exposed to such fluctuations:
Consolidated | ||||
Exposure to CDI | Exposure to SOFR | |||
Description | Rate (p.a.) | June 30, 2024 | Weighted Rate (p.a.) | June 30, 2024 |
Exposed assets (liabilities), net | 10.4% | (937,223) | 5.3% | (760,135) |
Effect on profit or loss | ||||
Interest rate devaluation by -50% | 5.2% | 48,748 | 2.7% | 20,225 |
Interest rate devaluation by -25% | 7.8% | 24,374 | 4.0% | 10,112 |
Interest rate appreciation by 50% | 15.6% | (48,748) | 8.0% | (20,225) |
Interest rate appreciation by 25% | 13.0% | (24,374) | 6.7% | (10,112) |
Assets and liabilities previously linked to LIBOR were reviewed and updated by SOFR.
36.2.2 Aircraft fuel price risk (“QAV”)
The price of fuel may vary depending on the volatility of the price of crude oil and its derivatives. To mitigate losses linked to variations in the fuel market, the Company had, as of June 30, 2024, forward and options transactions on fuel (note 23).
36.2.2.1 Sensitivity analysis
The following table demonstrates the sensitivity analysis in US dollars of the price fluctuation of QAV liter:
Consolidated | ||||
Exposure to price | ||||
Description | Average price per liter (in reais) |
June 30, 2024 | ||
Aircraft fuel | 4.47 | (2,726,854) | ||
Effect on profit or loss | ||||
Devaluation by -50% | 2.24 | 1,363,427 | ||
Devaluation by -25% | 3.35 | 681,714 | ||
Appreciation by 50% | 6.71 | (1,363,427) | ||
Appreciation by 25% | 5.59 | (681,714) | ||
55 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
36.2.3 Foreign exchange risk
The foreign exchange risk arises from the possibility of unfavorable exchange differences to which the Company's cash flows are exposed.
The equity exposure to the main variations in exchange rates is shown below:
Parent company | ||||
Exposure to US$ | Exposure to € | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Assets | ||||
Cash and cash equivalents | 489 | 706 | 431 | 388 |
Deposits | 8,959 | 7,802 | - | - |
Related parties | 2,538,162 | 1,578,332 | - | - |
Total assets | 2,547,610 | 1,586,840 | 431 | 388 |
Liabilities | ||||
Convertible debt instruments | (1,000,991) | (1,201,610) | - | - |
Leases | (2,372,856) | (1,659,739) | - | - |
Accounts payable | (150,846) | (119,888) | - | - |
Related parties | (744,894) | (649,232) | - | - |
Total liabilities | (4,269,587) | (3,630,469) | - | - |
Net exposure | (1,721,977) | (2,043,629) | 431 | 388 |
Net exposure in foreign currency | (309,769) | (422,124) | 72 | 73 |
Consolidated | ||||
Exposure to US$ | Exposure to € | |||
Description | June 30, 2024 | December 31, 2023 | June 30, 2024 | December 31, 2023 |
Assets | ||||
Cash and cash equivalents | 86,238 | 82,975 | 5,224 | 4,092 |
Long-term investments | - | - | 884,454 | 780,312 |
Accounts receivable | 318,805 | 115,024 | 1,196 | 2,876 |
Aircraft sublease | 13,881 | 30,802 | - | - |
Deposits | 2,795,370 | 2,196,474 | - | - |
Other assets | 16,955 | 26,207 | - | - |
Total assets | 3,231,249 | 2,451,482 | 890,874 | 787,280 |
Liabilities | ||||
Loans and financing | (11,126,346) | (8,889,048) | - | - |
Leases | (17,781,735) | (14,043,101) | - | - |
Convertible debt instruments | (1,000,991) | (1,201,610) | - | - |
Accounts payable | (2,608,813) | (2,040,546) | - | - |
Airport taxes and fees | (2,049) | (21,994) | - | - |
(3,216,189) | (2,573,170) | - | - | |
Provisions and other liabilities | (50,288) | (108,687) | (14) | - |
Total liabilities | (35,786,411) | (28,878,156) | (14) | - |
Net exposure | (32,555,162) | (26,426,674) | 890,860 | 787,280 |
Net exposure in foreign currency | (5,856,404) | (5,458,590) | 149,606 | 147,111 |
36.2.3.1 Sensitivity analysis
Parent company | ||||
Exposure to US$ | Exposure to € | |||
Description | Closing rate | June 30, 2024 | Closing rate | June 30, 2024 |
Exposed assets (liabilities), net | 5.5589 | (1,721,977) | 5.9547 | 431 |
Effect on profit or loss | ||||
Foreign currency devaluation by -50% | 2.7795 | 860,989 | 2.9774 | (216) |
Foreign currency devaluation by -25% | 4.1692 | 430,494 | 4.4660 | (108) |
Foreign currency appreciation by 50% | 8.3384 | (860,989) | 8.9321 | 216 |
Foreign currency appreciation by 25% | 6.9486 | (430,494) | 7.4434 | 108 |
Consolidated | ||||
Exposure to US$ | Exposure to € | |||
Description | Closing rate | June 30, 2024 | Closing rate | June 30, 2024 |
Exposed assets (liabilities), net | 5.5589 | (32,555,162) | 5.9547 | 890,860 |
Effect on profit or loss | ||||
Foreign currency devaluation by -50% | 2.7795 | 16,277,581 | 2.9774 | (445,430) |
Foreign currency devaluation by -25% | 4.1692 | 8,138,791 | 4.4660 | (222,715) |
Foreign currency appreciation by 50% | 8.3384 | (16,277,581) | 8.9321 | 445,430 |
Foreign currency appreciation by 25% | 6.9486 | (8,138,791) | 7.4434 | 222,715 |
36.3 | Credit risk |
Credit risk is inherent to the Company's operating and financial activities, mainly disclosed in cash and cash equivalents, long-term investments, accounts receivable, aircraft sublease, security deposits and maintenance reserves. Financial assets classified as cash and cash equivalents are deposited with counterparties that have a minimum investment grade. The TAP Bond is guaranteed by intellectual property rights and credits related to the TAP mileage program.
Credit limits are established for all customers based on internal classification criteria and the carrying amounts represent the maximum credit risk exposure. Outstanding receivables from customers are frequently monitored by the Company and, when necessary, allowances for expected credit losses are recognized.
Derivative financial instruments are contracted on the over-the-counter (OTC) market with counterparties that maintain a relationship, and can be contracted on commodity and futures exchanges (B3 and NYMEX), which mitigates and contributes to credit risk. The Company assesses the risks of counterparties in financial instruments and diversifies exposure periodically.
56 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
36.4 | Liquidity risk |
The maturity schedules of the Company’s consolidated financial liabilities as of June 30, 2024 are as follows:
Consolidated | |||||
Description | Carrying amount | Contractual cash flow | Until 1 year | From 2 to 5 years | After 5 years |
Loans and financing | 12,593,759 | 18,653,828 | 2,749,697 | 12,068,624 | 3,835,507 |
Reverse factoring | 45,493 | 46,012 | 46,012 | - | - |
Leases | 17,885,831 | 29,270,515 | 4,791,710 | 18,039,500 | 6,439,305 |
Convertible debt instruments | 1,000,991 | 2,080,851 | 164,322 | 1,916,529 | - |
Accounts payable | 4,524,351 | 4,955,371 | 3,277,724 | 1,116,543 | 561,104 |
Airport taxes and fees | 1,670,621 | 1,883,773 | 914,284 | 727,195 | 242,294 |
37,721,046 | 56,890,350 | 11,943,749 | 33,868,391 | 11,078,210 |
36.5 | Capital management |
The Company seeks capital alternatives in order to satisfy its operational needs, aiming for a capital structure that it considers adequate for the financial costs and the maturity terms of the funding and its guarantees. The Company's Management continually monitors its net debt.
57 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
37. | NON-CASH TRANSACTIONS |
Consolidated | ||||||||||||||||
Description | Aircraft sublease | Acquisition of property and equipment | Acquisition of capitalized maintenance | Maintenance prepayment | Acquisition of intangible | Maintenance reserves | Sublease Compensations | Reverse factoring | Sale and leaseback | Compensation of lease | Compensation of accounts payable | Acquisition of lease | Addition the ARO | Lease Modifications | Others | Total |
Accounts receivable | - | - | - | - | - | 85,039 | - | - | (84,633) | (69,105) | - | (11,117) | - | - | - | (79,816) |
Aircraft sublease | (14,366) | - | - | - | - | - | (7,995) | - | - | - | - | - | - | - | - | (22,361) |
Inventories | - | - | - | - | - | - | - | - | - | - | - | (2,261) | - | - | (15,337) | (17,598) |
Deposits | - | - | - | - | - | (9,031) | - | - | - | - | - | - | - | - | - | (9,031) |
Advances to suppliers | - | - | - | - | - | - | - | - | - | - | (867,948) | - | - | - | - | (867,948) |
Property and equipment | - | 340,309 | - | - | - | - | - | - | - | - | - | (8,395) | - | - | (47,301) | 284,613 |
Right-of-use assets | 14,366 | - | 38,038 | - | - | - | - | - | - | - | - | 1,098,109 | 285,575 | 188,029 | - | 1,624,117 |
Intangible assets | - | - | - | - | 66,611 | - | - | - | - | - | - | - | - | - | - | 66,611 |
Other assets | - | - | - | 222,683 | - | - | - | - | - | - | - | (28,367) | - | - | - | 194,316 |
Loans and financing | - | (221,108) | - | - | - | - | - | - | - | - | - | - | - | - | - | (221,108) |
Leases | - | - | - | - | - | - | 7,995 | - | - | 69,105 | - | (1,056,765) | - | (170,552) | - | (1,150,217) |
Accounts payable | - | (119,201) | (38,038) | (222,683) | (66,611) | (76,008) | - | 160,146 | 84,633 | - | 867,948 | 4,893 | - | - | 62,638 | 657,717 |
Reverse factoring | - | - | - | - | - | - | - | (160,146) | - | - | - | - | - | - | - | (160,146) |
Provisions | - | - | - | - | - | - | - | - | - | - | - | - | (285,575) | (17,477) | - | (303,052) |
Other liabilities | - | - | - | - | - | - | - | - | - | - | - | 3,903 | - | - | - | 3,903 |
June 30, 2024 | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
Description | Acquisition of property and equipment | Acquisition of capitalized maintenance | Acquisition of intangible | Maintenance reserves | Compensation of sublease | Compensation of lease | Acquisition of lease | ARO | Modification | Transfers | Total |
Accounts receivable | - | - | - | - | - | (35,966) | - | - | - | 116,948 | 80,982 |
Aircraft sublease | - | - | - | - | (14,741) | - | - | - | - | - | (14,741) |
Deposits | - | - | - | 293,196 | - | - | - | - | - | (116,948) | 176,248 |
Advances to suppliers | - | - | - | - | - | - | - | - | - | (922,310) | (922,310) |
Property and equipment | 54,064 | - | - | - | - | - | - | - | - | (12,977) | 41,087 |
Right-of-use assets | - | 34,123 | - | - | - | - | 481,340 | 143,109 | (591,527) | 12,785 | 79,830 |
Intangible assets | - | - | 30,309 | - | - | - | - | - | - | 192 | 30,501 |
Loans and financing | - | - | - | - | - | - | - | - | - | (14,464) | (14,464) |
Leases | - | - | - | - | 14,741 | 39,526 | (494,970) | - | 520,521 | 14,464 | 94,282 |
Accounts payable | (54,064) | (34,123) | (30,309) | (293,196) | - | - | 9,594 | - | - | 975,254 | 573,156 |
Provisions | - | - | - | - | - | - | - | (143,109) | 121,008 | - | (22,101) |
Other assets and liabilities | - | - | - | - | - | (3,560) | 4,036 | - | - | (52,944) | (52,468) |
Result | - | - | - | - | - | - | - | - | (50,002) | - | (50,002) |
June 30, 2023 | - | - | - | - | - | - | - | - | - | - | - |
58 |
AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2024 | |
38. | COMMITMENTS |
38.1 | Aircraft acquisition |
Through contracts with manufacturers and lessors, the Company committed to acquiring certain aircraft, as follows:
Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | |
Lessors | 30 | 31 | |
Manufacturers | 94 | 96 | |
124 | 127 |
The amounts shown below are brought to present value using the weighted discount rate for lease operations, equivalent to 15.4% (15.8% on December 31, 2023) and do not necessarily represent a cash outflow, as the Company is evaluating the acquisition of financing to meet these commitments.
Consolidated | |||
Description | June 30, 2024 | December 31, 2023 | |
2024 | 632,021 | 916,053 | |
2025 | 1,561,967 | 1,290,764 | |
2026 | 6,171,248 | 4,991,454 | |
2027 | 5,412,919 | 4,359,775 | |
2028 | 3,230,189 | 2,595,179 | |
After 2028 | 2,780,269 | 2,294,727 | |
19,788,613 | 16,447,952 |
38.2 | Letters of credit |
The position of the letters of credit in use by the Company follows, for the following purposes:
Consolidated | ||||
June 30, 2024 | December 31, 2023 | |||
Description | R$ | US$ | R$ | US$ |
Security deposits and maintenance reserve | 2,234,950 | 402,049 | 1,979,883 | 408,957 |
Bank guarantees | 9,520 | - | 9,161 | - |
2,244,470 | 402,049 | 1,989,044 | 408,957 |
Elton Flavio Ribeiro
CRC 1SP 253891/O-0
Controllership and tax director
59 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 12, 2024
Azul S.A.
By: /s/ Alexandre Wagner Malfitani
Name: Alexandre Wagner Malfitani
Title: Chief Financial Officer