Azul's Q2 Revenue Hits Record, But Fuel Costs Crush Core Earnings
Azul's Q2 revenue rose to a record, but EBITDA fell 55% on a 61.8% jump in fuel costs per liter, squeezing margins.
Brazilian airline Azul reported record operating revenue for the second quarter, but a sharp rise in fuel costs sent core earnings down by more than half. The company's EBITDA fell 55.4% year-on-year to 510.1 million reais, even as total operating revenue edged up 0.7% to 4.98 billion reais.
The fuel price surge, linked to the oil shock from the U.S.-Israeli conflict with Iran, pushed fuel cost per liter up 61.8%. Total aircraft fuel expenses rose 41.2% to 1.96 billion reais, squeezing margins despite the airline raising average fares by 9.5%.
To counter higher costs, Azul cut capacity by 10.6% year-on-year, part of its post-restructuring plan after emerging from a nine-month Chapter 11 process in February. The airline said unit revenue improved as it implemented higher fares in response to the fuel price spike.
Azul, Brazil's largest carrier by cities served, also reported a wider adjusted net loss of 1.07 billion reais for the quarter, compared with a loss of 475.8 million reais a year earlier. However, total gross debt fell 37.8% to 21.4 billion reais following the completion of its financial restructuring.
Analysts polled by LSEG had expected net revenue of 5.03 billion reais and EBITDA of 618 million reais, making the results a miss on both counts.