Brazilian airline Azul says business picked up markedly toward the end of the second quarter, and the airline remains positive that the country’s air transport recovery will continue in the coming months.
The Sao Paulo-based airline on 12 August reports a R$1.07 billion ($204 million) profit for the second quarter of 2021, driven by foreign exchange gains. Without those gains, the airline would have posted a loss of R$1.17 billion for the three months that ended on 30 June.
Revenue for the quarter came in at R$1.7 billion, more than four times the R$402 million the airline posted in the same quarter a year ago, but still 35% lower than in 2019.
Azul says that while the second quarter began slow amid a second wave of Covid-19 infections, business picked up, with its domestic load factor rising to 83% in July. Fares, too, are rising, the airline says.
“Since [April], the vaccination effort in Brazil has accelerated, leading to a decrease in cases, hospitalisations and daily casualties,” says the airline’s chief executive John Rodgerson.
“The economy has safely started to reopen. Restrictions on businesses, restaurants and other public places have been removed. Schools are back to in-person learning and our corporate customers are returning to the office,” he adds.
The airline serves 128 destinations, 14 more than before the pandemic, and plans to increase that to 135 destinations by the end of the third quarter.
Azul ended the second quarter with 161 aircraft, up from 159 at the end of March.
CARGO BOOM
The airline’s recovery is being driven by sequential and significant increases in its cargo business. That segment generated second-quarter revenue of R$272 million, up 137% compared to the same period two years ago, even with 33% fewer departures, the airline says.
The carrier’s executives say Azul’s logistics business continues to boom, and they expect cargo revenue will more than double from 2019 to 2021 as the airline invests in that segment.
“We are seeing great strength in customers migrating from road to air,” Abhi Shah, Azul’s chief revenue officer, says of the airline’s cargo business. “We are not stealing share from competitors, but rather helping grow the market… That’s sustainable growth going forward.”
Azul can now deliver freight and packages to more than 1,000 cities in Brazil within two days – a marked improvement over delivery times via ground-based transportation networks.
CORPORATE REBOUND
Corporate travel is already at 60% of pre-Covid-19 levels, Shah adds. “I can easily see us at 70, 75, 80% by the end of the year”.
“We are hearing from our corporate customers that as the second dose [of the vaccine] comes into play for the months of August and September, they are coming back to the office,” Shah adds.
The airline’s diversity of corporate accounts has been an advantage, Shah says. While the construction industry is back at close to 100%, finance and banking travel remains at around 36%, he says.
“Our office is now filling up, traffic is up, companies are back on line,” Rodgerson adds. ”As vaccinations continue to progress and corporations return to the office, we will see a strong revenue environment during the second half of the year.”
LILIUM JETS
Earlier this month, Azul announced a deal with German electric aviation start-up Lilium worth up to $1 billion. Azul could acquire 220 of Lilium’s in-development electric vertical take-off and landing (eVTOL) vehicles, which Lilium aims to have in commercial operation by 2025. Executives say they envision the air taxis flying over large metroplexes like the Sao Paulo area.
Investing in the new technology is ”a no-brainer for us,” Rodgerson says.
The companies hope to build an exclusive eVTOL network serving the vast Latin American country in the coming years.
