SEC Form 6-K filed by Azul S.A.

Contents

 

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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 months ended March 31, 2025.

Barueri, May 14, 2025.

John Peter Rodgerson

CEO

Alexandre Wagner Malfitani

Vice President of Finance and Investor Relations

Daniel Tckaz

Technical Vice President

Abhi Manoj Shah

Vice President of Revenue

 

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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 on the examination of the interim condensed individual and consolidated financial statements relating to for the three months ended March 31, 2025.

Barueri, May 14, 2025.

John Peter Rodgerson

CEO

Alexandre Wagner Malfitani

Vice President of Finance and Investor Relations

Daniel Tckaz

Technical Vice President

Abhi Manoj Shah

Vice President of Revenue

 

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Opinion of the statutory audit committee

In compliance with the legal provisions, the Statutory Audit Committee reviewed the management report and the interim condensed individual and consolidated financial statements for the three months ended March 31, 2025. Based on this review and also considering the information and clarifications provided by the Company management and by Grant Thornton Auditores Independentes Ltda. during the three months, the Statutory Audit Committee expressed a favorable opinion on the management report and on the interim condensed individual and consolidated financial statements for the three months ended March 31, 2025, together with the independent auditor’s report issued by Grant Thornton Auditores Independentes Ltda., recommending the Board of Directors to approve them.

Barueri, May 13, 2025.

Gilberto de Almeida Peralta

Member and Coordinator of the Audit Committee

Renata Faber Rocha Ribeiro

Member of the Audit Committee

James Jason Grant

Member of the Audit Committee

 

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(Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.)
(Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.)

Independent auditor's report on review of interim financial information

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 March 31, 2025, comprising the balance sheet as of March 31, 2025, and the respective statements of income, of comprehensive income, of changes in shareholders’ equity and of cash flows for the period of three-month 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.

 

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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 three-month period ended March 31, 2025, 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.

Review of values corresponding to the comparative period

The amounts corresponding to the three-month period ending March 31, 2024, presented for comparison purposes were reviewed by another independent auditor, whose report on the review was issued on May 10, 2024, without modifications.

São Paulo, May 14, 2025

Grant Thornton Auditores Independentes Ltda.

CRC 2SP-025.583/O-1

Élica Daniela da Silva Martins

Accountant CRC 1SP-223.766/O-0

 

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The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.

 

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The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.

 

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The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.

 

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The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements

 

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(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 Options and RSU).

(c) Difference between the issue value and the fair value of the shares.

The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.

 

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The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.

 

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(a) Not including INSS in the amount of R$462 in the parent company R$115,068 in the consolidated, as it is in the federal tax line.

(b) In 2024, 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.

 

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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”). 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.

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 tourism services.    

Azul shares are traded on B3 and on the New York Stock Exchange (“NYSE”) under tickers AZUL4 and AZUL, respectively.

Azul is headquartered at Avenida Marcos Penteado de Ulhôa Rodrigues, 939, 8^th floor, in the city of Barueri, state of São Paulo, Brazil.

1.1 Organizational structure

The Company organizational structure as of March 31, 2025 is as follows:

 

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The table below lists the operational activities in which the Azul subsidiaries are engaged, as well as the ownership.

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.

2.    GOING CONCERN

2.1 Management Statement

The Company's individual and consolidated financial statements were prepared on going concern basis, which assumes that the Company will be able to fulfill its payment obligations in accordance with contracted maturities.

On performing the Company's going concern assessment, management considered the financial position and results of operations up to March 31, 2025, as well as other foreseen or occurred events up to the date of issuance of these interim condensed individual and consolidated financial statements.

 

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Management understands that even with the existence of a certain degree of uncertainty regarding the Company's ability to fulfill its obligations, the renegotiations carried out between the Company and its creditors, as disclosed in notes 18, 19, 21 and 38, corroborate Management's assessment of the Company's reasonable expectation of having sufficient resources to continue operating in the foreseeable future.

Additionally, Management's conclusion is based on the Company's business plan approved by the Board of Directors in December 2024 and the entire debt restructuring in which the Company is engaged. The Company's business plan includes future actions, macroeconomic and aviation sector assumptions, such as the level of demand for air transport with corresponding increase in fees and estimated exchange rates and fuel prices.

Management confirms that all relevant information specific to the 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 Non-binding Memorandum of Understanding

In January 2025, the Company signed a non-binding memorandum of understanding (“MoU”) with Abra Group Limited (“Abra”) aligning the terms and conditions for the potential business combination between Azul and Gol Linhas Aéreas Inteligentes S.A. (“Gol”).

The MoU describes the understandings regarding the governance of the entity resulting from the transaction and reinforces the interest in continuing negotiations regarding the proposed share exchange and other conditions. If the transaction is implemented, Azul and Gol will maintain their operating certificates segregated under a single listed resulting entity.

The closing of the transaction is subject to the agreement between Abra and Azul regarding the economic terms of the transaction, the satisfactory conclusion of due diligence, the execution of definitive agreements, the obtaining of corporate and regulatory approvals (including from the Brazilian antitrust authority), the fulfillment of customary closing conditions, the consummation of Gol's reorganization plan within the scope of the judicial recovery and the receipt, by Abra, of the corresponding consideration.

2.3 Restructuring

During the first quarter of 2025, the Company made significant progress in restructuring its obligations to debt holders, lessors and suppliers.

The restructuring and recapitalization included a structured financing plan focused on improving liquidity, cash generation and reducing leverage, as detailed in notes 18, 19, 20, 21 and 38.

 

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2.4 Net working capital and capital structure

The Company's working capital and liquid equity position are as shown below:

The variation in the balance of net working capital balance, which represents an improvement of 29.5%, is mainly due to the restructuring of its obligations to debt securities holders, lessors and suppliers, in addition to the 7.3% appreciation of the real against the dollar.

The positive variation of equity is mainly due to the Company's operating result, in the amount of R$1,480,889, mainly due to the effects of the restructuring.

3.    DECLARATION OF THE MANAGEMENT, 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.

 

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As a consequence of the improvements made to the presentation of some items in the statements of cash flows the following reclassifications were carried out to ensure comparability of balances from the previous period:

The interim condensed individual and consolidated financial statements have been prepared based on the historical cost, except for the items bellow:

Fair value:

Other:

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 at the Board of Directors’ meeting held on May 14, 2025.

4.    MAIN ACCOUNTING PROCEDURES

The interim condensed individual and consolidated financial statements of the company was prepared based on the main accounting procedures: practices and methods of calculating estimates adopted and presented in detail in the financial statements for the year ended December 31, 2024 and disclosed on February 24, 2025 and, therefore, must be read together.

4.1 New relevant accounting standards, changes and interpretations

The following accounting standards came into effect on January 1, 2025 and did not significantly impact on the Company's balance sheet or income statement.

 

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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:

5.    CASH AND CASH EQUIVALENTS

6.    SHORT AND LONG-TERM INVESTMENTS

 

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7.    ACCOUNTS RECEIVABLE

The increase in “Other” accounts receivable in foreign currency mainly refers to contractual guarantees from aeronautical manufacturers.

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 three months ended March 31, 2025, the Company anticipated the receipt of R$2,923,382 in accounts receivable from credit card administrators, without right of return, with an average cost of 1.2% p.m. on the anticipated amount. On the same date, the balance of accounts receivable is net of R$3,118,463 due to such advances (R$4,434,864 on December 31, 2024).

 

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The breakdown of accounts receivable by maturity, net of allowances for losses:

As of May 02, 2025, of the total amount due, R$32,459 has been received.

The movement of allowances for losses is presented below:

8.    INVENTORIES

 

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9.    DEPOSITS

The movement of security deposits and maintenance reserves is as follows:

The movement of provision for loss of maintenance reserves is as follows:

 

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10.    TAXES RECOVERABLE

11.    ADVANCE TO SUPPLIERS

12.    OTHER ASSETS

 

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13.    INCOME TAX AND CONTRIBUTION

13.1 Breakdown of deferred taxes

13.2 Reconciliation of the effective income tax rate

 

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The Company has tax losses that are available indefinitely for offset against 30% of future taxable profits on which deferred income tax and social contribution assets have not been created, as it is not likely that future taxable profits will be available for the Company to use them, as below:

14.    INVESTMENTS

14.1 Direct investments

14.2 Movement of the investments

 

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15.    PROPERTY AND EQUIPMENT

During the three months ended March 31, 2025, the Company carried out “sale and leaseback” transactions for an engine, where the revenue, net of sales costs, corresponds to a gain of R$1,798 (R$27,441 on March 31 2024) and is recognized under the heading “Other costs of services provided”

16.    RIGHT-OF-USE ASSETS

 

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17.    INTANGIBLE ASSETS

 

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18.    LOANS AND FINANCING

(a) Due to the restructuring, R$552,073 was recorded in the income statement under the caption “Restructuring of loans and financing”. The amount refers to R$396,779 of incorporation of fees and R$155,294, mainly, of costs of the original fundraising.

(b) The effective rate of 37.8% per year is due to the very short maturity term and transaction costs.

(c) Due to the restructuring, R$84,884 was recorded in the income statement under the caption “Restructuring of debentures”. The amount refers to the incorporation of fees.

 

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18.1 Schedule of amortization of debt

18.2 Restructuring

During the first quarter of 2025, in exchange for the substantial balance of Senior Notes 2028, 2029 and 2030 – (“Existing Notes”), the subsidiary Azul Secured issued Senior Notes 1L – 2028 and Senior Notes 2L – 2029 and 2030 with the following conditions:

The Senior Notes 1L – 2028 are guaranteed on a first lien basis after the payments of the superpriority Notes, but before the payments of the Senior Notes 2L – 2029 and 2030, in addition to other debts and other obligations, as per priorities established in an agreement between creditors. The guarantee package consists of the fiduciary assignment of the flow of receivables of Azul Viagens, the loyalty program and the fiduciary sale of the intellectual property of the loyalty program.

In addition, the Company has executed supplemental indentures to amend the terms of the Existing Notes in accordance with its solicitation of consents to substantially eliminate all restrictive covenants, events of default and collateral.

In accordance with CPC 48 – Financial Instruments, equivalent to IFRS 9, the Company concluded that the renegotiation falls within the scope of debt extinguishment. Therefore, the proportional amounts previously recorded were extinguished and a new debt was recorded. For this reason, any costs or fees incurred were recognized in the result.

 

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18.3 Relevant Funding

18.3.1 Superpriority Notes

During the first quarter of 2025, the subsidiary Azul Secured issued superpriority notes in a private, in the principal amount of R$3,093,825 (equivalent to US$525,000), with costs of R$315,190, interest equivalent to Sofr Index + 8.3% p.a. (if paid in cash) or + 10.7% p.a. (if is capitalized), quarterly interest payments, the first in February 2025, and due in January 2030.

Additionally, interest in the amount of R$27,508 was incorporated into the principal.

18.4 Covenants

The Company measures restrictive clauses (“covenants”) in some of its loan and financing contracts, as shown below:

19.    LEASES

 

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19.1 Restructuring

During the first quarter of 2025, the Company made significant progress in restructuring its obligations to lessors, which included:

 

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19.2 Leases

(a) Transfer balances are to “Accounts payable”.

19.3 Leases – Notes

 

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19.4 Leases – Convertible to equity

 

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19.5 Schedule of amortization of leases

19.6 Schedule of amortization of leases – Notes

19.7 Schedule of amortization of leases – Convertible to equity

 

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19.8 Covenants

The Company measures restrictive clauses (“covenants”) in some of its related to the level of indebtedness and coverage of debt payments contracts, as shown below:

20.    CONVERTIBLE DEBT INSTRUMENTS

(a) Does not consider the conversion right.

(b) Consider the original exchange rate.

20.1 Schedule of debt amortization

20.2 Restructuring

During the first quarter of 2025, the Company renegotiated the convertible debentures, with payment of a premium of R$1,428 (equivalent to US$242) and a change in the conversion price from R$22.78 reais to R$3.37 reais. There was no change in the maturity date or nominal interest rate.

In accordance with CPC 48 – Financial Instruments, equivalent to IFRS 9, IFRS 9, the Company concluded that the renegotiation of the debentures falls within the scope of debt extinguishment. Therefore, the proportional amounts previously recorded were extinguished and a new debt was recorded. For this reason, any costs or fees incurred were recognized in the income statement.

Due to the modification of the debt, the amount of R$249,715 was recorded in the statement of income, under the caption “Restructuring of debentures”. The amount refers to the payment of a premium of R$1,428, extinction and reconstitution of the conversion right of R$961,252 and revenue from extinction and reconstitution of the debt of R$712,965.

 

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21.    ACCOUNTS PAYABLE

21.1 Restructuring

During the first quarter of 2025, the Company made significant progress in restructuring its obligations to suppliers, which included:

22.    DERIVATIVE FINANCIAL INSTRUMENTS

(a) Balance recorded in the parent company.

(b) Refers to the effects of the extinction and reconstitution of the right of conversion.

 

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23.    AIRPORT TAXES AND FEES

24.    AIR TRAFFIC LIABILITY AND LOYALTY PROGRAM

(a) Does not consider the loyalty program.

25.    SALARIES AND BENEFITS

 

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26.    TAXES PAYABLE

27.    PROVISIONS

27.1 Breakdown of provisions

(a) Nominal discount rate 10.8% p.a. (10.8% p.a. on December 31, 2024).

(b) Considers provision for civil risks in the amount of R$213 in the parent company (R$142 as of December 31, 2024).

 

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27.1.1 Tax, civil and labor risks

The balances of the proceedings with estimates of probable and possible losses are shown below:

27.1.1.1 Civel

The increase in lawsuits with estimates of probable and possible losses is due to the significant increase in lawsuits received, as well as the decisions handed down in recent months.

The values are dispersed and it is not appropriate to highlight any specific lawsuit.

28.    RELATED-PARTY TRANSACTIONS

28.1 Transactions between companies

28.1.1 Balances

In compliance with accounting standards, such transactions were duly eliminated for consolidation purposes.

28.1.2 Compensation of key management personnel

The Company´s employees are entitled to profit sharing based on certain goals agreed annually. In turn, executives are entitled to bonus based on statutory provisions proposed by the Board of Directors and approved by the shareholders. The amount of profit sharing is recognized in profit or loss for the year in which the goals are achieved.