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 September, 2023
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
Interim Condensed - ITR
Individual and Consolidated
AZUL S.A.
June 30, 2023
with independent auditor’s report on the
review of interim condensed individual and consolidated financial statements-
ITR
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 on review of interim condensed individual and consolidated financial
statements |
4 |
Summary report of the statutory audit committee |
5 |
Independent auditor’s report on the review of interim financial position. |
6 |
Statement of financial position |
8 |
Statement of operations |
10 |
Statement of comprehensive loss |
12 |
Statement of changes in equity |
13 |
Statement of cash flows |
14 |
Statement of values added |
15 |
Notes to the interim condensed individual and consolidated financial statements |
16 |
|
|
AZUL S.A.
Declaration of the officers
June 30, 2023
|
|
|
|
Declaration of the officers on the interim condensed individual
and consolidated financial statements
In compliance with item VI of article 27 of CVM Instruction No.
80, of March 29, 2022, the Officers declare that they have reviewed, discussed and agreed with the interim condensed individual and consolidated
financial statements for the three and six months ended June 30, 2023.
Barueri, August 10, 2023.
John Peter Rodgerson
Chief Executive Officer
Alexandre Wagner Malfitani
Chief Financial and Investor Relations Officer
Antonio Flavio Torres Martins Costa
Chief Operating Officer
Abhi Manoj Shah
Chief Revenue Officer
| | |
| 3 | |
|
|
AZUL S.A.
Declaration of the officers
June 30, 2023
|
|
|
|
Declaration of the officers on the independent
auditor’s report on the review of interim condensed individual and consolidated financial statements
In compliance with item V of article 27 of CVM Instruction No.
80, of March 29, 2022, the Officers declare that they have reviewed, discussed and agreed with the conclusions expressed in the independent
auditor’s report on the of interim financial position for the three and six months ended June 30, 2023.
Barueri, August 10, 2023.
John Peter Rodgerson
Chief Executive Officer
Alexandre Wagner Malfitani
Chief Financial and Investor Relations Officer
Antonio Flavio Torres Martins Costa
Chief Operating Officer
Abhi Manoj Shah
Chief Revenue Officer
| | |
| 4 | |
|
|
AZUL S.A.
Summary report of the statutory audit committee
June 30, 2023
|
|
|
|
Opinion of the statutory audit committee
All the members of the Audit Committee, considering the documents
presented and the information and clarifications provided by the Company's Officers and by Ernst & Young Auditores Independentes S.S.
Ltda., have reviewed the interim condensed individual and consolidated financial statements (ITR) for the three and six months ended June
30, 2023.
Based on this information, they have expressed a favorable opinion
on the interim condensed individual and consolidated financial statements (ITR) for the three and six months ended June 30, 2023, accompanied
by the report on review of interim condensed individual and consolidated financial statements (ITR) to be issued by Ernst & Young
Auditores Independentes S.S. Ltda., recommending its approval to the Board Directors.
Barueri, August 10, 2023.
Sergio Eraldo de Salles Pinto
Member, Coordinator of the Audit Committee and Financial Expert
Gilberto Peralta
Member of the Audit Committee
Renata Faber Rocha Ribeiro
Member of the Audit Committee
| | |
| 5 | |
A free translation from Portuguese into English of Independent
Auditor’s Review Report on Quarterly Information prepared in Brazilian currency in accordance with NBC TG 21 and IAS 34 - Interim
Financial Reporting, and with the rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation
of Quarterly Information (ITR)
Report on the review of interim financial information
The Shareholders, Board of Directors and Officers
Azul S.A.
Barueri - SP
Introduction
We have reviewed the interim individual and consolidated financial
information of Azul S.A. (the “Company”) contained in the Quarterly Information Form - ITR form as of June 30, 2023, which
comprise the statement of financial position on June 30, 2023, the statements of profit or loss and comprehensive income (loss) for the
three and six-month periods then ended and the statements of changes in equity and of cash flows for the six-month period then ended,
including explanatory notes.
Management is responsible for the preparation of the individual
and consolidated interim financial information in accordance with the NBC TG 21 - Interim Financial Reporting and the international standard
IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB), as well as for the presentation of
this information in accordance with the rules issued by the Brazilian Securities and Exchange Commission (CVM) applicable to the preparation
of Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.
Scope of review
We conducted our review in accordance with the Brazilian and international
standards on review engagements (NBC TR 2410 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 substantially less in scope than
an audit conducted in accordance with auditing standards 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.
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 referred to above
was not prepared, in all material respects, in accordance with the NBC TG 21 and IAS 34 applicable to the preparation of Quarterly Information
(ITR), and presented consistently with the rules issued by the Brazilian Securities and Exchange Commission (CVM).
| | |
| 6 | |
Other matters
Statements of value added
The quarterly information referred to above includes the individual
and consolidated statements of value added (DVA) for the six-month period ended June 30, 2023, prepared under the responsibility of the
Company management and presented as supplementary information under IAS 34. These statements have been subject to review procedures performed
in conjunction with the review of the quarterly information, in order to determine whether they are reconciled with the interim financial
information and accounting records, as applicable, and whether their form and content are in accordance with the criteria defined in NBC
TG 09 - Statement of Value Added. Based on our review, nothing has come to our attention that causes us to believe that these statements
of value added were not prepared, in all material respects, in accordance with the criteria set forth by this Standard and consistently
with the individual and consolidated interim financial information taken as a whole.
São Paulo, August 10, 2023.
ERNST & YOUNG
Auditores Independentes S/S Ltda.
CRC SP-034519/O
Emerson Pompeu Bassetti
Accountant CRC SP-251558/O
| | |
| 7 | |
|
|
AZUL S.A.
Statement of financial position
June 30, 2023 and December 31, 2022
(In thousands of Brazilian reais – R$) |
|
|
|
|
|
Parent company |
Consolidated |
Assets |
Note |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
4 |
2,805 |
8,117 |
616,210 |
668,348 |
Accounts receivable |
6 |
- |
- |
1,351,188 |
1,803,998 |
Aircraft sublease |
7 |
- |
- |
67,599 |
70,193 |
Inventories |
8 |
- |
- |
722,736 |
721,738 |
Security deposits and maintenance reserves |
9 |
7,767 |
8,409 |
1,285,984 |
1,025,168 |
Taxes recoverable |
10 |
8,767 |
11,572 |
188,019 |
234,891 |
Derivative financial instruments |
23 |
- |
- |
29,493 |
36,054 |
Prepaid expenses |
11 |
18,277 |
2,089 |
233,530 |
182,891 |
Advances to suppliers |
12 |
- |
- |
121,246 |
121,697 |
Other assets |
|
- |
- |
12,292 |
6,958 |
Total current assets |
|
37,616 |
30,187 |
4,628,297 |
4,871,936 |
|
|
|
|
|
|
Non-current assets |
|
|
|
|
|
|
|
|
|
|
|
Long-term investments |
5 |
- |
- |
742,090 |
733,043 |
Aircraft sublease |
7 |
- |
- |
72,491 |
105,860 |
Security deposits and maintenance reserves |
9 |
71 |
77 |
1,331,318 |
1,514,393 |
Derivative financial instruments |
23 |
- |
- |
356 |
235,896 |
Prepaid expenses |
11 |
- |
- |
188,549 |
319,000 |
Other assets |
|
- |
- |
8,447 |
9,005 |
Investments |
14 |
762,240 |
761,125 |
- |
- |
Property and equipment |
15 |
- |
- |
1,924,587 |
1,953,089 |
Right-of-use assets |
16 |
- |
- |
6,758,063 |
7,552,548 |
Intangible assets |
17 |
- |
- |
1,467,798 |
1,426,523 |
Total non-current assets |
|
762,311 |
761,202 |
12,493,699 |
13,849,357 |
|
|
|
|
|
|
Total assets |
|
799,927 |
791,389 |
17,121,996 |
18,721,293 |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 8 | |
|
|
AZUL S.A.
Statement of financial position
June 30, 2023 and December 31, 2022
(In thousands of Brazilian reais – R$) |
|
|
|
|
|
Parent company |
Consolidated |
Liabilities and equity |
Note |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing |
18 |
- |
- |
1,694,457 |
1,112,940 |
Leases |
19 |
- |
- |
4,641,265 |
4,025,948 |
Convertible instruments |
20 |
12,946 |
14,789 |
12,946 |
14,789 |
Accounts payable |
21 |
8,693 |
24 |
2,912,549 |
2,432,843 |
Reverse factoring |
22 |
- |
- |
- |
753,352 |
Airport fees |
|
- |
- |
1,192,153 |
831,897 |
Air traffic liability |
24 |
- |
- |
4,476,074 |
4,140,025 |
Salaries and benefits |
|
2,622 |
2,485 |
474,426 |
479,412 |
Insurance payable |
|
2,891 |
- |
21,906 |
84,985 |
Taxes payable |
25 |
473 |
633 |
129,523 |
193,588 |
Derivative financial instruments |
23 |
- |
- |
120,534 |
69,365 |
Provisions |
26 |
- |
- |
1,006,696 |
834,288 |
Related parties |
27 |
5,007 |
- |
- |
- |
Other liabilities |
|
- |
- |
140,468 |
82,673 |
Total current liabilities |
|
32,632 |
17,931 |
16,822,997 |
15,056,105 |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
|
|
|
|
|
|
Loans and financing |
18 |
- |
- |
5,399,608 |
6,119,759 |
Leases |
19 |
- |
- |
8,833,430 |
10,556,885 |
Convertible instruments |
20 |
1,641,536 |
1,388,930 |
1,641,536 |
1,388,930 |
Accounts payable |
21 |
- |
- |
436,155 |
516,971 |
Airport fees |
|
- |
- |
513,275 |
502,872 |
Air traffic liability |
24 |
- |
- |
26,077 |
- |
Derivative financial instruments |
23 |
- |
- |
127 |
175,210 |
Taxes payable |
25 |
- |
- |
136,856 |
71,595 |
Provisions |
26 |
- |
- |
2,071,153 |
2,408,706 |
Provision for loss on investment |
14 |
18,807,759 |
18,392,028 |
- |
- |
Other liabilities |
|
- |
- |
922,782 |
931,760 |
Total non-current liabilities |
|
20,449,295 |
19,780,958 |
19,980,999 |
22,672,688 |
|
|
|
|
|
|
Equity |
28 |
|
|
|
|
|
|
|
|
|
|
Issued capital |
|
2,314,002 |
2,313,941 |
2,314,002 |
2,313,941 |
Advance for future capital increase |
|
819 |
61 |
819 |
61 |
Capital reserve |
|
2,010,392 |
1,970,098 |
2,010,392 |
1,970,098 |
Treasury shares |
|
(13,085) |
(10,204) |
(13,085) |
(10,204) |
Other comprehensive income |
|
5,281 |
5,281 |
5,281 |
5,281 |
Accumulated losses |
|
(23,999,409) |
(23,286,677) |
(23,999,409) |
(23,286,677) |
|
|
(19,682,000) |
(19,007,500) |
(19,682,000) |
(19,007,500) |
|
|
|
|
|
|
Total liabilities and equity |
|
799,927 |
791,389 |
17,121,996 |
18,721,293 |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 9 | |
|
|
AZUL S.A.
Statement of operations
Periods ended June 30, 2023 and 2022
(In thousands of Brazilian reais – R$, except basic and diluted loss per share) |
|
|
|
|
|
Parent company |
|
|
Three-month periods ended |
Six-month periods ended |
|
Note |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
|
Administrative expenses |
|
(12,202) |
(12,686) |
(25,818) |
(35,226) |
Other income and expenses |
|
71,699 |
- |
71,699 |
- |
|
|
|
|
|
|
|
32 |
59,497 |
(12,686) |
45,881 |
(35,226) |
|
|
|
|
|
|
Equity |
14 |
149,385 |
(2,616,900) |
(454,910) |
(162,000) |
|
|
|
|
|
|
Operating profit (loss) |
|
208,882 |
(2,629,586) |
(409,029) |
(197,226) |
|
|
|
|
|
|
|
|
|
|
|
|
Financial income |
|
102 |
7,709 |
1,829 |
14,521 |
Financial expenses |
|
(65,013) |
(56,366) |
(127,035) |
(111,611) |
Derivative financial instruments, net |
|
(188,798) |
310,586 |
(269,837) |
406,761 |
Foreign currency exchange, net |
|
68,735 |
(112,814) |
91,340 |
74,131 |
|
|
|
|
|
|
Financial result |
33 |
(184,974) |
149,115 |
(303,703) |
383,802 |
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) profit for the period |
|
23,908 |
(2,480,471) |
(712,732) |
186,576 |
|
|
|
|
|
|
Basic (loss) earnings per common share – R$ |
29 |
0.00 |
(0.10) |
(0.03) |
0.01 |
Diluted (loss) earnings per common share – R$ |
29 |
0.00 |
(0.10) |
(0.03) |
0.01 |
Basic (loss) earnings per preferred share – R$ |
29 |
0.07 |
(7.13) |
(2.05) |
0.54 |
Diluted (loss) earnings per preferred share – R$ |
29 |
0.07 |
(7.13) |
(2.05) |
0.54 |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 10 | |
|
|
AZUL S.A.
Statement of operations
Periods ended June 30, 2023 and 2022
(In thousands of Brazilian reais – R$, except basic and diluted loss per share) |
|
|
|
|
|
Consolidated |
|
|
Three-month periods ended |
Six-month periods ended |
|
Note |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
|
Passenger revenue |
|
3,939,865 |
3,558,442 |
8,108,165 |
6,401,411 |
Other revenues |
|
314,330 |
366,321 |
624,358 |
716,393 |
Total revenue |
31 |
4,254,195 |
3,924,763 |
8,732,523 |
7,117,804 |
|
|
|
|
|
|
Cost of services |
32 |
(3,588,001) |
(3,500,628) |
(7,482,825) |
(6,521,463) |
|
|
|
|
|
|
Gross profit |
|
666,194 |
424,135 |
1,249,698 |
596,341 |
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses |
|
(188,778) |
(163,322) |
(370,766) |
(295,667) |
Administrative expenses |
|
(75,690) |
(55,666) |
(189,887) |
(134,439) |
Other income and expenses |
|
(100,509) |
(68,682) |
(219,797) |
(179,615) |
|
32 |
(364,977) |
(287,670) |
(780,450) |
(609,721) |
|
|
|
|
|
|
Operating profit (loss) |
|
301,217 |
136,465 |
469,248 |
(13,380) |
|
|
|
|
|
|
|
|
|
|
|
|
Financial income |
|
50,983 |
42,084 |
104,449 |
90,998 |
Financial expenses |
|
(1,198,099) |
(1,125,665) |
(2,455,683) |
(2,149,823) |
Derivative financial instruments, net |
|
(235,616) |
592,506 |
(510,588) |
898,548 |
Foreign currency exchange, net |
|
1,105,423 |
(2,125,861) |
1,679,842 |
1,360,233 |
Financial result |
33 |
(277,309) |
(2,616,936) |
(1,181,980) |
199,956 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) profit for the period |
|
23,908 |
(2,480,471) |
(712,732) |
186,576 |
|
|
|
|
|
|
Basic (loss) earnings per common share – R$ |
29 |
0.00 |
(0.10) |
(0.03) |
0.01 |
Diluted (loss) earnings per common share – R$ |
29 |
0.00 |
(0.10) |
(0.03) |
0.01 |
Basic (loss) earnings per preferred share – R$ |
29 |
0.07 |
(7.13) |
(2.05) |
0.54 |
Diluted (loss) earnings per preferred share – R$ |
29 |
0.07 |
(7.13) |
(2.05) |
0.54 |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 11 | |
|
|
AZUL S.A.
Statement of comprehensive (loss) income
Periods ended June 30, 2023 and 2022
(In thousands of Brazilian reais – R$) |
|
|
|
|
Parent company and Consolidated |
|
Three-month periods ended |
Six-month periods ended |
|
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Net (loss) profit for the period |
23,908 |
(2,480,471) |
(712,732) |
186,576 |
|
|
|
|
|
Other comprehensive income that may be reclassified to profit or loss in subsequent periods: |
- |
- |
- |
- |
|
|
|
|
|
Total comprehensive (loss) income |
23,908 |
(2,480,471) |
(712,732) |
186,576 |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 12 | |
|
|
AZUL S.A.
Statement of changes in equity
Periods months ended June 30, 2023 and 2022
(In thousands of Brazilian reais – R$) |
|
|
|
Description |
Note |
Issued
capital |
Advance for future capital increase |
Treasury
shares |
Capital
reserve |
Other comprehensive income |
Accumulated losses |
Total |
|
|
|
|
|
|
|
|
|
At December 31, 2021 |
|
2,290,876 |
120 |
(11,959) |
1,946,471 |
5,799 |
(22,564,310) |
(18,333,003) |
|
|
|
|
|
|
|
|
|
Net profit for the period |
|
- |
- |
- |
- |
- |
186,576 |
186,576 |
|
|
|
|
|
|
- |
|
|
Total comprehensive income |
|
- |
- |
- |
- |
- |
186,576 |
186,576 |
|
|
|
|
|
|
|
|
|
Share buyback |
28 |
- |
- |
(923) |
- |
- |
- |
(923) |
Share-based payment |
28/30 |
22,979 |
(52) |
- |
7,623 |
- |
- |
30,550 |
|
|
|
|
|
|
|
|
|
At June 30, 2022 |
|
2,313,855 |
68 |
(12,882) |
1,954,094 |
5,799 |
(22,377,734) |
(18,116,800) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Description |
Note |
Issued
capital |
Advance for future capital increase |
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 |
28 |
- |
- |
(2,881) |
- |
- |
- |
(2,881) |
Share-based payment |
28/30 |
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) |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 13 | |
|
|
AZUL S.A.
Statement of cash flows
Periods ended June 30, 2023 and 2022
(In thousands of Brazilian reais – R$) |
|
|
|
|
|
Parent company |
Consolidated |
|
|
Six-month periods ended |
|
|
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
Cash flows from operating activities |
|
|
|
|
|
Net (loss) profit for the period |
(712,732) |
186,576 |
(712,732) |
186,576 |
Adjustments to reconcilie net (loss) profit for the period to net cash flow |
|
|
|
|
|
Depreciation and amortization |
- |
- |
1,194,819 |
1,000,193 |
|
Derivative financial results, net |
269,837 |
(406,761) |
510,588 |
(898,548) |
|
Share-based payment |
- |
- |
42,604 |
(17,919) |
|
Foreign currency exchange, net |
(91,088) |
(73,610) |
(1,679,991) |
(1,337,196) |
|
Financial income and expenses, net |
125,050 |
111,098 |
2,219,057 |
1,996,024 |
|
Provisions |
3,192 |
10,702 |
134,121 |
110,523 |
|
Disposal of prepaid expenses |
- |
- |
169,999 |
- |
|
Result from modification of lease contracts lease and provision |
- |
- |
(50,002) |
(17,480) |
|
Result on disposal, or sale of fixed assets and intangible assets |
- |
- |
40,978 |
12,671 |
|
Equity |
454,910 |
162,000 |
- |
- |
Adjusted net (loss) profit |
49,169 |
(9,995) |
1,869,441 |
1,034,844 |
|
|
|
|
|
|
Changes in operating assets and liabilities |
|
|
|
|
|
Accounts receivable |
- |
- |
522,793 |
(620,807) |
|
Aircraft sublease |
- |
- |
16,828 |
28,036 |
|
Inventories |
- |
- |
3,935 |
(87,451) |
|
Security deposits and maintenance reserves |
7 |
(8,437) |
(121,927) |
(235,543) |
|
Taxes recoverable |
2,805 |
(237) |
47,574 |
(47,580) |
|
Derivative financial results, net |
- |
- |
(122,564) |
210,855 |
|
Prepaid expenses |
(8,833) |
(5,111) |
(118,423) |
(130,054) |
|
Advances to suppliers |
- |
34 |
(924,679) |
61,714 |
|
Other assets |
- |
(1,455) |
(3,436) |
(10,222) |
|
Accounts payable |
1,659 |
(1,084) |
978,688 |
747,325 |
|
Airport fees |
- |
- |
314,893 |
188,688 |
|
Air traffic liability |
- |
- |
294,587 |
917,317 |
|
Salaries and benefits |
(3,055) |
(10,894) |
31,374 |
45,935 |
|
Insurance payable |
2,891 |
6,239 |
(54,169) |
(54,334) |
|
Taxes payable |
(160) |
2,762 |
(1,136) |
(64,754) |
|
Provisions |
- |
- |
(249,132) |
(83,983) |
|
Other liabilities |
- |
- |
(2,967) |
(195,920) |
|
|
|
|
|
|
Total changes in operating assets and liabilities |
(4,686) |
(18,183) |
612,239 |
669,222 |
|
|
|
|
|
|
|
Interest paid |
(52,591) |
(50,725) |
(845,257) |
(680,199) |
|
|
|
|
|
|
Net cash provided (used) by operating activities |
(8,108) |
(78,903) |
1,636,423 |
1,023,867 |
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Short-term investments |
|
|
|
|
|
Acquisition of short-term investments |
- |
- |
- |
(500) |
|
Redemption of short-term investments |
- |
- |
- |
1,076 |
|
Payment for acquisition of subsidiary |
- |
- |
- |
(30,317) |
|
Acquisition of intangible assets |
- |
- |
(92,525) |
(72,842) |
|
Acquisition of property and equipment |
- |
- |
(102,727) |
(16,650) |
|
Acquisition of capitalized maintenance |
- |
- |
(108,358) |
(440,628) |
Net cash used by investing activities |
- |
- |
(303,610) |
(559,861) |
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Loans and financing |
|
|
|
|
|
Proceeds |
- |
- |
902,252 |
187,692 |
|
Repayment |
- |
- |
(565,030) |
(165,611) |
|
Payment of costs with capture |
- |
- |
(15,493) |
- |
|
Reverse factoring |
- |
- |
(727,368) |
(160,919) |
|
Related parties |
5,007 |
- |
- |
- |
|
Lease payment |
- |
- |
(975,146) |
(1,379,893) |
|
Advance for future capital increase |
819 |
68 |
819 |
68 |
|
Capital increase |
- |
22,859 |
- |
22,859 |
|
Treasury shares |
(2,881) |
(923) |
(2,881) |
(923) |
Net cash provided (used) by financing activities |
2,945 |
22,004 |
(1,382,847) |
(1,496,727) |
|
|
|
|
|
|
|
Exchange rate changes on cash and cash equivalents |
(149) |
(1,267) |
(2,104) |
(7,450) |
|
|
|
|
|
|
Decrease in cash and cash equivalents |
(5,312) |
(58,166) |
(52,138) |
(1,040,171) |
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period |
8,117 |
293,557 |
668,348 |
3,073,799 |
Cash and cash equivalents at the end of the period |
2,805 |
235,391 |
616,210 |
2,033,628 |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 14 | |
|
|
AZUL S.A.
Statement of value added
Periods ended June 30, 2023 and 2022
(In thousands of Brazilian reais – R$) |
|
|
|
|
|
|
Parent company |
Consolidated |
|
|
|
Six-month periods ended |
|
|
Note |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
|
|
Gross sales revenue |
|
|
|
|
|
|
Passenger revenue |
31 |
- |
- |
8,120,213 |
6,596,065 |
|
Other revenues |
31 |
- |
- |
707,732 |
792,229 |
|
Allowance for expected credit losses |
6 |
- |
- |
(2,648) |
(468) |
|
|
|
- |
- |
8,825,297 |
7,387,826 |
Inputs acquired from third parties |
|
|
|
|
|
|
Aircraft fuel |
32 |
- |
- |
(3,011,619) |
(2,887,157) |
|
Materials, energy, third-party services and others |
|
61,445 |
(17,142) |
(2,882,154) |
(2,189,639) |
|
Insurances |
32 |
- |
- |
(26,463) |
(38,754) |
|
|
|
61,445 |
(17,142) |
(5,920,236) |
(5,115,550) |
|
|
|
|
|
|
|
Gross value added |
|
61,445 |
(17,142) |
2,905,061 |
2,272,276 |
|
|
|
|
|
|
|
Retentions |
|
|
|
|
|
|
Depreciation and amortization |
32 |
- |
- |
(1,194,819) |
(1,000,193) |
|
|
|
|
|
|
|
Net value added |
|
61,445 |
(17,142) |
1,710,242 |
1,272,083 |
|
|
|
|
|
|
|
Value added received in transfers |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
14 |
(454,910) |
(162,000) |
- |
- |
|
Financial income |
33 |
1,829 |
14,521 |
104,449 |
90,998 |
|
|
|
(453,081) |
(147,479) |
104,449 |
90,998 |
|
|
|
|
|
|
|
Value added to be distributed |
|
(391,636) |
(164,621) |
1,814,691 |
1,363,081 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Personnel (a) |
|
14,406 |
17,076 |
972,537 |
766,516 |
|
|
|
|
|
|
|
|
Salaries |
|
9,337 |
4,768 |
765,625 |
644,694 |
|
Benefits |
|
4,783 |
12,043 |
138,419 |
60,639 |
|
F.G.T.S. |
|
286 |
265 |
68,493 |
61,183 |
|
|
|
|
|
|
|
|
Taxes, fees and contributions |
|
1,158 |
1,008 |
193,908 |
351,528 |
|
|
|
|
|
|
|
|
Federal |
|
1,158 |
508 |
166,261 |
321,196 |
|
State |
|
- |
- |
24,836 |
22,376 |
|
Municipal |
|
- |
500 |
2,811 |
7,956 |
|
|
|
|
|
|
|
|
Third party capital |
|
305,532 |
(369,281) |
1,360,978 |
58,461 |
|
|
|
|
|
|
|
|
Financial expenses |
33 |
127,035 |
111,611 |
2,455,683 |
2,149,823 |
|
Derivative financial instruments, net |
33 |
269,837 |
(406,761) |
510,588 |
(898,548) |
|
Foreign currency exchange, net |
33 |
(91,340) |
(74,131) |
(1,679,842) |
(1,360,233) |
|
Rentals |
|
- |
- |
74,549 |
167,419 |
|
|
|
|
|
|
|
|
Own capital |
|
(712,732) |
186,576 |
(712,732) |
186,576 |
|
|
|
|
|
|
|
|
Net (loss) profit for the period |
|
(712,732) |
186,576 |
(712,732) |
186,576 |
| (a) | Not including INSS in the amount of R$900
in the parent company and R$133,391 in the consolidated. |
The accompanying notes are an integral part of these interim condensed
individual and consolidated financial statements.
| | |
| 15 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
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.
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, 2023 is as
follows:
| | |
| 16 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
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 |
Country |
June 30, 2023 |
December 31, 2022 |
Azul IP Cayman Holdco Ltd. |
Direct |
Holding of equity interests in other companies |
USA |
24.8% |
- |
Azul IP Cayman Ltd. |
Indirect |
Intellectual property owner |
USA |
100.0% |
- |
IntelAzul S.A. |
Direct |
Frequent-flyer program |
Brazil |
100.0% |
100.0% |
Azul IP Cayman Holdco Ltd. |
Indirect |
Holding of equity interests in other companies |
USA |
25.0% |
- |
Azul Linhas Aéreas Brasileiras S.A. (ALAB) |
Direct |
Airline operations |
Brazil |
100.0% |
100.0% |
Azul IP Cayman Holdco Ltd. |
Indirect |
Holding of equity interests in other companies |
USA |
25.0% |
- |
Azul Conecta Ltda. (Conecta) |
Indirect |
Airline operations |
Brazil |
100.0% |
100.0% |
ATS Viagens e Turismo Ltda. |
Indirect |
Travel packages |
Brazil |
99.9% |
99.9% |
ATSVP Viagens Portugal, Unipessoal LDA |
Indirect |
Travel packages |
Portugal |
100.0% |
- |
Azul IP Cayman Holdco Ltd. |
Indirect |
Holding of equity interests in other companies |
USA |
25.0% |
- |
Cruzeiro Participações S.A |
Indirect |
Holding of equity interests in other companies |
Brazil |
99.9% |
99.9% |
Azul Investments LLP |
Indirect |
Funding |
USA |
100.0% |
100.0% |
Azul SOL LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Azul Finance LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Azul Finance 2 LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Blue Sabiá LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Canela Investments LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Canela Turbo Three LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Azul Saira LLC |
Indirect |
Aircraft financing |
USA |
100.0% |
100.0% |
Azul Secured Finance LLP |
Indirect |
Funding |
USA |
100.0% |
- |
The company ATSVP Viagens Portugal Unipessoal LDA was incorporated
on March 1, 2023, the Azul Secured Finance LLP (“Azul Secured”) on May 25, 2023 and the companies Azul IP
Cayman Holdco Ltd (“Azul Cayman Holdco”) and Azul IP Cayman Ltd (“Azul Cayman”) on June
16, 2023.
| 1.2 | Capital structure and
net working capital |
The Company's Management, together with the Board of Directors,
constantly monitors the Company's liquidity position and cash projections as well as any factors that may affect the ability to generate
revenue and the Company's ability to honor the financial commitments assumed.
The variation in consolidated net working capital and equity is
presented below:
Description |
|
June 30, 2023 |
December 31, 2022 |
Variation |
|
|
|
|
|
Net working capital |
|
(12,194,700) |
(10,184,169) |
(2,010,531) |
Equity |
|
(19,682,000) |
(19,007,500) |
(674,500) |
The variation in the balance of net working capital is mainly due
to:
| · | decrease
of R$52,138 in
cash and cash equivalents, result (i) of payments of R$2,267,544 related
to loans, financing, leases and reverse factoring (ii) offset by funding
payments related to the investment activities of R$902,252 and (iii) by operating cash generation of R$1,636,423; |
| | |
| 17 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| · | increase in accounts payable and airport
fees result of payment term extension in the amount of R$839,962; and. |
| · | transfers from non-current to current, mainly
in the account “Loans and financing”, “Leases” and “Provision for return of aircraft and engines”. |
The increase in the negative position of shareholders' equity is
mainly due to the financial result of the Company, which exceeds the operating profit by R$712,732.
Since the beginning of 2023, the Company's Management has been
carrying out a process of restructuring its debts, and by the date of publication of this quarterly information, the following renegotiations
were finalized:
On July 11, 2023, the Company renegotiated with certain suppliers
the amount of R$365,817, under the following conditions:
Renegotiated conditions |
Values |
|
|
The amount was paid in 36 monthly installments, with interest of 7.5% p.a. and the start of payments on January 1, 2025. |
83,236 |
|
|
The amount will be included in a debt (Notes) to be issued by the Company, with maturity on June 30, 2030, with interest of 7.5% p.a., to be amortized semi-annually. |
226,065 |
|
|
The amount will be settled by an instrument that provides for quarterly settlement in cash or shares, starting in December 2024. |
56,516 |
|
|
Total |
365,817 |
On July 14, 2023, the Company, through its subsidiary Azul Secured,
completed the exchange of existing debt securities with the aim of obtaining an extension of maturities. The conditions of such renegotiations
are detailed below:
|
Original conditions |
|
Renegotiated conditions |
Description |
Value |
Average
nominal rate
p.a. |
Maturity |
% of renegotiation |
Value |
Average
nominal rate
p.a. |
Maturity |
Senior notes – 2024 |
US$400 million |
5.9% |
Oct-24 |
74% |
US$294 million |
11.5% |
May-29 |
Senior notes – 2026 |
US$600 million |
7.3% |
Jun-26 |
95% |
US$568 million |
10.9% |
May-30 |
Also on that date, the Company concluded the renegotiation referring
to the extension of the term of the convertible debentures, as follows:
|
Original conditions |
|
|
|
|
|
Description |
Value in June 30, 2023 |
Average
nominal rate
p.a. |
Maturity |
Payment in Aug-23 |
Award |
Remaining amount |
Average
nominal rate
p.a. |
Maturity |
Convertible debentures |
1,686,952 |
6.0% |
Oct-25 |
524,811 |
104,962 |
1,162,141 |
12.5% |
Oct-28 |
The conversion price of the debentures will correspond to the average
of the 20 trading sessions that will take place in the period subsequent to the end of the renegotiation.
The amounts shown in the tables above do not include funding costs
incurred.
| | |
| 18 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
On July 20, 2023, the Company, through its subsidiary Azul Secured,
finalized a private offering of senior debt securities with priority guarantee, maturing in 2028, with a coupon of 11.9% p.a. in the amount
of US$800 million ("Notes"). The accrued interest will be paid quarterly, starting November 28, 2023.
Liquid proceeds will be used to pay certain debts, obligations
and other corporate purposes.
The accounting impacts to be recorded in a subsequent period arising
from such operations are presented below:
Description |
|
|
|
|
Values |
Banks |
|
|
|
|
3,715,850 |
Senior notes - 2028 |
|
|
|
|
3,831,040 |
Funding costs to be appropriated (*) |
|
|
|
(115,190) |
(*) Includes funding costs captured up to July 31, 2023.
The Company's Management has been restructuring debts the Company’s
as per note 36.
Management performed too an evaluation and concluded that the Company
is able to continue as a going concern and meet its obligations as they fall due. This evaluation is based on the Company's business plan
approved by the Board of Directors on December 8, 2022. The business plan includes future actions, macroeconomic and aviation sector assumptions,
such as: recovery in demand for air transport, estimates of exchange rates and fuel prices. The Company's Management monitors and informs
the Board of Directors about the performance achieved in relation to the approved plan.
Based on this conclusion, these interim condensed individual and
consolidated financial statements have been prepared based on the principle of going concern.
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 the quarters
of the fiscal year. It should be noted that the COVID-19 pandemic impacted the behavior related to the frequency of travels of the Company’s
customers, in the first quarter of 2022, thus impacting the accumulated result for 6 months presented for comparative purposes.
| | |
| 19 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 2. | DECLARATION OF 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”). 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 and are expressed in thousands of reais, unless otherwise indicated.
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 revenues, expenses, assets and liabilities. However, the uncertainty related to these judgments, assumptions and estimates
can lead to results that require a significant adjustment to the carrying amount of certain assets and liabilities in future years.
The Company reviews its judgments, estimates, and assumptions on
an ongoing basis. When preparing these interim condensed individual and consolidated financial statements, Management used the following
disclosure criteria to understand the changes observed in the Company's equity, economic and financial position and in its performance,
since the end of the last fiscal year ended December 31, 2022, disclosed on March 6, 2023: (i) regulatory requirements; (ii) relevance
and specificity of the information on the Company's operations to users; (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.
During the six months ended June 30, 2023, there were no impacts
related to changes in accounting estimates and/or provisions that were not described in these interim condensed individual and consolidated
financial statements.
Management confirms that all relevant information specific to the
interim condensed individual and consolidated financial statements, is presented and corresponds to that used by Management when carrying
out its business management activities.
In order to ensure a better presentation and comparability of balances,
some reclassifications were carried out in the statement of cash flows for the previous year.
|
June 30, 2022 |
Liabilities and equity |
As
reported |
Reclassifications |
As reclassified |
Changes in operating assets and liabilities |
|
|
|
|
|
|
|
Reverse factoring |
(160,919) |
160,919 |
- |
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
Reverse factoring |
- |
(160,919) |
(160,919) |
|
|
|
|
Total |
(160,919) |
- |
(160,919) |
| | |
| 20 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
The interim condensed individual and consolidated financial statements
have been prepared based on the historical cost, except for the following material items recognized in the statements of financial position:
At fair value:
·
Short-term investments classified as cash and cash equivalents;
·
Short-term investments mainly comprised of TAP Bond;
·
Derivative financial instruments; and
·
Debenture conversion right.
Other:
·
Investments accounted for under the equity method.
| 2.1 | 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 August 10, 2023.
| 3. | SIGNIFICANT ACCOUNTING POLICIES |
The interim condensed individual and consolidated financial statements
was prepared based on the policies, practices and methods of calculating votes adopted and presented in detail in the annual financial
statements of December 31, 2022 and disclosed on March 6, 2023 and, therefore, should be read together.
| 3.1 | New accounting standards and pronouncements not yet
adopted |
In June 2023, the International Sustainability
Standards Board (“ISSB”) issued the following standards with effect for periods beginning January 1, 2024:
| · | IFRS S1 –
General Requirements for Disclosure of Financial Information Related to Sustainability; and |
| · | IFRS S2 – Climate-Related Disclosures. |
| 3.2 | 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 translated based
on the exchange rate in effect at the reporting date, and any difference resulting from currency translation is recorded under the line
item “Foreign currency exchange, net” in the statement of operations.
| | |
| 21 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
The exchange rates to Brazilian reais at the date of these interim
condensed individual and consolidated financial statements are as follows:
|
|
Final exchange rates |
Description |
|
June 30, 2023 |
December 31, 2022 |
Variation % |
|
|
|
|
|
U.S. dollar |
|
4.8192 |
5.2177 |
-7.6% |
Euro |
|
5.2626 |
5.5694 |
-5.5% |
|
Average exchange rates |
|
Three-month periods ended |
|
Six-month periods ended |
|
Description |
June 30, 2023 |
June,30 2022 |
Variation % |
June 30, 2023 |
June 30, 2022 |
Variation % |
|
|
|
|
|
|
|
U.S. dollar |
4.9485 |
4.9266 |
0.4% |
5.0744 |
5.0782 |
-0.1% |
Euro |
5.3867 |
5.2409 |
2.8% |
5.4831 |
5.5568 |
-1.3% |
| 4. | CASH AND CASH EQUIVALENTS |
|
|
Parent company |
Consolidated |
Description |
Weighted
average rate p.a. |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
|
Cash and bank deposits |
- |
1,280 |
5,784 |
65,276 |
101,737 |
Cash equivalents: |
|
|
|
|
|
Bank Deposit Certificate - CDB |
60.9% do CDI |
160 |
2,333 |
511,576 |
352,971 |
Repurchase agreements |
88.4% do CDI |
1,365 |
- |
36,915 |
210,443 |
Time Deposit - TD (a) |
3.5% |
- |
- |
2,443 |
2,616 |
Others |
- |
- |
- |
- |
581 |
|
|
2,805 |
8,117 |
616,210 |
668,348 |
| (a) | Investment in U.S. dollar. |
|
|
|
Consolidated |
Description |
Weighted average
rate p.a. |
Maturity |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
TAP Bond |
7.5% |
Sep-26 |
742,090 |
733,043 |
|
|
|
|
|
|
|
|
742,090 |
733,043 |
| | |
| 22 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
|
|
Local currency |
|
|
|
|
|
Credit card companies |
344,682 |
1,109,197 |
Cargo and travel agencies |
362,168 |
282,438 |
Travel package financing entities |
117,518 |
135,168 |
TudoAzul Program partners |
287,572 |
69,035 |
Others |
59,402 |
41,973 |
|
|
|
Total local currency |
1,171,342 |
1,637,811 |
|
|
|
Foreign currency |
|
|
|
|
|
Credit card companies |
16,955 |
15,913 |
Reimbursement receivable for maintenance reserves |
59,848 |
78,801 |
Airline partner companies |
32,020 |
39,612 |
Clearinghouse - agencies and cargo |
29,509 |
26,363 |
Others |
68,246 |
29,582 |
|
|
|
Total foreign currency |
206,578 |
190,271 |
|
|
|
|
|
|
Total |
1,377,920 |
1,828,082 |
|
|
|
Allowance for expected credit losses |
(26,732) |
(24,084) |
|
|
|
Total net |
1,351,188 |
1,803,998 |
In Brazil, credit card receivables are not exposed to credit risk
of the cardholder. The balances can easily be converted into cash, when necessary, by discounting of these receivables with credit card
companies.
During the six months ended June 30, 2023, the Company discounted
accounts receivable of R$6,020,621 from accounts receivable from credit card companies, with no right of recourse.
As of June 30, 2023, the balance of accounts receivable are net
of R$2,896,160 due to such anticipations (R$1,735,432 on December 31, 2022).
The breakdown of accounts receivable by maturity, net of allowance
for expected losses, is as follows:
|
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
|
|
Not past due |
1,168,442 |
1,644,019 |
Over 1 to 90 days |
69,907 |
68,631 |
Over 90 days |
112,839 |
91,348 |
|
|
|
Total |
1,351,188 |
1,803,998 |
Until July
31, 2023, out of the total amount past due within 90 days, R$23,290 had already been received.
| | |
| 23 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
Of the receivables past due for more than 90 days, approximately
R$83,345 refer to receivables for lessor arranged under the headings of “reimbursement
receivable for maintenance reserves” and “others” in foreign currency, and Management does not expect to incur losses
on such operations as it has obligations to pay for them. The Company is negotiating to recover these amounts or offset them against lease
obligations. Therefore, we conclude that the allowance for expected credit losses is adequately estimated.
The movement of the allowance for expected losses is as follows:
|
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
|
|
Balances at the beginning of the period |
(24,084) |
(17,817) |
(Additions) and reversal |
(2,654) |
(6,583) |
Write-off of uncollectible amounts |
6 |
316 |
|
|
|
Balances at the end of the period |
(26,732) |
(24,084) |
|
|
|
Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
2023 |
|
|
52,760 |
89,293 |
2024 |
|
|
65,019 |
70,396 |
2025 |
|
|
46,299 |
50,127 |
2026 |
|
|
7,344 |
7,951 |
|
|
|
|
|
Gross sublease |
|
|
171,422 |
217,767 |
Accrued interest |
|
|
(16,669) |
(25,838) |
Provision for losses |
|
|
(14,663) |
(15,876) |
Net sublease |
|
|
140,090 |
176,053 |
|
|
|
|
|
Current |
|
|
67,599 |
70,193 |
Non-current |
|
|
72,491 |
105,860 |
|
|
|
Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Maintenance materials and parts |
|
|
738,477 |
741,101 |
Flight attendance and uniforms |
|
|
20,611 |
21,922 |
Provision for losses |
|
|
(36,352) |
(41,285) |
Total net |
|
|
722,736 |
721,738 |
| | |
| 24 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
Set out below is the movement of the provision for inventory losses:
|
|
|
Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Balances at the beginning of the period |
|
|
(41,285) |
(38,935) |
Additions |
|
|
(10,626) |
(5,652) |
Reversal |
|
|
15,559 |
3,302 |
Balances at the end of the period |
|
|
(36,352) |
(41,285) |
| 9. | SECURITY DEPOSITS AND MAINTENANCE RESERVES |
|
Parent company |
|
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
|
Security deposits |
7,838 |
8,486 |
|
346,399 |
374,960 |
Maintenance reserves |
- |
- |
|
2,646,432 |
2,610,943 |
|
|
|
|
|
|
Total |
7,838 |
8,486 |
|
2,992,831 |
2,985,903 |
|
|
|
|
|
|
Additions and reversal for provision |
- |
- |
|
(375,529) |
(446,342) |
|
|
|
|
|
|
Total net |
7,838 |
8,486 |
|
2,617,302 |
2,539,561 |
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, 2022 |
8,486 |
|
374,960 |
2,164,601 |
2,539,561 |
|
|
|
|
|
|
Additions |
81 |
|
63,796 |
353,013 |
416,809 |
Transfers |
(88) |
|
(69,823) |
(47,125) |
(116,948) |
Additions and reversal for provision |
- |
|
- |
35,993 |
35,993 |
Loss |
- |
|
- |
(64,623) |
(64,623) |
Foreign currency exchange |
(641) |
|
(22,534) |
(170,956) |
(193,490) |
|
|
|
|
|
|
At June 30, 2023 |
7,838 |
|
346,399 |
2,270,903 |
2,617,302 |
|
|
|
|
|
|
At June 30, 2023 |
|
|
|
|
|
Current |
7,767 |
|
76,755 |
1,209,229 |
1,285,984 |
Non-current |
71 |
|
269,644 |
1,061,674 |
1,331,318 |
|
|
|
|
|
|
At December 31, 2022 |
|
|
|
|
|
Current |
8,409 |
|
77,241 |
947,927 |
1,025,168 |
Non-current |
77 |
|
297,719 |
1,216,674 |
1,514,393 |
| | |
| 25 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
The movement of the allowance for maintenance reserves losses is as follows:
|
|
Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Balances at the beginning of the period |
|
|
446,342 |
459,643 |
Additions |
|
|
28,631 |
74,691 |
Reversals |
|
|
(64,624) |
(59,581) |
Foreign currency exchange |
|
|
(34,820) |
(28,411) |
|
|
|
|
|
Balances at the end of the period |
|
|
375,529 |
446,342 |
|
Parent company |
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
PIS and COFINS |
- |
- |
95,303 |
135,176 |
IRRF |
8,098 |
8,064 |
46,768 |
39,528 |
IRPJ and CSLL |
669 |
3,508 |
14,707 |
29,359 |
ICMS |
- |
- |
21,761 |
21,661 |
Others |
- |
- |
9,480 |
9,167 |
|
|
|
|
|
|
8,767 |
11,572 |
188,019 |
234,891 |
|
Parent company |
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Insurances |
8,125 |
2,089 |
50,681 |
82,501 |
Maintenance |
- |
- |
186,528 |
304,927 |
Commissions |
- |
- |
47,449 |
69,856 |
Others |
10,152 |
- |
137,421 |
44,607 |
|
|
|
|
|
Total |
18,277 |
2,089 |
422,079 |
501,891 |
|
|
|
|
|
Current |
18,277 |
2,089 |
233,530 |
182,891 |
Non-current |
- |
- |
188,549 |
319,000 |
The variation "Maintenance” mainly refers to the end
of contract, the effect accounted for under “Other” in the statement of operations.
The variation in "Others" mainly refers to expenses related
to the Company's restructuring plan.
| | |
| 26 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
|
|
Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Local currency |
|
|
72,068 |
90,810 |
Foreign currency |
|
|
49,178 |
30,887 |
|
|
|
121,246 |
121,697 |
| 13. | INCOME TAX AND CONTRIBUTION |
| 13.1 | Breakdown of deferred
taxes |
|
|
|
Consolidated |
Description |
|
December 31, 2022 |
Profit or loss |
June 30, 2023 |
|
|
|
|
|
|
Temporary differences liabilities |
|
|
|
|
|
|
|
|
|
|
|
Breakage |
|
(176,884) |
(22,963) |
(199,847) |
|
Others |
|
(516) |
(94) |
(610) |
|
|
|
|
|
|
|
|
|
(177,400) |
(23,057) |
(200,457) |
|
|
|
|
|
|
Temporary differences assets |
|
177,400 |
23,057 |
200,457 |
|
|
|
|
|
|
Total |
|
- |
- |
- |
| 13.2 | Reconciliation of the
effective income tax rate |
|
Parent company |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Profit (loss) before income tax and social contribution |
23,908 |
(2,480,471) |
(712,732) |
186,576 |
Combined nominal tax rate |
34% |
34% |
34% |
34% |
Taxes calculated at nominal rates |
(8,129) |
843,360 |
242,329 |
(63,436) |
|
|
|
|
|
Adjustments to determine the effective rate |
|
|
|
|
Equity |
50,791 |
(889,746) |
(154,669) |
(55,080) |
Unrecorded and (recorded) benefit on tax losses and temporary differences |
34,032 |
(49,035) |
28,446 |
85 |
Mark to market of convertible instruments |
(64,191) |
105,599 |
(91,744) |
138,298 |
Permanent differences |
(12,503) |
(10,178) |
(24,362) |
(19,867) |
|
- |
- |
- |
- |
| | |
| 27 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Consolidated |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Profit (loss) before income tax and social contribution |
23,908 |
(2,480,471) |
(712,732) |
186,576 |
Combined nominal tax rate |
34% |
34% |
34% |
34% |
Taxes calculated at nominal rates |
(8,129) |
843,360 |
242,329 |
(63,436) |
|
|
|
|
|
Adjustments to determine the effective rate |
|
|
|
|
Result from investments not taxed abroad |
17,042 |
116,731 |
70,428 |
78,878 |
Unrecorded and (recorded) benefit on tax losses and temporary differences |
73,184 |
(1,137,753) |
(229,950) |
(263,320) |
Mark to market of convertible instruments |
(64,191) |
105,599 |
(91,744) |
138,298 |
Permanent differences |
(16,727) |
62,176 |
436 |
100,583 |
Rate differential |
30 |
12,649 |
10,919 |
12,649 |
Others |
(1,209) |
(2,762) |
(2,418) |
(3,652) |
|
- |
- |
- |
- |
The Company has tax losses that are available indefinitely for
offset against 30% of future taxable profits, as follows:
|
Parent company |
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Tax losses and negative bases |
441,951 |
437,395 |
13,535,513 |
12,863,038 |
|
|
|
|
|
Tax loss (25%) |
110,488 |
109,349 |
3,383,878 |
3,215,760 |
Negative social contribution base (9%) |
39,776 |
39,366 |
1,218,196 |
1,157,673 |
|
|
Company equity interest |
|
Description |
|
Paid-up capital |
Voting capital |
Equity |
|
|
|
|
|
At December 31, 2022 |
|
|
|
|
ALAB |
|
100% |
100% |
(18,392,028) |
IntelAzul |
|
100% |
100% |
(19,866) |
Goodwill – IntelAzul |
|
- |
- |
780,991 |
Total |
|
|
|
(17,630,903) |
|
|
|
|
|
At June 30, 2023 |
|
|
|
|
ALAB |
|
100% |
100% |
(18,807,759) |
IntelAzul |
|
100% |
100% |
(18,751) |
Goodwill – IntelAzul |
|
- |
- |
780,991 |
Total |
|
|
|
(18,045,519) |
| | |
| 28 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 14.2 | Movement of the investments |
Description |
|
ALAB |
IntelAzul |
Total |
|
|
|
|
|
At December 31, 2022 |
|
(18,392,028) |
761,125 |
(17,630,903) |
|
|
|
|
|
Equity |
|
(456,025) |
1,115 |
(454,910) |
Share-based payment |
|
40,294 |
- |
40,294 |
|
|
|
|
|
At June 30, 2023 |
|
(18,807,759) |
762,240 |
(18,045,519) |
|
|
|
|
|
|
|
|
|
|
Investments |
|
|
|
762,240 |
Provision for loss on investment |
|
|
|
(18,807,759) |
During the first semester of 2023, there was no capital contribution
in Azul Cayman Hold Co.
| 15. | PROPERTY AND EQUIPMENT |
|
Consolidated |
Description |
Weighted average rate (p.a.) |
December 31, 2022 |
Acquisitions |
Write-offs |
Transfers (b) |
June 30, 2023 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
Aircraft (a) |
|
2,656,771 |
95,811 |
(39,110) |
1,308 |
2,714,780 |
Buildings and improvements |
|
524,075 |
8,902 |
(18,377) |
160 |
514,760 |
Equipment and facilities |
|
222,482 |
18,297 |
(1,250) |
- |
239,529 |
Others |
|
32,205 |
1,091 |
- |
- |
33,296 |
Construction in progress |
|
44,243 |
6,940 |
- |
(14,445) |
36,738 |
Advance payments for acquisition of aircraft |
|
109,487 |
25,751 |
- |
- |
135,238 |
|
|
3,589,263 |
156,792 |
(58,737) |
(12,977) |
3,674,341 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
Aircraft (a) |
8% |
(965,066) |
(110,582) |
11,047 |
- |
(1,064,601) |
Buildings and improvements |
7% |
(214,411) |
(19,385) |
18,327 |
- |
(215,469) |
Equipment and facilities |
11% |
(151,732) |
(12,141) |
545 |
- |
(163,328) |
Others |
9% |
(25,888) |
(1,391) |
- |
- |
(27,279) |
|
|
(1,357,097) |
(143,499) |
29,919 |
- |
(1,470,677) |
|
|
|
|
|
|
|
Property and equipment |
2,232,166 |
13,293 |
(28,818) |
(12,977) |
2,203,664 |
|
|
|
|
|
|
|
Impairment |
|
(279,077) |
- |
- |
- |
(279,077) |
|
|
|
|
|
|
|
Total property and equipment, net |
|
1,953,089 |
13,293 |
(28,818) |
(12,977) |
1,924,587 |
(a)
Includes aircraft, engines, simulators and aircraft equipment.
(b)
The balances of transfers are between “Property and equipment”,
“Right-of-use assets” and “Intangible” groups.
| | |
| 29 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Consolidated |
Description |
Weighted average rate (p.a.) |
December 31, 2022 |
Acquisitions |
Write-offs |
Modifications (c) |
Transfers (b) |
June 30, 2023 |
|
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
Aircraft (a) |
|
12,753,324 |
473,701 |
(523,326) |
(519,286) |
10,157 |
12,194,570 |
Maintenance of aircraft and engines |
|
1,938,788 |
142,481 |
(163,532) |
(23,857) |
2,628 |
1,896,508 |
Restoration of aircraft and engines |
|
1,819,438 |
143,110 |
(23,546) |
(105,336) |
- |
1,833,666 |
Others |
|
226,621 |
7,638 |
- |
56,952 |
- |
291,211 |
|
|
16,738,171 |
766,930 |
(710,404) |
(591,527) |
12,785 |
16,215,955 |
|
|
|
|
|
|
|
|
Depreciation |
|
|
|
|
|
|
Aircraft (a) |
7% |
(7,228,226) |
(459,612) |
523,326 |
- |
- |
(7,164,512) |
Maintenance of aircraft and engines |
18% |
(1,159,612) |
(171,182) |
152,157 |
- |
- |
(1,178,637) |
Restoration of aircraft and engines |
35% |
(628,522) |
(317,018) |
23,546 |
- |
- |
(921,994) |
Others |
21% |
(58,914) |
(23,486) |
- |
- |
- |
(82,400) |
|
|
(9,075,274) |
(971,298) |
699,029 |
- |
- |
(9,347,543) |
|
|
|
|
|
|
|
|
Right-of-use assets |
7,662,897 |
(204,368) |
(11,375) |
(591,527) |
12,785 |
6,868,412 |
|
|
|
|
|
|
|
|
Impairment |
|
(110,349) |
- |
- |
- |
- |
(110,349) |
|
|
|
|
|
|
|
|
Right-of-use assets, net |
7,552,548 |
(204,368) |
(11,375) |
(591,527) |
12,785 |
6,758,063 |
(a)
Includes aircraft, engines and simulators.
(b)
The balances of transfers are between “Property and equipment”,
“Right-of-use assets” and "Intangible” groups.
(c)
Refers mainly to the renegotiation of 4 A350 model aircraft.
|
Consolidated |
Description |
Weighted average rate (p.a.) |
December 31, 2022 |
Acquisitions |
Write-offs |
Transfers (a) |
June 30, 2023 |
|
|
|
|
|
|
|
Cost |
|
|
|
|
|
|
Goodwill |
- |
901,417 |
- |
- |
- |
901,417 |
Slots |
- |
126,547 |
- |
- |
- |
126,547 |
Software and software development |
- |
946,516 |
122,834 |
(785) |
192 |
1,068,757 |
|
|
1,974,480 |
122,834 |
(785) |
192 |
2,096,721 |
|
|
|
|
|
|
|
Amortization |
|
|
|
|
|
|
Software |
17% |
(547,957) |
(80,966) |
- |
- |
(628,923) |
|
|
(547,957) |
(80,966) |
- |
- |
(628,923) |
|
|
|
|
|
|
|
Total intangible assets, net |
1,426,523 |
41,868 |
(785) |
192 |
1,467,798 |
| (a) | The balances of transfers are between “Property
and equipment”, “Right-of-use assets” and "Intangible” groups. |
| | |
| 30 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
Consolidated |
Description |
Average
nominal rate
p.a. |
Maturity |
December 31, 2022 |
Funding
(–) costs |
Transfers (a) |
Payment of principal |
Payment of interest |
Interest incurred |
Foreign currency exchange |
Amortized cost |
June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
In foreign currency – US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior notes – 2024 |
5.9% |
Oct-24 |
2,097,402 |
- |
- |
- |
(59,470) |
58,916 |
(160,048) |
3,023 |
1,939,823 |
Senior notes – 2026 |
7.3% |
Jun-26 |
3,095,665 |
- |
- |
- |
(105,405) |
108,034 |
(240,654) |
6,166 |
2,863,806 |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft and engines |
|
Aug-26 |
- |
- |
14,464 |
- |
- |
768 |
(768) |
- |
14,464 |
|
7.5% |
Mar-29 |
730,673 |
- |
- |
(78,885) |
(22,693) |
24,246 |
(56,266) |
3,489 |
600,564 |
|
|
|
|
|
|
|
|
|
|
|
|
Others |
1.0% |
Jun-25 |
551 |
- |
- |
(113) |
(2) |
2 |
(44) |
- |
394 |
|
|
|
5,924,291 |
- |
14,464 |
(78,998) |
(187,570) |
191,966 |
(457,780) |
12,678 |
5,419,051 |
|
|
|
|
|
|
|
|
|
|
|
|
In local currency - R$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working capital |
CDI +5.2% |
Feb-24 |
496,997 |
301,098 |
- |
(282,270) |
(44,086) |
44,330 |
- |
198 |
516,267 |
|
|
Sep-25 |
2,675 |
- |
- |
(591) |
(93) |
202 |
- |
- |
2,193 |
|
|
|
|
|
|
|
|
|
|
|
|
Debentures |
CDI + 5.5% |
Dec-28 |
747,170 |
585,661 |
- |
(191,530) |
(80,811) |
44,685 |
- |
2,144 |
1,107,319 |
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft and engines |
Selic + 5.5% |
May-25 |
19,284 |
- |
- |
(2,348) |
(2,261) |
1,601 |
- |
10 |
16,286 |
|
6.2% |
Mar-27 |
42,282 |
- |
- |
(9,293) |
(1,217) |
1,125 |
- |
52 |
32,949 |
|
|
|
1,308,408 |
886,759 |
- |
(486,032) |
(128,468) |
91,943 |
- |
2,404 |
1,675,014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total in R$ |
|
|
7,232,699 |
886,759 |
14,464 |
(565,030) |
(316,038) |
283,909 |
(457,780) |
15,082 |
7,094,065 |
|
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
1,112,940 |
|
|
|
|
|
|
|
1,694,457 |
Non-current |
|
|
6,119,759 |
|
|
|
|
|
|
|
5,399,608 |
(a)
The balance of transfers are between “Loans and financing”
and “Leases” groups.
| | |
| 31 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
18.1
Schedule of amortization of debt
|
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
|
|
2023 |
1,135,604 |
1,112,940 |
2024 |
2,549,441 |
2,397,036 |
2025 |
201,177 |
234,919 |
2026 |
2,988,668 |
3,306,081 |
2027 |
107,742 |
172,205 |
After 2027 |
111,433 |
9,518 |
|
7,094,065 |
7,232,699 |
|
|
|
Current |
1,694,457 |
1,112,940 |
Non-current |
5,399,608 |
6,119,759 |
During the first quarter, the subsidiary ALAB raised R$302,252
at costs of R$1,154, a rate equivalent to CDI+6.4% p.a. and a single payment of interest and principal in June 2023. During the second
quarter, the postponement of the payment period to September 2023 and the interest rate to CDI+6.5% p.a. were renegotiated. In July 2023
the balance was paid in advance.
During the second quarter, the subsidiary ALAB granted the 11th
issue of simple debentures, non-convertible into shares, of the type with real guarantee, with additional personal guarantee, in a single
series, in the total amount of R$600,000, with unit face value of R$1, costs of R$11,872, rate equivalent to CDI+6.0% p.a. and due on
June 1, 2024. The proceeds will be fully and exclusively used to pay for the supply of aviation fuel.
During the first quarter, the subsidiary ALAB renegotiated the
terms of the debentures, with costs of R$2,467 in order to extend the maturity date from December 20, 2027 to December 20, 2028, there
was no change in interest rates.
| 18.3.2 | Aircraft and engines |
During the first quarter, the subsidiary ALAB renegotiated the
deferral of the payment from March 31, 2023 to December 31, 2023 of an installment in the amount of R$194,330, changing the weighted average
rate from 6.5% p.a. to 7.4% p.a. Linked to this renegotiation, in the second quarter, the weighted average rate of the entire contract
was renegotiated, changing from 7.4% p.a. to 8.6% p.a.
| | |
| 32 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
The Company has restrictive clauses covenants in some of its loan
and financing agreements, as disclosed in the annual financial statements of December 31, 2022.
In the second quarter of 2023, the Company complied with all covenants.
| | |
| 33 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
Consolidated |
|
|
|
|
|
|
|
|
|
|
|
Description |
Average
remaining term |
Weighted
average rate |
December
31, 2022 |
Additions |
Modifications |
Payments |
Interest
incurred |
Transfers
(b) |
Foreign
currency exchange |
June
30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
Lease
without purchase option: |
|
|
|
|
|
|
|
|
|
|
Aircraft
(a) |
7.3 |
21.3% |
13,585,810 |
487,332 |
(546,366) |
(1,131,733) |
1,228,999 |
76,351 |
(1,039,115) |
12,661,278 |
Others |
4.8 |
10.1% |
185,527 |
7,638 |
56,952 |
(24,422) |
8,737 |
- |
(10,465) |
223,967 |
Lease
with purchase option: |
|
|
|
|
|
|
|
|
|
|
Aircraft
(a) |
5.4 |
22.0% |
811,496 |
- |
(31,107) |
(102,640) |
53,288 |
(90,815) |
(50,772) |
589,450 |
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
14,582,833 |
494,970 |
(520,521) |
(1,258,795) |
1,291,024 |
(14,464) |
(1,100,352) |
13,474,695 |
|
|
|
|
|
|
|
|
|
|
|
Current |
|
|
4,025,948 |
|
|
|
|
|
|
4,641,265 |
Non-current |
|
|
10,556,885 |
|
|
|
|
|
|
8,833,430 |
(a)
Includes aircraft, engines and simulators.
(b)
The balance of transfers is between the “Loans and financing”
and “Leases” groups.
| | |
| 34 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 19.1 | Schedule of amortization
of leases |
|
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
|
|
2023 |
3,001,303 |
4,387,911 |
2024 |
3,772,814 |
4,162,958 |
2025 |
3,304,843 |
3,579,587 |
2026 |
2,967,701 |
3,237,509 |
2027 |
2,625,641 |
2,909,201 |
After 2027 |
7,739,650 |
8,512,031 |
Minimum lease payments |
23,411,952 |
26,789,197 |
|
|
|
Financial charges |
(9,937,257) |
(12,206,364) |
|
|
|
Present value of minimum lease payments |
13,474,695 |
14,582,833 |
|
|
|
Current |
4,641,265 |
4,025,948 |
Non-current |
8,833,430 |
10,556,885 |
The Company has covenants in some of its lease agreements, as disclosed
in the annual financial statements as of December 31, 2022.
These conditions will be verified only December 31,
2023, therefore, the related debt is still classified in these interim condensed individual and consolidated financial statements according
to the original contractual terms.
| 20. | CONVERTIBLE INSTRUMENTS |
Parent
Company and Consolidated |
Description |
Average
nominal rate
p.a. |
Maturity |
December
31, 2022 |
Variation
of conversion right |
Payment
of interest |
Interest
incurred |
Foreign
currency exchange |
Amortized
cost |
June
30, 2023 |
|
|
|
|
|
|
|
|
|
|
In
foreign currency –
US$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debentures |
6.0% |
Oct-25 |
1,403,719 |
269,837 |
(52,591) |
122,608 |
(91,532) |
2,441 |
1,654,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total in R$ |
|
|
1,403,719 |
269,837 |
(52,591) |
122,608 |
(91,532) |
2,441 |
1,654,482 |
|
|
|
|
|
|
|
|
|
|
Current |
|
|
14,789 |
|
|
|
|
|
12,946 |
Non-current |
|
|
1,388,930 |
|
|
|
|
|
1,641,536 |
Contains the right to convert the debt into shares of the Company
in the amount of R$386,808 (R$116,971 on December 31, 2022).
| | |
| 35 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
20.1
Schedule of amortization of convertible instruments
|
Parent Company and Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
|
|
|
2023 |
12,946 |
14,789 |
2025 |
1,641,536 |
1,388,930 |
|
1,654,482 |
1,403,719 |
|
|
|
Current |
12,946 |
14,789 |
Non-current |
1,641,536 |
1,388,930 |
|
Parent company |
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Local currency |
3,680 |
24 |
1,811,994 |
1,857,583 |
Foreign currency |
5,013 |
- |
1,536,710 |
1,092,231 |
|
8,693 |
24 |
3,348,704 |
2,949,814 |
|
|
|
|
|
Current |
8,693 |
24 |
2,912,549 |
2,432,843 |
Non-current |
- |
- |
436,155 |
516,971 |
Description |
|
|
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
At December 31, 2022 |
|
|
|
753,352 |
|
|
|
|
|
Interest incurred |
|
|
|
12,258 |
Interest paid |
|
|
|
(38,242) |
Payment |
|
|
|
(727,368) |
|
|
|
|
|
|
|
|
|
|
At June 30, 2023 |
|
|
|
- |
| | |
| 36 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 23. | DERIVATIVE FINANCIAL INSTRUMENTS |
|
Consolidated |
|
Derivatives not designated as hedge accounting |
Changes in fair value |
Interest rate swap |
Forward - fuel |
Option fuel |
Forward - foreign currency |
Conversion right debentures (a) |
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At December 31, 2022 |
(179,170) |
(28,701) |
- |
235,246 |
(116,971) |
(89,596) |
|
- |
- |
- |
- |
- |
- |
Gains (losses) recognized in result |
(34,075) |
(191,758) |
9,634 |
(24,552) |
(269,837) |
(510,588) |
Payments (receipts) |
213,245 |
109,636 |
10,377 |
(210,694) |
- |
122,564 |
|
|
|
|
|
|
|
At June 30, 2023 |
- |
(110,823) |
20,011 |
- |
(386,808) |
(477,620) |
|
|
|
|
|
|
|
Rights with current derivative financial instruments |
- |
596 |
28,897 |
- |
- |
29,493 |
Rights with non-current derivative financial instruments |
- |
356 |
- |
- |
- |
356 |
Obligations with current derivative financial instruments |
- |
(111,648) |
(8,886) |
- |
- |
(120,534) |
Obligations with non-current derivative financial instruments |
- |
(127) |
- |
- |
- |
(127) |
Long-term loans and financing |
- |
- |
- |
- |
(386,808) |
(386,808) |
|
- |
- |
- |
- |
- |
- |
|
- |
(110,823) |
20,011 |
- |
(386,808) |
(477,620) |
(a) Balance recorded in the parent company.
|
|
|
Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Air traffic liability |
|
|
5,089,936 |
4,660,271 |
Breakage |
|
|
(587,785) |
(520,246) |
|
|
|
4,502,151 |
4,140,025 |
|
|
|
|
|
Average use term |
|
|
57 days |
48 days |
|
|
|
|
|
Current |
|
|
4,476,074 |
4,140,025 |
Non-current |
|
|
26,077 |
- |
The balance classified as non-current refers to the TudoAzul points
program.
|
Parent company |
Consolidated |
Description |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
Government installment payment program |
- |
- |
179,084 |
96,547 |
PIS and COFINS |
142 |
2 |
22,217 |
55,385 |
IRRF |
281 |
535 |
39,751 |
49,906 |
Import taxes |
50 |
96 |
16,288 |
15,189 |
Others |
- |
- |
9,039 |
48,156 |
|
|
|
|
|
|
473 |
633 |
266,379 |
265,183 |
|
|
|
|
|
Current |
473 |
633 |
129,523 |
193,588 |
Non-current |
- |
- |
136,856 |
71,595 |
During the six months ended June 30, 2023, the Company installment
federal taxes in 60 months through Government installment payment program.
| | |
| 37 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 26.1 | Breakdown of provisions |
|
Consolidated |
Description |
Return of aircrafts and engines (a) |
Tax, civil, labor and other risks |
Post-employment benefit |
Total |
|
|
|
|
|
|
|
|
|
|
At December 31, 2022 |
2,675,266 |
560,727 |
7,001 |
3,242,994 |
|
|
|
|
|
Additions |
143,109 |
129,469 |
58 |
272,636 |
Contractual lease modifications |
(121,008) |
- |
- |
(121,008) |
Payments |
(139,240) |
(109,892) |
- |
(249,132) |
Interest incurred |
130,544 |
9,803 |
380 |
140,727 |
Foreign currency exchange |
(208,368) |
- |
- |
(208,368) |
|
|
|
|
|
At June 30, 2023 |
2,480,303 |
590,107 |
7,439 |
3,077,849 |
|
|
|
|
|
At June 30, 2023 |
|
|
|
|
Current |
801,825 |
204,871 |
- |
1,006,696 |
Non-current |
1,678,478 |
385,236 |
7,439 |
2,071,153 |
|
|
|
|
|
At December 31, 2022 |
|
|
|
|
Current |
654,897 |
179,391 |
- |
834,288 |
Non-current |
2,020,369 |
381,336 |
7,001 |
2,408,706 |
(a)
Nominal discount rate 11.24% p.a. (11.24% p.a as of December 31, 2022).
| 26.1.1 | Tax, civil, labor and other risks |
The balances of the proceedings with estimates of probable and
possible losses are shown below:
|
Consolidated |
|
Probable loss |
Possible loss |
Description |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Tax |
278,664 |
263,495 |
424,313 |
376,510 |
Civil |
113,288 |
107,980 |
50,763 |
57,871 |
Labor |
130,745 |
121,842 |
61,710 |
43,423 |
Other |
67,410 |
67,410 |
- |
- |
|
590,107 |
560,727 |
536,786 |
477,804 |
| | |
| 38 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
26.1.1.1 New relevant processes
26.1.1.1.1 Labor
26.1.1.1.1.1
Possible loss
During the first six month, the Public Ministry of Labor (“MPT”)
filed a lawsuit against the Company alleging non-compliance with the minor apprentice quota, intending that Azul start to consider, when
calculating the quota, all functions that require professional training, as specified in the Brazilian Classification of Occupations,
under penalty of a daily fine of R$5 per apprentice not hired. The MPT also requests the condenation of the Company to the payment of
compensation for collective pain and suffering in the amount of R$20,000.
The
lawsuit is in the initial phase, still without decision. The probability of loss is evaluated as "possible" by the Company's
legal advisors.
| 27. | RELATED-PARTY TRANSACTIONS |
Transactions with related parties were entered into in the ordinary
course of the Company’s business, at prices, terms and financial charges according to the conditions established between the parties.
Such operations include, among other aspects, shared service agreements and loan agreements.
These transactions include, among other aspects, shared service contracts and
loan agreements, detailed below:
Parent company |
Creditor |
Debtor |
Type of operation |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
ALAB |
Azul |
Loan |
5,007 |
- |
|
|
|
|
|
|
|
|
5,007 |
- |
The table below shows the balances of related-party transactions
of the subsidiary ALAB, which were eliminated in the preparation of this consolidated interim information:
Creditor |
Debtor |
Type of operation |
June 30, 2023 |
December 31, 2022 |
ALAB |
ATS Viagens e Turismo Ltda |
Sale of TudoAzul points |
911 |
21,917 |
ALAB |
ATS Viagens e Turismo Ltda |
Service sharing |
28,928 |
36,448 |
ALAB |
Azul |
Loan |
5,007 |
- |
ALAB |
Canela Investiments |
Transfers |
20,975 |
- |
ALAB |
Azul Conecta Ltda |
Loan |
- |
58,539 |
ALAB |
Azul Conecta Ltda |
Service sharing |
3,416 |
- |
Azul Conecta Ltda |
ALAB |
Ticket purchase |
(3,581) |
(7,694) |
ATS Viagens e Turismo Ltda. |
ALAB |
Travel packages |
(92,959) |
(58,732) |
ATS Viagens e Turismo Ltda. |
ALAB |
Advance for ticket purchase |
(271,559) |
(191,808) |
Azul Investments LLP |
ALAB |
Loan |
(4,092,903) |
(4,815,559) |
|
|
|
(4,401,765) |
(4,956,889) |
| | |
| 39 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 27.1 | 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.
Key management personnel comprise the directors, officers and members
of the Executive Committee. 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, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Short-term benefits |
6,633 |
5,895 |
13,101 |
11,545 |
Wages |
1,329 |
1,275 |
2,621 |
2,916 |
Share-based payment plan |
18,781 |
(25,216) |
37,768 |
(18,699) |
|
|
|
|
|
|
26,743 |
(18,046) |
53,490 |
(4,238) |
Stock-based compensation plan, considers stock option plans, restricted
shares and phantom shares. Such plans are expected to be settled in up to eight years and, therefore, and does not represent a cash outflow.
| 27.2 | 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.
| 27.3 | Technology service sharing contract |
On January 1, 2013, the Company entered into a contract with Águia
Branca Participações S.A., one of its shareholders, for the sharing of information technology resources for an indefinite
period. The total amount of services acquired during six months ended June 30, 2023 was R$26 (R$26 as of June 30, 2022), recorded under
“Other expenses, net” in the statement of operations. As of June 30, 2023, there were no amounts to be paid as a result of
this transaction.
| 27.4 | Ticket sales contract |
On March 26, 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$20 credit line for the purchase and resale of tickets for flights operated
by the Company. This credit line is guaranteed by a non-interest bearing promissory note in the same amount payable.
| | |
| 40 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
In December 2019, the Company signed a letter of intent for the
sublease of aircraft to the 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 2, 2020. Following good corporate practices, the controlling shareholder did not participate in the voting.
Until June 30, 2023, the Company sub-leased three aircraft to Breeze
and recorded a balance receivable of R$56,292 (R$67,056 as of December 31, 2022).
27.6
Lilium
In August 2021, the Company announced plans to make a strategic
partnership with Lilium GmbH (“Lilium”), a wholly owned subsidiary of Lilium N.V., which has ultimately become a related party
as the Company’s Board of Directors’ Chairman was elected independent member of Lilium’s Board of Directors.
27.7
Azorra
In August 2022, the Company made agreements for purchase and sale
of aircraft and engines with entities that are part of Azorra Aviation Holdings LLC. (“Azorra”) group, which has become a
related party as the Company’s Board of Directors’ Chairman was elected independent member of Azorra’s Board of Directors.
Consolidated |
Creditor |
Debtor |
Type of operation |
June 30, 2023 |
December 31, 2022 |
ALAB |
Azorra |
Maintenance reserves |
94,724 |
107,286 |
ALAB |
Azorra |
Security deposits |
5,356 |
3,913 |
Azorra |
ALAB |
Leases |
(85,807) |
(113,832) |
Azorra |
ALAB |
Loans and financing |
(14,464) |
- |
|
|
|
|
|
Revenues |
Expenses |
Type of operation |
June 30, 2023 |
June 30, 2022 |
Azorra |
ALAB |
Interest incurred |
8,120 |
3,006 |
|
Parent company and Consolidated |
|
|
|
|
Quantity |
Description |
Company’s capital |
Advance for future capital increase |
Common shares |
Preferred shares |
|
|
|
|
|
|
|
|
|
|
At December 31, 2022 |
2,313,941 |
61 |
928,965,058 |
335,623,408 |
|
|
|
|
|
Capital payment |
61 |
(61) |
- |
- |
Share-based payment |
- |
819 |
- |
74,000 |
|
|
|
|
|
At June 30, 2023 |
2,314,002 |
819 |
928,965,058 |
335,697,408 |
| | |
| 41 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
As established in the Company’s bylaws, each common share
is entitled to 1 (one) vote. Preferred shares of any class do not have voting rights, however they do provide their holders with rights
that were disclosed in detail in the annual financial statements of December 31, 2022.
Company shareholding structure is presented below:
|
Parent company and Consolidated |
|
June 30, 2023 |
|
December 31, 2022 |
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% |
4.0% |
5.0% |
|
33.0% |
4.4% |
5.4% |
United Airlines Inc |
- |
8.0% |
7.8% |
|
- |
8.0% |
7.8% |
Blackrock |
- |
5.0% |
4.8% |
|
- |
5.0% |
4.8% |
Others |
- |
80.6% |
77.7% |
|
- |
80.3% |
77.4% |
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. |
|
|
Parent company and Consolidated |
Description |
|
Number of shares |
Amount paid |
Average cost
(in R$) |
|
|
|
|
|
|
|
|
|
|
At December 31, 2022 |
|
349,999 |
10,204 |
29.15 |
|
|
|
|
|
Repurchase |
|
350,000 |
2,881 |
8.23 |
|
|
|
|
|
At June 30, 2023 |
|
699,999 |
13,085 |
18.69 |
As of November 11, 2022 approved the repurchase plan for 1,300,000
preferred shares maturing in 18 months, to keep them in treasury for a subsequent payment of the installments of the Restricted Stock
Option plan. Until June 30, 2023, within the said plan, the Company reacquired 610,002 shares.
| 29. | EARNINGS (LOSS) PER SHARE |
|
Parent company and Consolidated |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Numerator |
|
|
|
|
Net (loss) profit for the period |
23,908 |
(2,480,471) |
(712,732) |
186,576 |
|
|
|
|
|
Denominator |
|
|
|
|
Weighted average number of common shares |
928,965,058 |
928,965,058 |
928,965,058 |
928,965,058 |
Weighted average number of preferred shares |
335,648,075 |
335,607,525 |
335,635,741 |
334,963,825 |
75 preferred shares |
75 |
75 |
75 |
75 |
Weighted average number of equivalent preferred shares (a) |
348,034,276 |
347,993,725 |
348,021,942 |
347,350,026 |
Weighted average number of equivalent common shares (b) |
26,102,570,683 |
26,099,529,408 |
26,101,645,633 |
26,051,251,958 |
Weighted average number of presumed conversions |
76,853,338 |
59,980,257 |
76,853,338 |
59,980,257 |
Weighted average number of shares that would have been issued at average market price |
4,776,446 |
361,106 |
2,668,627 |
502,018 |
Average share price at market price (in reais) |
15.16 |
19.56 |
12.98 |
22.27 |
|
|
|
|
|
Basic (loss) earnings per common share – R$ |
0.00 |
(0.10) |
(0.03) |
0.01 |
Diluted (loss) earnings per common share – R$ |
0.00 |
(0.10) |
(0.03) |
0.01 |
Basic (loss) earnings per preferred share – R$ |
0.07 |
(7.13) |
(2.05) |
0.54 |
Diluted (loss) earnings per preferred share – R$ |
0.07 |
(7.13) |
(2.05) |
0.54 |
| | |
| 42 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| (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. |
Diluted earnings (loss) per share are calculated by adjusting the
weighted average number of shares outstanding by instruments potentially convertible into shares. However, due to the loss reported in
six months ended June 30, 2023, these instruments issued by the company have a antidilutive effect and therefore were not considered in
the total number of shares outstanding to determine the diluted loss per share.
The conditions of the share-based grant plans were disclosed in detail in the annual
financial statements of December 31, 2022 and did not change during the six months ended June 30, 2023.
The movement of the plans is as follows:
|
Parent company and Consolidated |
|
Number
of shares |
Description |
Stock option plan |
Restricted shares plan ("RSU") |
Phantom
shares |
Total |
|
|
|
|
|
|
|
|
|
|
At December 31, 2022 |
19,069,705 |
1,795,401 |
326,472 |
21,191,578 |
|
|
|
|
|
Exercised |
(74,000) |
- |
(22,884) |
(96,884) |
Canceled |
(131,786) |
(90,308) |
(17,220) |
(239,314) |
|
|
|
|
|
At June 30, 2023 |
18,863,919 |
1,705,093 |
286,368 |
20,855,380 |
|
|
|
Parent Company and Consolidated |
Description |
|
|
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
Share price (in reais) |
|
|
21.86 |
11.01 |
Weighted average price of the stock option (in reais) |
|
11.07 |
11.84 |
Weighted average price of the phantom shares (in reais) |
|
10.35 |
- |
|
Parent Company and Consolidated |
|
Expense |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Stock option |
17,800 |
- |
35,601 |
1,021 |
RSU |
2,223 |
3,315 |
4,693 |
6,602 |
Phantom shares |
1,988 |
(29,305) |
2,310 |
(25,542) |
|
|
|
|
|
|
22,011 |
(25,990) |
42,604 |
(17,919) |
| | |
| 43 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
The amounts related to stock options and RSU are recorded under
“Capital reserves” and amounts for phantom shares are recorded under “Salaries and benefits”.
On June 30, 2023, the balance of the obligation related to the
phantom shares plans is R$3,143 (R$844 on December 31, 2022).
Date of grant |
Option exercise price
(in R$) |
Everage fair value of the option on the grant
(in R$) |
Historical volatility |
Expected dividend |
Average risk-free rate of return |
Exercise rate per tranche |
Deadline
remainder of
vesting period
(in years) |
Purchasing period up to (years) |
Total options granted |
Total outstanding options |
Total options available for exercise |
December 11, 2009 |
3.42 |
1.93 |
47.7% |
1.1% |
8.8% |
25.0% |
- |
4.0 |
5,032,800 |
182,870 |
182,870 |
March 24, 2011 |
6.44 |
4.16 |
54.8% |
1.1% |
12.0% |
25.0% |
- |
4.0 |
1,572,000 |
84,000 |
84,000 |
April 5, 2011 |
6.44 |
4.16 |
54.8% |
1.1% |
12.0% |
25.0% |
- |
4.0 |
656,000 |
7,500 |
7,500 |
June 30, 2014 |
19.15 |
11.01 |
40.6% |
1.1% |
12.5% |
25.0% |
- |
4.0 |
2,169,122 |
740,013 |
740,013 |
July 1, 2015 |
14.51 |
10.82 |
40.6% |
1.1% |
15.7% |
25.0% |
- |
4.0 |
627,810 |
195,410 |
195,410 |
July 1, 2016 |
14.50 |
10.14 |
43.1% |
1.1% |
12.2% |
25.0% |
- |
4.0 |
820,250 |
287,918 |
287,918 |
July 6, 2017 |
22.57 |
12.82 |
43.4% |
1.1% |
10.3% |
25.0% |
- |
4.0 |
680,467 |
459,338 |
459,338 |
March 14, 2017 |
11.85 |
4.82 |
50.6% |
1.1% |
11.3% |
20.0% |
- |
5.0 |
9,343,510 |
- |
- |
August 8, 2022 |
11.07 |
8.10 |
70.0% |
- |
13.0% |
25.0% |
3.1 |
4.0 |
1,774,418 |
1,759,788 |
- |
August 8, 2022 |
11.07 |
6.40 |
68.8% |
- |
13.2% |
25.0% |
2.1 |
4.0 |
1,514,999 |
1,422,749 |
295,000 |
August 19, 2022 |
11.07 |
7.39 |
67.2% |
- |
13.6% |
100.0% |
0.1 |
1.0 |
4,900,000 |
4,824,333 |
- |
August 19, 2022 |
11.07 |
11.54 |
74.6% |
- |
12.7% |
33.0% |
4.1 |
5.0 |
8,900,000 |
8,900,000 |
- |
|
|
|
|
|
|
|
|
|
37,991,376 |
18,863,919 |
2,252,049 |
| 30.2.2 | Restricted stock option plan |
Date of
grant |
Exercise rate per tranche |
Fair value of share
(in R$) |
Remaining term of the vesting period
(in years) |
Purchasing period up to (years) |
Total
granted |
Total not
exercised |
July 7, 2019 |
25.0% |
51.65 |
- |
4.0 |
170,000 |
31,834 |
June 19, 2020 |
25.0% |
21.80 |
0.9 |
4.0 |
1,382,582 |
546,518 |
July 7, 2021 |
25.0% |
42.67 |
2.0 |
4.0 |
300,000 |
185,018 |
July 7, 2022 |
25.0% |
11.72 |
3.0 |
4.0 |
335,593 |
318,643 |
July 7, 2022 |
25.0% |
11.72 |
3.0 |
4.0 |
671,186 |
623,080 |
|
|
|
|
|
2,859,361 |
1,705,093 |
Date of grant |
Option exercise price
(in reais) |
Price on the grant date (in reais) |
Current share price
(in reais) |
Average fair value of option at the reporting date (in reais) |
Historical volatility |
Expected dividend |
Average risk-free rate of return |
Exercise rate |
Remaining term of the vesting period
(in years) |
Term
limit to
exercise after dressing |
Purchasing period up to (years) |
Total options granted |
Total outstanding |
August 7, 2018 |
20.43 |
40.41 |
21.86 |
8.36 |
80.9% |
- |
12.6% |
25.0% |
- |
4 years |
4.0 |
707,400 |
79,681 |
July 7, 2019 |
42.09 |
25.34 |
21.86 |
3.41 |
80.9% |
- |
12.6% |
25.0% |
- |
4 years |
4.0 |
405,000 |
13,277 |
April 30, 2020 |
10.35 |
17.40 |
21.86 |
13.51 |
80.9% |
- |
12.6% |
33.3% |
- |
4 years |
3.0 |
3,250,000 |
153,160 |
April 30, 2020 |
10.35 |
17.40 |
21.86 |
14.17 |
76.7% |
- |
12.2% |
25.0% |
0.8 |
4 years |
4.0 |
1,600,000 |
38,820 |
August 17, 2021 |
33.99 |
33.99 |
21.86 |
6.94 |
73.5% |
- |
11.9% |
25.0% |
2.1 |
4 years |
4.0 |
580,000 |
1,430 |
|
|
|
|
|
|
|
|
|
|
|
|
6,542,400 |
286,368 |
| | |
| 44 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Consolidated |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
Revenue |
|
|
|
|
Passenger revenue |
3,945,037 |
3,664,875 |
8,120,213 |
6,596,065 |
Other revenues |
358,231 |
404,650 |
707,732 |
792,229 |
|
- |
- |
- |
- |
Total |
4,303,268 |
4,069,525 |
8,827,945 |
7,388,294 |
|
- |
- |
- |
- |
Taxes levied |
|
|
|
|
Passenger revenue |
(5,172) |
(106,433) |
(12,048) |
(194,654) |
Other revenues |
(43,901) |
(38,329) |
(83,374) |
(75,836) |
|
|
|
|
|
Total taxes |
(49,073) |
(144,762) |
(95,422) |
(270,490) |
|
|
|
|
|
Total revenue |
4,254,195 |
3,924,763 |
8,732,523 |
7,117,804 |
Revenues by geographical location are as follows:
|
Consolidated |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Domestic revenue |
3,305,766 |
3,320,214 |
6,810,712 |
6,008,732 |
Foreign revenue |
948,429 |
604,549 |
1,921,811 |
1,109,072 |
|
- |
- |
- |
- |
Total revenue |
4,254,195 |
3,924,763 |
8,732,523 |
7,117,804 |
|
Parent company |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Administrative expenses |
|
|
|
|
Salaries and benefits |
(6,343) |
(3,173) |
(15,305) |
(17,584) |
Others |
(5,859) |
(9,513) |
(10,513) |
(17,642) |
|
(12,202) |
(12,686) |
(25,818) |
(35,226) |
|
|
|
|
|
Other income and expenses |
|
|
|
|
Others (*) |
71,699 |
- |
71,699 |
- |
|
71,699 |
- |
71,699 |
- |
|
|
|
|
|
Total |
59,497 |
(12,686) |
45,881 |
(35,226) |
(*) Refers to the debt forgiveness for loan operations between Azul
and ALAB.
| | |
| 45 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Consolidated |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Cost of services |
|
|
|
|
Aircraft fuel |
(1,338,217) |
(1,698,191) |
(3,011,619) |
(2,887,157) |
Salaries and benefits |
(524,383) |
(453,365) |
(1,021,541) |
(850,379) |
Airport fees |
(249,392) |
(223,704) |
(511,753) |
(422,811) |
Traffic and customer servicing |
(189,490) |
(150,780) |
(385,086) |
(283,750) |
Maintenance and repairs |
(223,276) |
(168,276) |
(381,172) |
(328,544) |
Depreciation and amortization (a) |
(624,678) |
(476,110) |
(1,190,056) |
(965,049) |
Insurance |
(7,065) |
(19,986) |
(26,463) |
(38,754) |
Others |
(431,500) |
(310,216) |
(955,135) |
(745,019) |
|
(3,588,001) |
(3,500,628) |
(7,482,825) |
(6,521,463) |
|
|
|
|
|
Selling expenses |
|
|
|
|
Salaries and benefits |
(8,958) |
(5,473) |
(16,949) |
(10,967) |
Sales and marketing |
(179,820) |
(157,849) |
(353,817) |
(284,700) |
|
(188,778) |
(163,322) |
(370,766) |
(295,667) |
|
|
|
|
|
Administrative expenses |
|
|
|
|
Salaries and benefits |
(35,116) |
7,368 |
(67,439) |
(24,345) |
Depreciation and amortization |
(2,488) |
(2,045) |
(4,763) |
(4,019) |
Others |
(38,086) |
(60,989) |
(117,685) |
(106,075) |
|
(75,690) |
(55,666) |
(189,887) |
(134,439) |
|
|
|
|
|
Other income and expenses |
|
|
|
|
Idleness - Depreciation and amortization |
- |
- |
- |
(31,125) |
Others |
(100,509) |
(68,682) |
(219,797) |
(148,490) |
|
(100,509) |
(68,682) |
(219,797) |
(179,615) |
|
|
|
|
|
Total |
(3,952,978) |
(3,788,298) |
(8,263,275) |
(7,131,184) |
(a) Net of PIS and COFINS credits in the amount of R$440 three month
and R$874 at the six month.
In 2022, as a consequence of the reduction in the number of flights
operated during the COVID-19 pandemic and by analogy to the provisions of CPC 16 (R1) - Inventories, equivalent to IAS-2, expenses with
depreciation of flight equipment not directly related to the revenues generated in the quarter called idleness were reclassified from
the “Cost of service” group to the “Other income and expenses, net” group.
| | |
| 46 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Parent company |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Financial income |
|
|
|
|
Interest on short-term investments |
24 |
7,144 |
151 |
13,745 |
Others |
78 |
565 |
1,678 |
776 |
|
102 |
7,709 |
1,829 |
14,521 |
Financial expenses |
|
|
|
|
Interest on convertible instruments |
(61,877) |
(54,905) |
(122,608) |
(108,909) |
Amortized cost of convertible instruments |
(1,250) |
(1,119) |
(2,441) |
(2,189) |
Cost of financial operations |
(175) |
(190) |
(275) |
(283) |
Others |
(1,711) |
(152) |
(1,711) |
(230) |
|
(65,013) |
(56,366) |
(127,035) |
(111,611) |
|
|
|
|
|
Derivative financial instruments, net |
(188,798) |
310,586 |
(269,837) |
406,761 |
|
|
|
|
|
Foreign currency exchange, net |
68,735 |
(112,814) |
91,340 |
74,131 |
|
|
|
|
|
Financial result, net |
(184,974) |
149,115 |
(303,703) |
383,802 |
|
Consolidated |
|
Three-month periods ended |
Six-month periods ended |
Description |
June 30, 2023 |
June 30, 2022 |
June 30, 2023 |
June 30, 2022 |
|
|
|
|
|
Financial income |
|
|
|
|
Interest on short-term investments |
22,436 |
27,786 |
40,172 |
62,170 |
Sublease receivables |
3,576 |
11,941 |
7,546 |
17,620 |
TAP Bond fair value |
15,569 |
- |
43,607 |
- |
Others |
9,402 |
2,357 |
13,124 |
11,208 |
|
50,983 |
42,084 |
104,449 |
90,998 |
Financial expenses |
|
|
|
|
Interest on loans and financing |
(137,654) |
(157,534) |
(283,909) |
(301,112) |
Interest on lease |
(635,882) |
(591,835) |
(1,291,024) |
(1,185,828) |
Interest on convertible instruments |
(61,877) |
(54,905) |
(122,608) |
(108,909) |
Interest on factoring credit card receivables |
(91,907) |
(56,781) |
(206,649) |
(94,004) |
Interest on provisions |
(74,031) |
(62,856) |
(140,727) |
(112,529) |
Interest on reverse factoring |
- |
(4,005) |
(12,258) |
(4,005) |
Interest accounts payable |
(93,931) |
(47,249) |
(159,864) |
(82,662) |
Guarantee commission |
(37,230) |
(35,405) |
(87,347) |
(66,917) |
Amortized cost of loans and financing |
(7,318) |
(7,220) |
(15,082) |
(14,646) |
Amortized cost of convertible instruments |
(1,250) |
(1,119) |
(2,441) |
(2,189) |
Cost of financial operations |
(15,043) |
(19,434) |
(30,611) |
(37,150) |
TAP Bond fair value |
- |
(60,849) |
(10,628) |
(101,595) |
Others |
(41,976) |
(26,473) |
(92,535) |
(38,277) |
|
(1,198,099) |
(1,125,665) |
(2,455,683) |
(2,149,823) |
|
|
|
|
|
Derivative financial instruments, net |
(235,616) |
592,506 |
(510,588) |
898,548 |
|
|
|
|
|
Foreign currency exchange, net |
1,105,423 |
(2,125,861) |
1,679,842 |
1,360,233 |
|
|
|
|
|
Financial result, net |
(277,309) |
(2,616,936) |
(1,181,980) |
199,956 |
| | |
| 47 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 34.1 | Accounting classification and fair value
hierarchy of financial instruments |
The following hierarchy is used to determine the fair
value of financial instruments:
Level 1: quoted prices, without adjustment, in active markets for
identical assets and liabilities;
Level 2: other techniques for which all inputs that have
a significant effect on the fair value recorded are directly or indirectly observable; and
Level 3: techniques that use data that have a significant effect
on the fair value recorded that are not based on observable market data.
The accounting classifications and the fair value hierarchy of
the Company's consolidated financial instruments are shown below:
|
|
Parent company |
|
|
Carrying amount |
Fair value |
Description |
Level |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
2 |
2,805 |
8,117 |
2,805 |
8,117 |
Security deposits and maintenance reserves |
- |
7,767 |
8,409 |
7,767 |
8,409 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Convertible instruments |
- |
(1,267,674) |
(1,286,748) |
(1,267,674) |
(1,419,621) |
Convertible instruments- conversion right |
2 |
(386,808) |
(116,971) |
(386,808) |
(116,971) |
Accounts payable |
- |
(8,693) |
(24) |
(8,693) |
(24) |
Insurance payable |
- |
(2,891) |
- |
(2,891) |
- |
Related parties |
- |
(5,007) |
- |
(5,007) |
- |
| | |
| 48 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
|
Consolidated |
|
|
Carrying amount |
Fair value |
Description |
Level |
June 30, 2023 |
December 31, 2022 |
June 30, 2023 |
December 31, 2022 |
|
|
|
|
|
|
Assets |
|
|
|
|
|
Cash and cash equivalents |
2 |
616,210 |
668,348 |
616,210 |
668,348 |
Long-term investments |
2 |
742,090 |
733,043 |
742,090 |
733,043 |
Accounts receivable |
- |
1,351,188 |
1,803,998 |
1,351,188 |
1,803,998 |
Aircraft sublease |
- |
140,090 |
176,053 |
140,090 |
176,053 |
Security deposits and maintenance reserves |
- |
2,617,302 |
2,539,561 |
2,617,302 |
2,539,561 |
Derivative financial instruments |
2 |
29,849 |
271,950 |
29,849 |
271,950 |
Other assets |
- |
20,739 |
15,963 |
20,739 |
15,963 |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Loans and financing |
- |
(7,094,065) |
(7,232,699) |
(6,361,599) |
(6,187,389) |
Leases |
- |
(13,474,695) |
(14,582,833) |
(13,474,695) |
(14,582,833) |
Convertible instruments |
|
(1,267,674) |
(1,286,748) |
(1,267,674) |
(1,286,748) |
Convertible instruments- conversion right |
2 |
(386,808) |
(116,971) |
(386,808) |
(116,971) |
Accounts payable |
- |
(3,348,704) |
(2,949,814) |
(3,348,704) |
(2,949,814) |
Reverse factoring |
- |
- |
(753,352) |
- |
(753,352) |
Airport fees |
- |
(1,705,428) |
(1,334,769) |
(1,705,428) |
(1,334,769) |
Insurance payable |
- |
(21,906) |
(84,985) |
(21,906) |
(84,985) |
Derivative financial instruments |
2 |
(120,661) |
(244,575) |
(120,661) |
(244,575) |
Other liabilities |
- |
(1,063,250) |
(1,014,433) |
(1,063,250) |
(1,014,433) |
34.2.1
Interest rate risk
34.2.1.1
Sensitivity analysis
As of June 30, 2023, 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 |
Exposure to LIBOR |
Description |
Rate (p.a.) |
June 30, 2023 |
Rate (p.a.) |
June 30, 2023 |
Weighted
rate (p.a.) |
June 30, 2023 |
|
|
|
|
|
|
|
Exposed liabilities, net |
13.7% |
(1,082,206) |
5.1% |
(221,003) |
5.7% |
(272,366) |
|
|
|
|
|
|
|
Effect on profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate devaluation by -50% |
6.8% |
87,806 |
2.5% |
5,625 |
2.8% |
7,699 |
Interest rate devaluation by -25% |
10.2% |
43,903 |
3.8% |
2,812 |
4.2% |
3,850 |
Interest rate appreciation by 50% |
20.5% |
(87,806) |
7.6% |
(5,625) |
8.5% |
(7,699) |
Interest rate appreciation by 25% |
17.1% |
(43,903) |
6.4% |
(2,812) |
7.1% |
(3,850) |
Assets and liabilities linked to LIBOR are being reviewed and will
be restated at the published alternative rates. The Company estimates that the updated cash flows will be economically equivalent to the
original ones.
| | |
| 49 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
34.2.2
Fuel price risk (“QAV”)
The price of fuel may vary depending on the volatility of the price
of crude oil and its derivatives. To mitigate losses linked to variations in the fuel market, the Company had, as of June 30, 2023, forward
and options transactions on fuel (note 23).
34.2.2.1
Sensitivity analysis
The following table demonstrates the sensitivity analysis in US
dollars of the price fluctuation of QAV liter:
|
|
|
Consolidated |
|
|
Exposure to price |
Description |
|
|
Average price per liter
(in reais) |
June 30, 2023 |
|
|
|
|
|
Aircraft fuel |
|
|
4.44 |
(3,011,619) |
|
|
|
|
|
Effect on profit or loss |
|
|
|
|
|
|
|
|
|
Devaluation by -50% |
|
|
2.22 |
1,505,810 |
Devaluation by -25% |
|
|
3.33 |
752,905 |
Appreciation by 50% |
|
|
6.67 |
(1,505,810) |
Appreciation by 25% |
|
|
5.56 |
(752,905) |
34.2.3
Foreign exchange risk
The foreign exchange risk arises from the possibility of unfavorable
exchange differences to which the Company's cash flows are exposed.
| | |
| 50 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
The exposure to the main exchange differences is as follows:
|
Consolidated |
|
Exposure to US$ |
Exposure to € |
Description |
June 30,
2023 |
December 31, 2022 |
June 30,
2023 |
December 31, 2022 |
|
|
|
|
|
Assets |
|
|
|
|
Cash and cash equivalents |
34,474 |
56,487 |
1,431 |
8,052 |
Long-term investments |
- |
- |
742,090 |
733,043 |
Accounts receivable |
138,422 |
166,012 |
9,661 |
- |
Aircraft sublease |
140,090 |
176,053 |
- |
- |
Security deposits and maintenance reserves |
2,540,256 |
2,471,349 |
- |
- |
Other assets |
14,753 |
12,636 |
- |
- |
|
|
|
|
|
Total assets |
2,867,995 |
2,882,537 |
753,182 |
741,095 |
|
|
|
|
|
Liabilities |
|
|
|
|
Loans and financing |
(5,422,774) |
(5,880,553) |
- |
- |
Leases |
(13,410,786) |
(14,525,385) |
- |
- |
Convertible instruments |
(1,668,059) |
(1,418,738) |
- |
- |
Accounts payable |
(1,536,616) |
(1,051,379) |
- |
- |
Provisions and other liabilities |
(2,708,902) |
(3,020,947) |
- |
- |
|
|
|
|
|
Total liabilities |
(24,747,137) |
(25,897,002) |
- |
- |
|
|
|
|
|
Net exposure |
(21,879,142) |
(23,014,465) |
753,182 |
741,095 |
|
|
|
|
|
Net exposure in foreign currency |
(4,539,995) |
(4,410,845) |
143,120 |
133,066 |
34.2.3.1
Sensitivity analysis
|
Consolidated |
|
Exposure to US$ |
Exposure to € |
Description |
Closing rate |
June 30, 2023 |
Closing rate |
June 30, 2023 |
|
|
|
|
|
Exposed assets (liabilities), net |
4.8192 |
(21,879,142) |
5.2626 |
753,182 |
|
|
|
|
|
Effect on profit or loss |
|
|
|
|
|
|
|
|
|
Foreign currency devaluation by -50% |
2.4096 |
10,939,571 |
2.6313 |
(376,591) |
Foreign currency devaluation by -25% |
3.6144 |
5,469,786 |
3.9470 |
(188,296) |
Foreign currency appreciation by 50% |
7.2288 |
(10,939,571) |
7.8939 |
376,591 |
Foreign currency appreciation by 25% |
6.0240 |
(5,469,786) |
6.5783 |
188,296 |
| | |
| 51 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
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 and long-term investments are deposited with counterparties
that have a minimum investment grade rating in the assessment made by agencies S&P Global Ratings, Moody's or Fitch (between AAA and
A+). 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
market (OTC) from counterparties with a minimum investment grade rating, or on commodities and futures exchanges (B3 and NYMEX), which
substantially mitigates the credit risk. The Company assesses the risks of counterparties in financial instruments and diversifies its
exposure periodically.
The maturity schedules of the Company’s consolidated financial
liabilities as of June 30, 2023 are as follows:
|
Consolidated |
Description |
Carrying amount |
Contractual cash flow |
Until 1 year |
From 2 to 5 years |
After 5 years |
|
|
|
|
|
|
Loans and financing |
7,094,065 |
8,268,628 |
2,113,752 |
6,154,876 |
- |
Leases |
13,474,695 |
23,411,952 |
4,988,805 |
11,800,427 |
6,622,720 |
Convertible instruments |
1,654,482 |
2,306,627 |
100,150 |
2,206,477 |
- |
Accounts payable |
3,348,704 |
3,375,446 |
2,932,015 |
417,750 |
25,681 |
Airport fees |
1,705,428 |
1,731,049 |
1,206,147 |
193,271 |
331,631 |
Insurance payable |
21,906 |
21,906 |
21,906 |
- |
- |
Derivative financial instruments |
120,661 |
120,661 |
120,534 |
127 |
- |
|
|
|
|
|
|
|
27,419,941 |
39,236,269 |
11,483,309 |
20,772,928 |
6,980,032 |
The above balances do not reflect the renegotiations signed after
June 30, 2023 – see note 36.
The Company seeks capital alternatives in order to satisfy its
operational needs, aiming at a capital structure that it considers adequate for the financial costs and the maturity dates of funding
and its guarantees. The Company's continuously monitors its net indebtedness, see note 1.2 with details of the Company's actions in the
six months.
| | |
| 52 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
|
Consolidated |
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) |
Security deposits and maintenance reserves |
- |
- |
- |
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) |
As of June 30,2023 |
- |
|
- |
- |
- |
- |
- |
|
- |
- |
- |
| | |
| 53 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| | |
| 54 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
36.1
Renegotiation with Accounts payable
On July 11, 2023, the Company
renegotiated the amount of R$365,817, under the following conditions:
Renegotiated conditions |
Values |
|
|
The amount was paid in 36 monthly installments, with interest of 7.5% p.a. and the start of payments on January 1, 2025. |
83,236 |
|
|
The amount will be included in a debt (Notes) to be issued by the Company, with maturity on June 30, 2030, with interest of 7.5% p.a., to be amortized semi-annually. |
226,065 |
|
|
The amount will be settled by an instrument that provides for quarterly settlement in cash or shares, starting in December 2024. |
56,516 |
|
|
Total |
365,817 |
| 36.2 | Exchange of debt securities |
Exchange offer - senior notes and convertible
debentures
On July 14, 2023, the Company, through its subsidiary Azul Secured,
completed the exchange of existing debt securities with the aim of obtaining an extension of maturities. The conditions of such renegotiations
are detailed below:
|
Original conditions |
|
Renegotiated conditions |
Description |
Value |
Average
nominal rate
p.a. |
Maturity |
% of renegotiation |
Value |
Average
nominal rate
p.a. |
Maturity |
Senior notes – 2024 |
US$400 million |
5.9% |
Oct-24 |
74% |
US$294 million |
11.5% |
May-29 |
Senior notes – 2026 |
US$600 million |
7.3% |
Jun-26 |
95% |
US$568 million |
10.9% |
May-30 |
Also on that date, the Company concluded the renegotiation referring
to the extension of the term of the convertible debentures, as follows:
|
Original conditions |
|
|
|
|
|
Description |
Value in June 30, 2023 |
Average
nominal rate
p.a. |
Maturity |
Payment in Aug-23 |
Award |
Remaining amount |
Average
nominal rate
p.a. |
Maturity |
Convertible debentures |
1,686,952 |
6.0% |
Oct-25 |
524,811 |
104,962 |
1,162,141 |
12.5% |
Oct-28 |
The conversion price of the debentures will correspond to the average
of the 20 trading sessions that will take place in the period subsequent to the end of the renegotiation.
The amounts shown in the tables above do not include funding costs
incurred.
The 2029 and 2030 debt securities and convertible debentures are
guaranteed by the Company and its subsidiaries ALAB, IntelAzul S.A., ATS Viagens e Turismo Ltda., Azul IP Cayman Holdco Ltd. and
Azul IP Cayman Ltd. The shared guarantees package comprises certain receivables generated by TudoAzul (loyalty program), by Azul
Viagens (travel package business) and certain trademarks, domain names and certain other intellectual properties used by airline businesses
(excluding Azul), TudoAzul and Azul Viagens.
| | |
| 55 | |
| | AZUL S.A. Notes to the interim condensed individual and consolidated financial statements June 30, 2023 (In thousands of Brazilian reais – R$, unless otherwise indicated) |
| | |
| 36.3 | Issuance of Senior Debt Securities with Guarantee and Maturity in 2028 |
On July 20, 2023, the Company, through its subsidiary Azul Secured,
finalized a private offering of senior debt securities with priority guarantee, maturing in 2028, with a coupon of 11.9% p.a. in the amount
of US$800 million("Notes"). The accrued interest will be paid quarterly, starting November 28, 2023.
The offer is part of the Company's comprehensive and ongoing restructuring
plan to optimize the capital structure and increase the liquidity position. The debt securities will be guaranteed by the Company and
its subsidiaries ALAB, IntelAzul S.A., ATS Viagens e Turismo Ltda., Azul IP Cayman Holdco Ltd. and Azul IP Cayman Ltd. The
guarantees granted are shared with the "exchange offer” made by the company as detailed in note 36.2 of these interim financial
statements.
The shared guarantees comprise certain receivables generated by
TudoAzul (loyalty program), by Azul Viagens (travel package business) and certain brands, domain names and certain other intellectual
properties used by the airline businesses (excluding Azul Cargo), TudoAzul and Azul Travel.
Liquid proceeds will be used to pay certain debts, obligations
and other corporate purposes.
The accounting impacts to be recorded in a subsequent period arising
from such operations are presented below:
Description |
|
|
|
|
Values |
Banks |
|
|
|
|
3,715,850 |
Senior notes - 2028 |
|
|
|
|
3,831,040 |
Funding costs to be appropriated (*) |
|
|
|
(115,190) |
(*) Includes funding costs captured up to July 31, 2023.
Renata Bandeira Gomes do Nascimento
CRC 1SP 215231/O-3
Controllership, tax and internal control director
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:
September 12, 2023
Azul S.A.
By: /s/ Alexandre Wagner Malfitani
Name: Alexandre Wagner Malfitani
Title: Chief Financial Officer
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