6-K
AZUL SA (AZULQ)
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 February, 2025
Commission File Number: 001-38049
Azul S.A.
(Name of Registrant)
Edifício Jatobá, 8th floor, Castelo Branco Office Park
Avenida Marcos Penteado de Ulhôa Rodrigues, 939
Tamboré, Barueri, São Paulo, SP 06460-040, Brazil.
+55 (11) 4831 2880
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes ¨ No x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Yes ¨ No x
Contents
| Management report | 3 |
|---|---|
| Declaration of the officers on the individual and consolidated<br>financial statements | 12 |
| Declaration of the officers on the independent auditor’s<br>report | 13 |
| Summary report of the statutory audit committee | 14 |
| Independent auditor report | 17 |
| Statements of financial position | 22 |
| --- | --- |
| Statements of operations | 24 |
| Statements of comprehensive income | 25 |
| Statements of changes in equity | 26 |
| Statements of cash flows | 27 |
| Statements of value added | 28 |
| Notes | 29 |
| 2 | |
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Management Comments
I would like to start by thanking our crewmembers for all their hard work throughout 2024. The combination of a weakening Brazilian real, the floods in Rio Grande do Sul state, significant OEM and supply chain issues, and higher-than-expected fuel prices made for a very challenging year, and once again our strong culture proved as essential and unique as ever.
Despite these headwinds, we achieved our full-year guidance by delivering a record EBITDA of more than R$6.0 billion for the year, and we remain confident that the fundamentals of our business are working as expected. The year's results demonstrate the strength of our business model, overcoming challenges that were out of our control. This is a true testament to our incredible crewmembers, who delivered a world-class experience to our 30 million customers this year, each and every day. Once again, we clearly demonstrated our ability to continue increasing profitability despite higher currency.
We also delivered an all-time record revenue of R$19.5 billion in 2024, an increase of 4.4% over the same period last year, mainly driven by a healthy demand environment, robust revenues from our business units, and an increase in capacity. RASK and PRASK remained at high levels at R$42.18 cents and R$39.15 cents, respectively, demonstrating the strength of our business model. Capacity for the year grew 5.2%, supported by 8% domestic growth offset by a temporary reduction in our international network due to a transition in our widebody fleet.
Another important factor contributing to our healthy revenues and margins is our growth beyond the metal, i.e. our diversified business units. They continued their growth trajectories this year, contributing to our healthy revenues and margins. Our loyalty program Azul Fidelidade is now at more than 18 million members, with active users also at all-time highs. Gross billings for the program increased 27% versus 2023. Our vacations business Azul Viagens increased gross billings 63% year over year thanks to strong demand in leisure markets supported by our dedicated network. Finally, our cargo business remained strong, with continued recovery in international markets, where revenues increased almost 9% year over year.
We effectively managed our costs, with a 3.6% decrease in CASK in 2024 compared to 2023, mainly driven by the 7.6% reduction in fuel prices and our cost reduction initiatives and productivity gains to offset 7.8% year-over-year depreciation of the currency and almost 5% inflation over the last 12 months.
Immediate liquidity remained above R$3 billion, representing 16% of the last twelve months’ revenues. Additionally, in January we announced the successful conclusion of our agreements with bondholders, lessors and OEMs, and the closing of the previously announced offering of US$525 million in Superpriority Notes due 2030. This comprehensive balance sheet restructuring included a broad financing plan, focused on improving liquidity and cash generation, and reducing leverage, with more than US$1.6 billion in debt being extinguished from the balance sheet, and improving our cash generation up to US$200 million per year.
By achieving these results, we have strengthened our balance sheet, and we can now turn our attention to executing our margin expansion plan and generating positive free cash flow, as we continue to add larger, next-generation aircraft to our fleet. These aircraft are more fuel-efficient, resulting in lower unit costs and improving revenue across our network.
The year's results demonstrate the strength and uniqueness of our business model, overcoming numerous challenges. Now that 2024 is behind us, I could not be more confident on our ability to build a better Azul with sustainable long-term competitive advantages.
Finally, I would like to thank our stakeholders for supporting our plan and once again believing in Azul and our team. Our best years are ahead of us.
John Rodgerson, CEO of Azul S.A.
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Azul in 2024
| ü <br> Largest airline in Brazil in cities served and departures,<br> with more than 1,000 peak daily flights to more than 150 destinations.<br><br> <br><br><br> <br>ü <br> Operating fleet with 181 aircraft with an average age<br> of 7.2 years (excluding Cessna aircraft)<br><br> <br><br><br> <br>ü <br> 39% of domestic departures and 30% market share (RPK)<br><br> <br><br><br> <br>ü <br> The sixth most on-time airline in the world |
|---|
Aviation market
2024 was, once again, a year of strong demand for Azul, with significant improvements in capacity, revenue and earnings compared to the previous year.
During the year, Azul experienced significant growth in both domestic and international markets, and as a result, operating revenue reached once again a record, as travel demand remained strong. Total operating revenue reached R$19.5 billion, up 4.4% above 2023.
For the full year, EBITDA reached an all-time record of R$6.0 billion. EBITDA adjusted for non-recurring items reached R$6.1 billion, an increase of 16.4% compared to 2023, and an EBITDA margin of 31.1%, above guidance and market consensus.
In 2024, Azul remained focused on its network, ending the year with a capacity increase of 5.2% year-over -year, and a 6.7% increase in RPKs, resulting in a load factor of 81.6%.
| Market Share¹ (Domestic RPK, 2024) | Azul’s Domestic Market¹ (RPK %) |
|---|
¹Source: Anac
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Consolidated Results
The following revised income statement and operating data should be read in conjunction with the annual results comments presented below. Prior periods have been restated to reflect adoption of the new IFRS 16 accounting standards.
| Income statement (R$ million)¹ | 2024 | 2023 | % ∆ |
|---|---|---|---|
| Operating Revenue | |||
| Passenger revenue | 18,123.1 | 17,362.9 | 4.4% |
| Cargo revenue and other | 1,403.1 | 1,331.7 | 5.4% |
| Total operating revenue | 19,526.2 | 18,694.6 | 4.4% |
| Operating Expenses | |||
| Aircraft fuel | (5,583.5) | (5,890.5) | -5.2% |
| Salaries and benefits | (2,722.9) | (2,397.3) | 13.6% |
| Depreciation and amortization | (2,564.0) | (2,314.3) | 10.8% |
| Airport fees | (1,074.8) | (1,056.9) | 1.7% |
| Traffic and customer servicing | (872.5) | (807.6) | 8.0% |
| Sales and marketing | (889.2) | (779.3) | 14.1% |
| Maintenance and repairs | (789.2) | (686.2) | 15.0% |
| Other | (1,522.4) | (1,862.7) | -18.3% |
| Total Operating Expenses | (16,018.5) | (15,794.7) | 1.4% |
| Operating Result | 3,507.7 | 2,899.9 | 21.0% |
| Operating margin | 18.0% | 15.5% | +2.5 p.p. |
| EBITDA | 6,071.7 | 5,214.2 | 16.4% |
| EBITDA margin | 31.1% | 27.9% | +3.2 p.p. |
| Financial Result | |||
| Financial income | 239.1 | 220.1 | 8.6% |
| Financial expenses² | (4,741.2) | (5,363.5) | -11.6% |
| Derivative financial instruments, net² | (119.3) | 19.9 | n.a. |
| Foreign currency exchange, net | (7,160.1) | 1,562.8 | n.a. |
| Result Before Income Taxes | (8,273.8) | (660.8) | 1152.1% |
| Income tax and social contribution | (0.7) | - | n.a. |
| Deferred income tax and social contribution | 39.5 | (39.5) | n.a. |
| Net Result² | (8,235.0) | (700.3) | 1075.9% |
| Net margin | -42.2% | -3.7% | -38.4 p.p. |
| Adjusted Net Result² ³ | (1,057.4) | (2,421.0) | -56.3% |
| Adjusted net margin² ³ | -5.4% | -13.0% | +7.5 p.p. |
| Shares outstanding⁴ | 347.7 | 347.5 | 0.0% |
| EPS | (23.69) | (2.02) | 1075.4% |
| EPS (US$) | (4.40) | (0.40) | 990.1% |
| EPADR (US$) | (13.19) | (1.21) | 990.1% |
| Adjusted EPS³ | (3.04) | (6.97) | -56.3% |
| Adjusted EPS³ (US$) | (0.56) | (1.39) | -59.5% |
| Adjusted EPADR³ (US$) | (1.69) | (4.18) | -59.5% |
¹Operating results were adjusted for non-recurring items.
²Excludes the conversion right related to the convertible debentures.
³Adjusted net result and EPS/EPADR were adjusted for unrealized derivative results and foreign currency. One ADR equals three preferred shares (PNs).
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⁴Shares outstanding do not include the dilution related to the convertible and equity instruments.
| Operating Data¹ | 2024 | 2023 | % ∆ |
|---|---|---|---|
| ASK (million) | 46,292 | 44,006 | 5.2% |
| Domestic | 37,177 | 34,367 | 8.2% |
| International | 9,115 | 9,639 | -5.4% |
| RPK (million) | 37,778 | 35,399 | 6.7% |
| Domestic | 29,920 | 27,180 | 10.1% |
| International | 7,858 | 8,219 | -4.4% |
| Load factor (%) | 81.6% | 80.4% | +1.2 p.p. |
| Domestic | 80.5% | 79.1% | +1.4 p.p. |
| International | 86.2% | 85.3% | +0.9 p.p. |
| Average fare (R$) | 587.1 | 593.0 | -1.0% |
| Passengers (thousands) | 30,871 | 29,278 | 5.4% |
| Block hours | 567,774 | 550,843 | 3.1% |
| Aircraft utilization (hours per day)² | 11.5 | 10.0 | 15.0% |
| Departures | 322,082 | 316,896 | 1.6% |
| Average stage length (km) | 1,183 | 1,159 | 2.1% |
| End of period operating passenger aircraft | 181 | 183 | -1.1% |
| Fuel consumption (thousands of liters) | 1,324,982 | 1,291,297 | 2.6% |
| Fuel consumption per ASK | 28.6 | 29.3 | -2.5% |
| Full-time-equivalent employees | 15,367 | 15,248 | 0.8% |
| End of period FTE per aircraft | 85 | 83 | 1.9% |
| Yield (R$ cents) | 47.97 | 49.05 | -2.2% |
| RASK (R$ cents) | 42.18 | 42.48 | -0.7% |
| PRASK (R$ cents) | 39.15 | 39.46 | -0.8% |
| CASK (R$ cents) | 34.60 | 35.89 | -3.6% |
| CASK ex-fuel (R$ cents) | 22.54 | 22.51 | 0.2% |
| Fuel cost per liter (R$) | 4.21 | 4.56 | -7.6% |
| Break-even load factor (%) | 66.9% | 68.0% | -1.0 p.p. |
| Average exchange rate (R$ per US$) | 5.39 | 5.00 | 7.8% |
| End of period exchange rate | 6.19 | 4.90 | 26.4% |
| Inflation (IPCA/LTM) | 4.83% | 4.46% | +0.4 p.p. |
| WTI (average per barrel, US$) | 76.99 | 77.66 | -0.9% |
| Heating oil (US$ per gallon) | 2.44 | 2.81 | -13.2% |
¹Operating results were adjusted for non-recurring items
²Excludes Cessna aircraft
In 2024, Azul´s total operating revenue increased R$832 million or 4.4%, reaching a record of R$19.5 billion. Passenger revenue increased 4.4% on 5.2% more capacity compared to the same period last year, boosted by strong demand in both domestic and international passenger demand and the outstanding performance of our other businesses.
Cargo revenue and other reached R$1.4 billion in 2024, 5.4% higher than 2023, mainly due to the business growth in the fourth quarter, by expanding our diversified customer base with even more retailers, manufacturers, and e-commerce operators in Brazil who value our reliable, far-reaching logistic solutions.
RASK and PRASK reached R$42.18 cents and R$39.15 cents, respectively, mainly due to the sustainable competitive advantages of our unique business model. Compared to 2023, RASK and PRASK remained flat.
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The table below sets forth the breakdown of our operating revenue and expenses per ASK basis for the periods indicated:
| R$ cents¹ | 2024 | 2023 | % Δ |
|---|---|---|---|
| Operating revenue per ASK | |||
| Passenger revenue | 39.15 | 39.46 | -0.8% |
| Cargo revenue and other | 3.03 | 3.03 | 0.2% |
| Operating revenue (RASK) | 42.18 | 42.48 | -0.7% |
| Operating expenses per ASK | |||
| Aircraft fuel | (12.06) | (13.39) | -9.9% |
| Salaries and benefits | (5.88) | (5.45) | 8.0% |
| Depreciation and amortization | (5.54) | (5.26) | 5.3% |
| Airport fees | (2.32) | (2.40) | -3.3% |
| Traffic and customer servicing | (1.88) | (1.84) | 2.7% |
| Sales and marketing | (1.92) | (1.77) | 8.5% |
| Maintenance and repairs | (1.70) | (1.56) | 9.3% |
| Other operating expenses | (3.29) | (4.23) | -22.3% |
| Total operating expenses (CASK) | (34.60) | (35.89) | -3.6% |
| Operating income per ASK (RASK-CASK) | 7.58 | 6.59 | 15.0% |
¹Operating results were adjusted for non-recurring items.
Operating Expenses
In 2024, Azul recorded operating expenses of R$16.0 billion, compared to R$15.8 billion in 2023, representing an increase of 1.4%, mainly due to the capacity and revenue increase of 5.2% and 4.4%, respectively in addition to investments to growth and maximize fleet availability to benefit from the continued strong demand environment, offset by a 7.6% reduction in jet fuel price per liter and 7.8% average depreciation of the real against the dollar.
The breakdown of our main operating expenses compared to 2023 is as follows:
| § | Aircraft fuel decreased<br>5.2% to R$5,583.5 million, even with a 5.2% increase in total capacity, mostly due to a 7.6% reduction in fuel price per liter (excluding<br>hedges) and a reduction in fuel burn per ASK as a result of the higher utilization of our next-generation fleet. |
|---|---|
| § | Salaries and benefits<br>increased 13.6%, mainly driven by our capacity increase of 5.2% in 2024, a 4.8% union increase in salaries as a result of collective bargaining<br>agreements with unions applicable to all airline employees in Brazil, and the insourcing of certain activities as total cost reduction<br>initiatives. |
| --- | --- |
| § | Depreciation and amortization<br>increased 10.8% or R$249.7 million, driven by the increase in the size of our fleet compared to 2024, as a result of the fleet transformation<br>process. |
| --- | --- |
| § | Airport fees increased<br>1.7% or R$17.9 million, mostly driven by the 5.2% increase in total capacity, partially offset by a reduction in fines related to the<br>individual settlement agreement with the National Treasury Attorney’s Office and the Special Secretariat of the Federal Revenue<br>of Brazil. |
| --- | --- |
| § | Traffic and customer servicing<br>increased R$64.9 million, mostly due to the 5.4% increase in passengers, 1.6% increase in departures, in addition to 4.8% inflation in<br>the period, partially offset by the reduction in onboard services. |
| --- | --- |
| § | Sales and marketing increased<br>14.1%, or R$110.0 million, mostly driven by higher advertising campaigns and regional events, in addition to the 4,4% growth in our passenger<br>revenue, leading to an increase in credit card fees and commissions. |
| --- | --- |
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| --- | |
| § | Maintenance and repairs<br>increased R$103.0 million compared to 2024, mostly driven by a higher number of maintenance events to maximize aircraft availability and<br>support 2024 growth and the 7.8% average depreciation of the real against the dollar, partially offset by savings from insourcing of maintenance<br>events and renegotiations with suppliers. |
| --- | --- |
| § | Other expenses reduced<br>R$340.3 million, mainly driven by cost-reduction initiatives and lower number of judicial claims in the period, partially offset by the 7.8% depreciation<br>of the Brazilian real against the US dollar. |
| --- | --- |
Liquidity and Financing
Azul ended the year with R$3.1 billion in immediate liquidity, including cash and cash equivalents, accounts receivable and short-term investments, R$35.9 million higher than the same period in 2023 even after paying more than R$9.2 billion in leases, loans, deferral repayments, maintenance reserves, interest and capital expenses. This immediate liquidity represents 15.7% of our LTM revenues.
Total liquidity including deposits, maintenance reserves, long-term investments and receivables was R$7.5 billion as of December 31, 2024.
| Liquidity (R$ million) | 2024 | 2023 | % ∆ |
|---|---|---|---|
| Cash, cash equivalents and short-term investments | 1,281.9 | 1,897.3 | -32.4% |
| Accounts receivable | 1,775.4 | 1,124.0 | 58.0% |
| Immediate liquidity | 3,057.3 | 3,021.3 | 1.2% |
| Cash as % of LTM revenue | 15.7% | 16.2% | -0.5 p.p. |
| Long-term investments and receivables | 1,040.5 | 796.5 | 30.6% |
| Security deposits and maintenance reserves | 3,392.7 | 2,293.5 | 47.9% |
| Total Liquidity | 7,490.4 | 6,111.4 | 22.6% |
Azul’s debt amortization schedule as of December 31, 2024, is set out below. The chart converts our dollar-denominated debt to reais using the quarter-end foreign exchange rate of R$6.19 and does not consider the new debt and equitization from our recently announced transaction.
Loans and financing debt amortization as of December31^st^, 2024¹(R$ million converted at R$6.19 reais per dollar)
Excludes convertible debentures, equity instruments and OEMs’ notes.
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Gross debt increased 45.3% or R$10,491.5 million compared to December 31, 2023, mostly due to the 26.4% end of period depreciation of the Brazilian real against the US dollar, which increased our dollar-denominated lease liabilities and loans in R$6.5 billion, in addition to the increase in our lease liabilities related to new aircraft entering our fleet in 2024 at R$2.7 billion, and roughly R$2.3 billion of net loans raised in 2024.
As of December 31, 2024, Azul’s average debt maturity excluding lease liabilities and convertible debentures was 3.8 years, with an average interest rate of 11.3%. Average interest rate on local and dollar-denominated obligations were equivalent to CDI + 4% and 10.9%, respectively.
| Loans and financing (R$ million)¹ | 2024 | 2023 | % ∆ |
|---|---|---|---|
| Lease liabilities | 16,627.8 | 11,805.1 | 40.9% |
| Lease notes | 1,357.0 | 1,030.8 | 31.6% |
| Finance lease liabilities | 710.9 | 650.7 | 9.3% |
| Other aircraft loans and financing | 994.1 | 399.4 | 148.9% |
| Loans and financing | 13,987.3 | 9,299.5 | 50.4% |
| % of non-aircraft debt in local currency | 10% | 10% | +0.1 p.p. |
| % of total debt in local currency | 4% | 4% | -0.0 p.p. |
| Gross debt | 33,677.1 | 23,185.6 | 45.3% |
Considers the effect of hedges on debt, net of aircraft sublease receivables; excludes convertible debentures.
Azul’s leverage ratio measured as net debt to LTM EBITDA was 4.9x, mainly due to the devaluation of the Brazilian real against the US dollar this year, which impacted our dollar-denominated debt. Considering foreign exchange rate at R$5.70 and adjusting the debt for aircraft that entered the fleet in 2024, leverage would have been 4.15x. Considering the pro-forma net debt from our recently announced transaction and foreign exchange rate at R$5.70, Azul’s leverage ratio would have been 3.7x.
| Key financial ratios (R$ million) | 2024 | 2023 | % ∆ |
|---|---|---|---|
| Cash¹ | 4,097.7 | 3,817.9 | 7.3% |
| Gross debt² | 33,677.1 | 23,185.6 | 45.3% |
| Net debt | 29,579.4 | 19,367.7 | 52.7% |
| Net debt / EBITDA (LTM) | 4.9x | 3.7x | 1.2x |
¹Includes cash and cash equivalents, short-term and long-term investments, and receivables.
²Excludes convertible debentures.
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Fleet
As of December 31, 2024, Azul had a passenger operating fleet of 181 aircraft and a passenger contractual fleet of 185 aircraft, with an average aircraft age of 7.2 years excluding Cessna aircraft.
Azul ended the year with approximately 83% of its capacity coming from next-generation aircraft, considerably higher than any competitor in the region.
| Passenger Contractual Fleet | 2024 | 2023 | % ∆ |
|---|---|---|---|
| Airbus widebody | 13 | 11 | 18.2% |
| Airbus narrowbody | 57 | 55 | 3.6% |
| Embraer E2 | 30 | 20 | 50.0% |
| Embraer E1 | 29 | 42 | -31.0% |
| ATR | 32 | 37 | -13.5% |
| Cessna | 24 | 24 | - |
| Total passenger contractual fleet | 185 | 189 | -2.1% |
| Aircraft under operating leases | 171 | 164 | 4.3% |
| Passenger Operating Fleet | 2024 | 2023 | % ∆ |
| --- | --- | --- | --- |
| Airbus widebody | 12 | 11 | 9.1% |
| Airbus narrowbody | 56 | 55 | 1.8% |
| Embraer E2 | 28 | 20 | 40.0% |
| Embraer E1 | 29 | 37 | -21.6% |
| ATR | 32 | 36 | -11.1% |
| Cessna | 24 | 24 | - |
| Total passenger operating fleet | 181 | 183 | -1.1% |
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Environmental, Social and Governance (“ESG”) Responsibility
The table below presents Azul’s key ESG information, according to the Sustainability Accounting Standards Board (SASB) standard for the airline industry.
| ESG Key Indicators | 2024 | 2023 | % Δ |
|---|---|---|---|
| Environmental | |||
| Fuel | |||
| Total fuel consumed per ASK (GJ / ASK) | 1,075 | 1,102 | -2.5% |
| Total fuel consumed (GJ x 1000) | 49,773 | 48,508 | 2.6% |
| Fleet | |||
| Average age of operating fleet¹ (years) | 7.2 | 7.1 | 1.8% |
| Social | |||
| Labor Relations | |||
| Employee gender: male (%) | 59.3% | 59.8% | -0.5 p.p. |
| Employee gender: female (%) | 40.8% | 40.2% | 0.6 p.p. |
| Employee monthly turnover (%) | 0.9% | 0.9% | - |
| Employee covered under collective bargaining agreements (%) | 100% | 100% | - |
| Volunteers (#) | 6,987 | 4,324 | 62% |
| Governance | |||
| Management | |||
| Independent directors (%) | 92% | 91% | 0.7 p.p. |
| Percent of Board members that are women (%) | 25% | 18% | 7.0 p.p. |
| Board of Directors' average age (years) | 59 | 58 | 1.9% |
| Director meeting attendance (%) | 99% | 96% | 3 p.p. |
| Board size (#) | 12 | 11 | 9.1% |
| Participation of women in leadership positions (%) | 38% | 40% | -2 p.p. |
¹Excluding Cessna aircraft
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Declaration of the officers on the individual and consolidated financial statements
In accordance with item VI of article 27 of CVM Resolution No. 80, of March 29, 2022, the Board of Directors declares that it reviewed, discussed and agreed with the individual and consolidated financial statements for the year ended December 31, 2024.
Barueri, February 24, 2025.
John Peter Rodgerson
CEO
Alexandre Wagner Malfitani
Vice President of Finance and Investor Relations
Daniel Tckaz
Technical Vice President
Abhi Manoj Shah
Vice President of Revenue
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Directors' statement on the independent auditor's report
In accordance with item V of article 27 of CVM Resolution No. 80, of March 29, 2022, the Board of Directors declares that it reviewed, discussed and agreed with the opinion expressed in the independent auditor's report on the examination of the individual and consolidated financial statements relating to for the year ending December 31, 2024.
Barueri, February 24, 2025.
John Peter Rodgerson
CEO
Alexandre Wagner Malfitani
Vice President of Finance and Investor Relations
Daniel Tckaz
Technical Vice President
Abhi Manoj Shah
Vice President of Revenue
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Summary report of the statutory audit committee (“SAC”)
Presentation and general information(“SAC”)
The Statutory Audit Committee is an advisory body directly linked to the Board of Directors, with operational autonomy and own budget, for advisory purposes, for:
| (i) | Engaging and removing the independent<br>auditor; |
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| (ii) | Supervising the independent auditor’s<br>activities as to: |
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| (a) | its<br>independence; |
| --- | --- |
| (b) | the quality of the services provided; and |
| --- | --- |
| (c) | the adequacy of the services provided to meet the Company needs; |
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| (iii) | Supervising the Company’s<br>internal controls and internal audit areas; |
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| (iv) | Supervising the activities of<br>the Company’s financial statements preparation function; |
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| (v) | Monitoring the quality and integrity<br>of the Company’s internal control mechanisms; |
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| (vi) | Monitoring the quality and integrity<br>of the Company’s quarterly information, interim and annual financial statements; |
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| (vii) | Monitoring the quality and integrity<br>of the information and measurements disclosed on the basis of adjusted accounting data and non-accounting data that add elements not addressed<br>by the structure of the usual reports on the Company’s financial statements; |
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| (viii) | Assessing and monitoring the Company’s risk exposures, and also requiring in-depth information about<br>policies and procedures regarding: |
| --- | --- |
(a) management fees;
(b) the use of Company assets; and
(c) expenses incurred in the Company’s name;
| (ix) | Assessing and monitoring, together<br>with management and the internal audit function, the adequacy of the Company transactions with related parties and their respective disclosures; |
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| (x) | Preparing the annual summary<br>report to be presented together with the financial statements, containing the description of: |
| --- | --- |
| (a) | its activities, the results and<br>conclusions reached and recommendations made; and |
| --- | --- |
| (b) | any situations in which there<br>is a significant disagreement among Company management, the independent auditor and the Statutory Audit Committee in relation to the Company’s<br>financial statements; |
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| (xi) | Analysis of guarantee proposals<br>and approval for deliberation by the Board of Directors. |
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Summary of statutory audit committeeactivities in 2024
Internal audit and internal controls
| (i) | Review and approval of the major<br>Company risks; |
|---|---|
| (ii) | Analysis and approval of the<br>planning of projects related to obtaining the 404 certification (Sarbanes-Oxley Act) and internal audit to be carried out in 2025; |
| --- | --- |
| (iii) | Monitoring the addressing of<br>deficiencies in internal controls identified in previous years and during the year ended December 31, 2024; |
| --- | --- |
| (iv) | Analysis of the audit work carried<br>out in light of inquiries of independent auditors; |
| --- | --- |
| (v) | Monitoring of the services carried<br>out in 2024; |
| --- | --- |
| (vi) | Analysis and authorization of<br>request of adjustments to the audit plan; and |
| --- | --- |
| (vii) | Monitoring of internal control<br>tests for certification to meet the requirements of Sections 302 and 404 of the Sarbanes-Oxley Act. |
| --- | --- |
Independent audit
| (i) | Replacement of the auditing firm<br>Ernst & Young Auditores Independentes S/S Ltda. by Grant Thornton Auditores Independentes Ltda.; |
|---|---|
| (ii) | Analysis and approval of the<br>information provided by Grant Thornton Auditores Independentes Ltda. for the year ended December 31, 2024; and |
| --- | --- |
| (iii) | Assessment of the planning and<br>strategy of Grant Thornton Auditores Independentes Ltda. for the year 2025. |
| --- | --- |
Individual and consolidated financialstatements
| (i) | Review and recommendation to<br>the Board of Directors as to the approval of the Company’s individual and consolidated financial statements; |
|---|---|
| (ii) | Monitoring of the provisions<br>for risks and accounting estimates; |
| --- | --- |
| 15 |
| --- |
Opinion of the statutory audit committee
In compliance with the legal provisions, the Statutory Audit Committee reviewed the management report and the individual and consolidated financial statements for the year ended December 31, 2024. Based on this review and also considering the information and clarifications provided by the Company management and by Grant Thornton Auditores Independentes Ltda. during the year, the Statutory Audit Committee expressed a favorable opinion on the management report and on the individual and consolidated financial statements for the year ended December 31, 2024, together with the independent auditor’s report issued by Grant Thornton Auditores Independentes Ltda., recommending the Board of Directors to approve them.
Barueri, February 24, 2024.
Sergio Eraldo de Salles Pinto
Member, Coordinator of the Audit Committee and Financial Specialist
Gilberto Peralta
Member of the Audit Committee
Renata Faber Rocha Ribeiro
Member of the Audit Committee
| 16 |
| --- |
(Free translation from the original issued in Portuguese. In the event of any discrepancies, the Portuguese language version shall prevail.)
Independent auditor’s report on the individual and consolidated financial statements
| Grant Thornton Auditores Independentes Ltda.<br><br><br><br><br><br><br><br>Av. José de Souza Campos, 507 - 5^o^ andar Cambuí<br>- Campinas (SP)<br><br><br><br>Brazil<br><br><br><br>T +55 19 2042-1036<br><br><br><br>www.grantthornton.com.br |
|---|
To the Management, Directors, and Shareholders of
Azul S.A.
Barueri – SP
Opinion
We have audited the accompanying individual and consolidated financial statements of Azul S.A. (the Company), identified as parent and consolidated, respectively, which comprise the statement of financial position as of December 31, 2024 and the respective statements of income, of comprehensive income, of changes in equity and of cash flows for the year then ended, and the corresponding explanatory notes, including material accounting policies and other explanatory information.
In our opinion, the financial statements referred to above present fairly, in all material respects, the individual and consolidated financial position of Azul S.A. as of December 31, 2024, its individual and consolidated financial performance and individual and consolidated cash flows for the year then ended, in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) (currently denominated IFRS Accounting Standards).
Basis for opinion
We conducted our audit in accordance with Brazilian and International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the “Auditor’s responsibilities for the audit of the individual and consolidated financial statements” section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical requirements set forth in the Code of Ethics for Professional Accountants and the professional standards issued by the Federal Accounting Council and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our judgment, were of most significance in our audit in the current year. These matters were addressed in the context of our audit of the individual and consolidated financial statements taken as a whole and in forming our opinion on such individual and consolidated financial statements and, therefore, we do not provide a separate opinion on these matters.
| 17 |
| --- |
Revenue from passenger transport (including breakage) (Explanatory Note n^º^ 35)
Reason why the matterwas considered a key audit matter
The Company recognizes passenger transportation revenue after the effective render of the transportation service, with sold and unflown flight segments recorded under "Air traffic liability and loyalty program", net of the estimated revenue from the expiration of unused tickets ("breakage"). Additionally, the ticket sales process and passenger transportation revenue recognition are highly dependent on information technology systems to systematically and accurately record transactions. However, these systems use assumptions and judgments in recognizing breakage revenue, which involves certain assumptions and judgments made by management, such as the expectation of unused ticket expiration, historical data, among others considered by management for revenue recognition. Therefore, this matter was considered a risk area in the current year and, thus, a key audit matter due to the high degree of judgment and uncertainties inherent in the process of determining assumptions and the relevance of the amounts involved.
How the matter was addressedin our audit
Our audit procedures included, among others:
| · | Understanding the automated IT internal<br>controls used by management for recording and controlling passenger transportation revenue activities and estimating revenue from the<br>expiration of unused tickets ("breakage"); |
|---|---|
| · | Performing analytical audit procedures<br>using an automated audit tool called Audit Data Analytics (ADA) for passenger transportation revenues; |
| --- | --- |
| · | On a sample basis, testing through<br>observation procedures, passenger boarding, and verifying the recognition of the respective revenue for a sample of flights; |
| --- | --- |
| · | Performing substantive tests, on<br>a sample basis, to verify if revenue transactions were adequately supported and recognized; |
| --- | --- |
| · | Challenging the assumptions determined<br>by management for breakage calculation, with the assistance of our internal actuarial specialists, to verify the reasonableness of the<br>model used by management and if there were any inconsistent assumptions and/or those that should be reviewed; |
| --- | --- |
| · | Evaluating if the disclosures in<br>the explanatory notes were consistent with the information and representations obtained from management. |
| --- | --- |
Based on the evidence obtained and the audit procedures described above, we consider the procedures adopted by management for recognizing passenger transportation revenue (including breakage), as well as the respective disclosures, are reasonable in the context of the individual and consolidated financial statements taken as a whole.
Going Concern Assessment (Explanatory Notes Nos. 2 and 41)
Reason why the matterwas considered a key audit matter
The individual and consolidated financial statements were prepared by management using the going concern assumption, based on the assumption that the Company is in operation and expects to continue operating for the foreseeable future, at least twelve months from the balance sheet date of the financial statements. This assumption assumes that management does not intend to liquidate the Company or cease its operations, having concluded that there is a reasonable expectation regarding the Company's going concern, supporting the preparation of the individual and consolidated financial statements using this assumption.
The Company incurred a loss of R$ 9,151,371 thousand during the year ended December 31, 2024, and at that date, it had negative equity, both individual and consolidated, amounting to R$ 30,435,270 thousand, as well as consolidated current liabilities exceeding consolidated current assets by R$ 15,684,277 thousand at that date. The actions and measures in progress by the Company's management, described in the explanatory notes, include measures already implemented and ongoing to maintain going concern. The calculations supporting the assumptions of expected profitability and cash flow require management to make judgments with a high degree of subjectivity. Therefore, due to the degree of judgment involved in preparing cash flow projections and evaluating the use of the going concern assumption by the Company's management in preparing the individual and consolidated financial statements, we considered this a significant matter for our audit.
| 18 |
| --- |
How the matter was addressedin our audit
Our audit procedures included, among others:
| · | Analyzing the Company's and its subsidiaries'<br>ability to continue operating in the foreseeable future based on existing factual information and data provided by management; |
|---|---|
| · | Reviewing the methodology and assumptions<br>used by management in the going concern study for the next twelve months from the balance sheet date of the individual and consolidated<br>financial statements and respective cash flows, including the evaluation of relevant subsequent effects up to the issuance date of the<br>aforementioned financial statements; |
| --- | --- |
| · | With the assistance of our internal<br>corporate finance specialists, evaluating the assumptions used by the Company's management in determining cash flow projections, considering<br>the realized results, as well as the consistency of the projections compared to the actual results for the past periods; |
| --- | --- |
| · | Analyzing ongoing restructurings<br>to reduce costs, as well as expected profitability in the foreseeable future to support operations; |
| --- | --- |
| · | Reviewing the debt negotiation schedule<br>and future financing sources; and |
| --- | --- |
| · | Evaluating if the respective disclosures<br>presented by the Company's management were adequate. |
| --- | --- |
Based on the procedures performed, we consider the judgments exercised and assumptions adopted by the Company's management in evaluating the going concern assumption, as well as the respective disclosures provided, to be reasonable in the context of the individual and consolidated financial statements taken as a whole.
Other matters
Statements of value added
The individual and consolidated statements of value added (DVA) for the year ended December 31, 2024, prepared under the responsibility of the Company’s management and presented as supplemental information for IFRS purposes, have been subject to auditing procedures which were performed together with the audit of the Company’s financial statements. In forming our opinion, we evaluated if these statements are reconciled to the financial statements and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in NBC TG 09 – Statement of Value Added. In our opinion, these statements of value added were appropriately prepared, in all material respects, according to the criteria defined in said technical pronouncement and are consistent in relation to the individual and consolidated financial statements taken as a whole.
Audit of the correspondingvalues for the comparative year
The audit of the individual and consolidated financial statements of the Company as of December 31, 2023, which corresponding values are presented for comparison purposes, was conducted under the responsibility of another independent auditor, who issued an unmodified audit report on April 12, 2024.
Other information accompanying the individual and consolidated financial statements and auditor’s report thereon
The Company’s Management is responsible for this other information that is included in the Management Report.
Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of assurance conclusion thereon.
In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise, appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement in the Management Report, we are required to report this fact. We have nothing to report in this regard.
| 19 |
| --- |
Responsibilities of Management and those charged with governance for the individual and consolidated financial statements
Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with accounting practices adopted in Brazil and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) (currently denominated IFRS Accounting Standards), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the individual and consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting in preparing the financial statements, unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with the Company’s and its subsidiaries’ governance are responsible for overseeing the financial reporting process.
Auditor’s responsibility for the audit of the individual and consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements, taken as a whole, are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with Brazilian and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
| · | Identify and assess the risks<br>of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit<br>procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.<br>The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve<br>override of internal control, collusion, forgery, intentional omissions or misrepresentations; |
|---|---|
| · | Obtain an understanding of internal<br>control relevant to the audit to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing<br>an opinion on the effectiveness of the Company’s and its subsidiaries’ internal controls; |
| --- | --- |
| · | Evaluate the appropriateness of<br>accounting policies used and the reasonableness of accounting estimates and related disclosures made by management; |
| --- | --- |
| · | Conclude on the appropriateness<br>of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty<br>exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern.<br>If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures<br>in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions<br>are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause<br>the Company to cease to continue as a going concern; |
| --- | --- |
| · | Evaluate the overall presentation,<br>structure, and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements<br>represent the underlying transactions and events in a manner that achieves fair presentation; and |
| --- | --- |
| · | Obtain sufficient and appropriate<br>audit evidence regarding the financial statements of the entities or business activities within the group to express an opinion on the<br>individual and consolidated financial statements. We are responsible for the direction, supervision, and performance of the group audit<br>and, consequently, for the audit opinion. |
| --- | --- |
| 20 |
| --- |
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we may have identified during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements, including those regarding independence, and communicate to them all relationships and other matters that may reasonably be thought to bear on our independence and, where applicable, related safeguards.
From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the financial statements for the current year and are, therefore, the key audit matters. We describe these matters in our audit report, unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Campinas, February 24, 2025
Grant Thornton Auditores Independentes Ltda.
CRC 2SP-028.281/O-4 F SP
Élica Daniela da Silva Martins
Accountant CRC 1SP-223.766/O-0
| 21 |
| --- | |||||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| Assets | Note | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Current assets | |||||
| Cash and cash equivalents | 6 | 2,015 | 2,809 | 1,210,009 | 1,897,336 |
| Short-term investments | 7 | - | - | 71,898 | - |
| Accounts receivable | 8 | - | - | 1,775,374 | 1,109,408 |
| Aircraft sublease | 9 | - | - | - | 14,592 |
| Inventories | 10 | - | - | 943,578 | 799,208 |
| Deposits | 11 | - | 7,802 | 328,876 | 515,692 |
| Taxes recoverable | 12 | 11 | 4,984 | 203,951 | 219,433 |
| Derivative financial instruments | 25 | - | - | - | 21,909 |
| Related parties | 31 | 1,307,350 | 216,388 | - | - |
| Advances to suppliers | 13 | - | - | 274,282 | 221,051 |
| Other assets | 14 | 2,357 | 2,079 | 850,052 | 245,518 |
| Total current assets | 1,311,733 | 234,062 | 5,658,020 | 5,044,147 | |
| Non-current assets | |||||
| Long-term investments | 7 | - | - | 1,040,454 | 780,312 |
| Aircraft sublease | 9 | - | - | - | 16,210 |
| Deposits | 11 | 65 | 70 | 3,063,786 | 1,777,803 |
| Taxes to recover | 12 | - | - | 36,136 | - |
| Related parties | 31 | 1,570,408 | 1,578,332 | - | - |
| Other assets | 14 | - | - | 411,701 | 143,781 |
| Investments | 16 | 759,173 | 760,782 | - | - |
| Property and equipment | 17 | - | - | 3,034,554 | 2,295,851 |
| Right-of-use assets | 18 | - | - | 11,470,679 | 9,011,558 |
| Intangible assets | 19 | - | - | 1,559,613 | 1,463,247 |
| Total non-current assets | 2,329,646 | 2,339,184 | 20,616,923 | 15,488,762 | |
| Total assets | 3,641,379 | 2,573,246 | 26,274,943 | 20,532,909 |
The accompanying notes are an integral part of these individual and consolidated financial statements.
| 22 |
| --- | |||||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| Liabilities and equity | Note | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Current liabilities | |||||
| Loans and financing | 20 | - | - | 2,207,199 | 1,100,051 |
| Reverse factoring | 24 | - | - | - | 290,847 |
| Leases | 21 | 1,241,318 | 216,388 | 6,314,221 | 3,687,392 |
| Convertible debt instruments | 22 | 124,321 | 25,807 | 124,321 | 25,807 |
| Accounts payable | 23 | 72,674 | 10,651 | 4,147,225 | 2,277,841 |
| Airport taxes and fees | 26 | - | - | 584,739 | 588,404 |
| Air traffic liability and loyalty program | 27 | - | - | 6,326,057 | 5,205,876 |
| Salaries and benefits | 28 | 2,470 | 2,344 | 508,448 | 474,797 |
| Taxes payable | 29 | 956 | 506 | 125,055 | 142,168 |
| Derivative financial instruments | 25 | - | - | 65,375 | 68,905 |
| Provisions | 30 | - | - | 670,722 | 736,430 |
| Related parties | 31 | 5,291 | 52,129 | - | - |
| Other liabilities | - | - | 268,935 | 150,362 | |
| Total current liabilities | 1,447,030 | 307,825 | 21,342,297 | 14,748,880 | |
| Non-current liabilities | |||||
| Loans and financing | 20 | - | - | 12,774,218 | 8,598,861 |
| Leases | 21 | 1,441,847 | 1,443,351 | 15,064,626 | 11,459,019 |
| Convertible debt instruments | 22 | 1,058,047 | 1,175,803 | 1,058,047 | 1,175,803 |
| Accounts payable | 23 | 107,416 | 119,841 | 1,162,396 | 1,320,927 |
| Airport taxes and fees | 26 | - | - | 792,680 | 1,171,679 |
| Taxes payable | 29 | 809 | - | 198,898 | 112,287 |
| Derivative financial instruments | 25 | - | - | - | 840 |
| Deferred income tax and social contribution | 15 | - | 39,526 | - | 39,526 |
| Provisions | 30 | 142 | 30 | 3,508,314 | 2,404,423 |
| Related parties | 31 | 1,083,007 | 683,763 | - | - |
| Provision for loss on investment | 16 | 28,938,351 | 20,130,955 | - | - |
| Other liabilities | - | - | 808,737 | 828,512 | |
| Total non-current liabilities | 32,629,619 | 23,593,269 | 35,367,916 | 27,111,877 | |
| Equity | 32 | ||||
| Issued capital | 2,315,628 | 2,314,821 | 2,315,628 | 2,314,821 | |
| Advance for future capital increase | - | 789 | - | 789 | |
| Capital reserve | 2,066,023 | 2,029,610 | 2,066,023 | 2,029,610 | |
| Treasury shares | (4,334) | (9,041) | (4,334) | (9,041) | |
| Other comprehensive income | 5,917 | 3,106 | 5,917 | 3,106 | |
| Accumulated losses | (34,818,504) | (25,667,133) | (34,818,504) | (25,667,133) | |
| (30,435,270) | (21,327,848) | (30,435,270) | (21,327,848) | ||
| Total liabilities and equity | 3,641,379 | 2,573,246 | 26,274,943 | 20,532,909 |
The accompanying notes are an integral part of these individual and consolidated financial statements.
| 23 |
| --- | |||||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| Years ended | |||||
| Note | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | |
| Passenger revenue | - | - | 18,123,135 | 17,227,728 | |
| Other revenues | - | - | 1,403,073 | 1,326,697 | |
| Total revenue | 35 | - | - | 19,526,208 | 18,554,425 |
| Cost of services | 36 | - | - | (14,310,434) | (15,178,018) |
| - | - | - | - | ||
| Gross profit | - | - | 5,215,774 | 3,376,407 | |
| - | - | - | - | ||
| Selling expenses | - | - | (934,145) | (820,029) | |
| Administrative expenses | (71,401) | (62,428) | (567,457) | (502,190) | |
| Other income (expenses), net | (431) | 71,624 | (323,540) | (393,094) | |
| 36 | (71,832) | 9,196 | (1,825,142) | (1,715,313) | |
| Equity | 16 | (8,855,954) | (1,805,476) | - | - |
| - | - | - | - | ||
| Operating (loss) profit | (8,927,786) | (1,796,280) | 3,390,632 | 1,661,094 | |
| Financial income | 3,269 | 3,824 | 239,058 | 220,141 | |
| Financial expenses | (308,038) | (603,046) | (5,247,414) | (5,608,771) | |
| Derivative financial instruments, net | 437,035 | (25,249) | 317,729 | (238,458) | |
| Foreign currency exchange, net | (395,377) | 79,821 | (7,890,179) | 1,625,064 | |
| Financial result | 37 | (263,111) | (544,650) | (12,580,806) | (4,002,024) |
| Loss before IR and CSLL | (9,190,897) | (2,340,930) | (9,190,174) | (2,340,930) | |
| Current income tax and social contribution | 15 | - | - | (723) | - |
| Deferred income tax and social contribution | 15 | 39,526 | (39,526) | 39,526 | (39,526) |
| Loss for the year | (9,151,371) | (2,380,456) | (9,151,371) | (2,380,456) | |
| Basic loss per common share – R$ | 33 | (0.35) | (0.09) | (0.35) | (0.09) |
| Diluted loss per common share – R$ | 33 | (0.35) | (0.09) | (0.35) | (0.09) |
| Basic loss per preferred share – R$ | 33 | (26.32) | (6.85) | (26.32) | (6.85) |
| Diluted loss per preferred share – R$ | 33 | (26.32) | (6.85) | (26.32) | (6.85) |
The accompanying notes are an integral part of these individual and consolidated financial statements.
| 24 |
| --- | ||
|---|---|---|
| --- | --- | --- |
| Years ended | ||
| December 31, 2024 | December 31, 2023 | |
| Loss for the year | (9,151,371) | (2,380,456) |
| Other comprehensive income | - | - |
| Post-employment benefit | 2,811 | (2,175) |
| Total comprehensive income | (9,148,560) | (2,382,631) |
The accompanying notes are an integral part of these individual and consolidated financial statements
| 25 |
| --- | ||||||||
|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| At December 31, 2022 | 2,313,941 | 61 | (10,204) | 1,970,098 | 5,281 | (23,286,677) | (19,007,500) | |
| Loss for the year | - | - | - | - | - | (2,380,456) | (2,380,456) | |
| Post-employment benefit | 30 | - | - | - | - | (2,175) | - | (2,175) |
| Total comprehensive income | - | - | - | - | (2,175) | (2,380,456) | (2,382,631) | |
| Share buyback | 32 | - | - | (6,826) | - | - | - | (6,826) |
| Share-based payment ^(b)^ | 33 | 880 | 728 | 7,989 | 59,512 | - | - | 69,109 |
| At December 31, 2023 | 2,314,821 | 789 | (9,041) | 2,029,610 | 3,106 | (25,667,133) | (21,327,848) | |
| Loss for the year | - | - | - | - | - | (9,151,371) | (9,151,371) | |
| Post-employment benefit | 30 | - | - | - | - | 2,811 | - | 2,811 |
| Total comprehensive income | - | - | - | - | 2,811 | (9,151,371) | (9,148,560) | |
| Share repurchase, disposal and transfers | 32 | - | - | 4,707 | (7,303) | - | - | (2,596) |
| Share-based payment ^(b)^ | 33 | 807 | (789) | - | 43,716 | - | - | 43,734 |
| At December 31, 2024 | 2,315,628 | - | (4,334) | 2,066,023 | 5,917 | (34,818,504) | (30,435,270) | |
| (a) | Advance for future capital increase. | |||||||
| --- | --- | |||||||
| (b) | Refers to the receipt of the exercise<br>of share options and the vesting of share-based compensation plans (Stock Options and RSU), net of income tax relating to the transfer<br>of RSU. | |||||||
| --- | --- |
The accompanying notes are an integral part of these individual and consolidated financial statements.
| 26 |
| --- | |||||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| Years ended | |||||
| December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||
| Cash flows from operating activities | |||||
| Loss for the year | (9,151,371) | (2,380,456) | (9,151,371) | (2,380,456) | |
| Result reconciliation items | |||||
| Depreciation and amortization | - | - | 2,563,982 | 2,404,223 | |
| Gain (loss) from impairment of assets | - | - | (143,790) | (245,636) | |
| Derivative financial results, net | (437,035) | 25,249 | (317,729) | 238,458 | |
| Share-based payment | - | - | 43,455 | 71,643 | |
| Foreign currency exchange, net | 393,715 | (79,073) | 7,736,026 | (1,616,363) | |
| Financial result | 317,328 | 601,009 | 5,018,405 | 5,313,867 | |
| Tax transaction | - | - | (252,968) | - | |
| Provisions, net | 112 | 3,221 | (145,985) | (160,957) | |
| Recovery of expenses and write-offs of other assets | - | - | (855,441) | 269,486 | |
| Result from modification of lease and provision | - | - | (221,391) | (204,017) | |
| Result of write-offs of fixed assets, right of use, intangible assets and inventories | - | - | 143,417 | 297,349 | |
| Deferred income tax and social contribution | (39,526) | 39,526 | (39,526) | 39,526 | |
| Sale and leaseback | - | - | (91,613) | 6,356 | |
| Equity | 8,855,954 | 1,805,476 | - | - | |
| Reconciled result | (60,823) | 14,952 | 4,285,471 | 4,033,479 | |
| Changes in operating assets and liabilities | |||||
| Accounts receivable | - | - | (292,029) | 876,955 | |
| Aircraft sublease | - | - | - | 19,485 | |
| Inventories | - | - | (159,409) | (153,502) | |
| Deposits | 5 | 7 | (455,229) | (453,090) | |
| Taxes recoverable | 4,973 | 6,588 | (20,284) | 16,312 | |
| Derivative financial results, net | - | - | (101,767) | (137,998) | |
| Other assets | 8,525 | 98 | (575,798) | (128,116) | |
| Accounts payable | (3,915) | 10,629 | 855,534 | (92,878) | |
| Airport taxes and fees | - | - | 79,824 | 227,996 | |
| Air traffic liability and loyalty program | - | - | 1,409,877 | 1,134,387 | |
| Salaries and benefits | 126 | (3,333) | 128,555 | 13,151 | |
| Taxes payable | 837 | (1,008) | 77,881 | (26,793) | |
| Provisions | - | - | (423,132) | (237,456) | |
| Other liabilities | - | - | 50,679 | 72,589 | |
| Total changes in operating assets and liabilities | 10,551 | 12,981 | 574,702 | 1,131,042 | |
| Interest paid | (97,523) | (100,928) | (2,073,149) | (1,724,830) | |
| Net cash provided (used) by operating activities | (147,795) | (72,995) | 2,787,024 | 3,439,691 | |
| Cash flows from investing activities | |||||
| Short and long-term investments | - | - | (101,219) | - | |
| Restricted cash | - | - | - | 6,145 | |
| Sale and leaseback | - | - | 29,346 | 91,688 | |
| Property and equipment | - | - | (681,329) | (464,354) | |
| Capitalized maintenance | - | - | (577,517) | (338,990) | |
| Intangible assets | - | - | (234,936) | (168,971) | |
| Net cash used by investing activities | - | - | (1,565,655) | (874,482) | |
| Cash flows from financing activities | |||||
| Loans and financing | |||||
| Proceeds | 250,000 | - | 3,209,990 | 4,733,292 | |
| Repayment | (250,000) | - | (1,723,166) | (1,907,123) | |
| Costs | (4,446) | (119,362) | (104,903) | (486,658) | |
| Reverse factoring | - | - | (496,286) | (831,477) | |
| Lease | - | - | (2,803,166) | (2,353,262) | |
| Convertible debt instruments | - | (542,496) | - | (542,496) | |
| Related parties | 153,811 | 734,901 | - | - | |
| Advance for future capital increase | 18 | 789 | 18 | 789 | |
| Capital increase | - | 819 | - | 819 | |
| Treasury shares | (2,596) | (6,826) | (2,596) | (6,826) | |
| Net cash provided (used) by financing activities | 146,787 | 67,825 | (1,920,109) | (1,392,942) | |
| Exchange rate changes on cash and cash equivalents | 214 | (138) | 11,413 | 56,721 | |
| Increase (decrease) in cash and cash equivalents | (794) | (5,308) | (687,327) | 1,228,988 | |
| Cash and cash equivalents at the beginning of the years | 2,809 | 8,117 | 1,897,336 | 668,348 | |
| Cash and cash equivalents at the end of the years | 2,015 | 2,809 | 1,210,009 | 1,897,336 |
The accompanying notes are an integral part of these individual and consolidated financial statements.
| 27 |
| --- | ||||||
|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- |
| Years ended | ||||||
| Note | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | ||
| Gross sales revenue | ||||||
| Passenger revenue | 35 | - | - | 18,125,685 | 17,229,732 | |
| **** | Other revenues | 35 | - | - | 1,506,303 | 1,487,286 |
| **** | Expected loss with accounts receivable | 8 | - | - | (490) | (3,150) |
| - | - | 19,631,498 | 18,713,868 | |||
| Inputs acquired from third parties | ||||||
| Aircraft fuel | - | - | (5,583,503) | (5,890,485) | ||
| Materials, energy, third-party services and others | (38,214) | (19,092) | (5,078,841) | (6,195,152) | ||
| Insurances | (7,265) | (12,245) | (79,588) | (89,492) | ||
| 36 | (45,479) | (31,337) | (10,741,932) | (12,175,129) | ||
| Gross value added | (45,479) | (31,337) | 8,889,566 | 6,538,739 | ||
| Retentions | 36 | |||||
| Depreciation and amortization | - | - | (2,563,982) | (2,404,223) | ||
| Impairment of assets | - | - | 143,790 | 245,636 | ||
| Net value added | (45,479) | (31,337) | 6,469,374 | 4,380,152 | ||
| Value added received in transfers | ||||||
| Equity | 16 | (8,855,954) | (1,805,476) | - | - | |
| Financial income | 37 | 3,269 | 3,824 | 239,058 | 220,141 | |
| Other revenues | - | 71,703 | - | - | ||
| (8,852,685) | (1,729,949) | 239,058 | 220,141 | |||
| Value added to be distributed | (8,898,164) | (1,761,286) | 6,708,432 | 4,600,293 | ||
| Distribution of value added: | ||||||
| Personnel ^(a)^ | ||||||
| Salaries and wages | 20,317 | 23,838 | 1,791,840 | 1,611,215 | ||
| Benefits | 3,365 | 6,261 | 405,951 | 331,550 | ||
| F.G.T.S. | 573 | 580 | 158,981 | 140,134 | ||
| 36 | 24,255 | 30,679 | 2,356,772 | 2,082,899 | ||
| Taxes, fees and contributions | ||||||
| Federal ^(b)^ | (37,428) | 40,017 | 351,179 | 388,760 | ||
| State | - | - | 52,033 | 53,141 | ||
| Municipal | - | - | 11,895 | 8,733 | ||
| (37,428) | 40,017 | 415,107 | 450,634 | |||
| Third party capital | ||||||
| Financial expenses | 37 | 308,038 | 603,046 | 5,247,414 | 5,608,771 | |
| Derivative financial instruments, net | 37 | (437,035) | 25,249 | (317,729) | 238,458 | |
| Foreign currency exchange, net | 37 | 395,377 | (79,821) | 7,890,179 | (1,625,064) | |
| Rentals | 36 | - | - | 268,060 | 225,051 | |
| 266,380 | 548,474 | 13,087,924 | 4,447,216 | |||
| Own capital | ||||||
| **** | Loss for the year | (9,151,371) | (2,380,456) | (9,151,371) | (2,380,456) | |
| (a) | Not including INSS in the amount<br>of R$1,975 in the parent company R$366,100 in the consolidated, as it is in the federal tax line. | |||||
| --- | --- | |||||
| (b) | Includes deferred income tax and<br>social contribution accounted for in the parent company. | |||||
| --- | --- |
The accompanying notes are an integral part of these individual and consolidated financial statements.
| 28 |
| --- | | 1. | OPERATIONS | | --- | --- |
Azul S.A. (“Azul”), together with its subsidiaries (“Company”) is a corporation governed by its bylaws, as per Law No. 6404/76 and by the corporate governance level 2 listing regulation of B3 S.A. – Brasil, Bolsa, Balcão (“B3”). The Azul was incorporated on January 3, 2008, and its core business comprises the operation of regular and non-regular airline passenger services, cargo or mail, passenger charter, provision of maintenance and hangarage services for aircraft, engines, parts and pieces, aircraft acquisition and lease, development of frequent-flyer programs, development of related activities and equity holding in other companies since the beginning of its operations on December 15, 2008.
The Azul carries out its activities through its subsidiaries, mainly Azul Linhas Aéreas Brasileiras S.A. (“ALAB”) and Azul Conecta Ltda. (“Conecta”), which hold authorization from government authorities to operate as airlines and ATS Viagens e Turismo Ltda (“Azul Viagens”) for tourism services.
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, 8^th^ floor, in the city of Barueri, state of São Paulo, Brazil.
| 1.1 | Organizationalstructure |
|---|
The Company organizational structure as of December 31, 2024 is as follows:
| 29 |
| --- |
The table below lists the operational activities in which the Azul subsidiaries are engaged, as well as the changes in ownership that occurred in period, when applicable.
| % equity interest | ||||||
|---|---|---|---|---|---|---|
| Company | Type of investment | Main activity | State | Country | December 31, 2024 | December 31, 2023 |
| Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Direct | Holding of equity interests in other companies | George Town | Cayman Islands | 25% | 25% |
| Azul IP Cayman Ltd. (Azul Cayman) | Indirect | Intellectual property owner | George Town | Cayman Islands | 100% | 100% |
| IntelAzul S.A. (IntelAzul) | Direct | Frequent-flyer program | São Paulo | Brazil | 100% | 100% |
| Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Indirect | Holding of equity interests in other companies | George Town | Cayman Islands | 25% | 25% |
| Azul Linhas Aéreas Brasileiras S.A. (ALAB) | Direct | Airline operations | São Paulo | Brazil | 100% | 100% |
| Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Indirect | Holding of equity interests in other companies | George Town | Cayman Islands | 25% | 25% |
| Azul Conecta Ltda. (Conecta) | Indirect | Airline operations | São Paulo | Brazil | 100% | 100% |
| ATS Viagens e Turismo Ltda. (Azul Viagens) | Indirect | Travel packages | São Paulo | Brazil | 100% | 100% |
| ATSVP Viagens Portugal, Unipessoal LDA (Azul Viagens Portugal) | Indirect | Travel packages | Lisbon | Portugal | 100% | 100% |
| Azul IP Cayman Holdco Ltd. (Azul Cayman Holdco) | Indirect | Holding of equity interests in other companies | George Town | Cayman Islands | 25% | 25% |
| Cruzeiro Participações S.A (Cruzeiro) | Indirect | Holding of equity interests in other companies | São Paulo | Brazil | 100% | 100% |
| Azul Investments LLP (Azul Investments) | Indirect | Funding | Delaware | USA | 100% | 100% |
| Azul SOL LLC (Azul SOL) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Azul Finance LLC (Azul Finance) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Azul Finance 2 LLC (Azul Finance 2) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Blue Sabiá LLC (Blue Sabiá) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Canela Investments LLC (Canela) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Canela Turbo Three LLC (Canela Turbo) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Azul Saira LLC (Azul Saira) | Indirect | Aircraft financing | Delaware | USA | 100% | 100% |
| Azul Secured Finance LLP (Azul Secured) | Indirect | Funding | Delaware | USA | 100% | 100% |
| Azul Secured Finance 2 LLP (Azul Secured 2) | Indirect | Funding | Delaware | USA | 100% | - |
Azul Secured 2 was incorporated in September, 2024.
| 1.2 | Seasonality |
|---|
The Company’s operating revenues depend substantially on the general volume of passenger and cargo traffic, which is subject to seasonal changes. Our passenger revenues are generally higher during the summer and winter holidays, in January and July respectively, and in the last two weeks of December, which corresponds to the holiday season. Considering the distribution of fixed costs, this seasonality tends to cause variations in operating results between periods of the fiscal year.
| 2. | GOING CONCERN |
|---|---|
| 2.1 | ManagementStatement |
| --- | --- |
The Company's individual and consolidated financial statements were prepared on going concern basis, which assumes that the Company will be able to fulfill its payment obligations in accordance with contracted maturities, which is confirmed by a positive trend in generating operating cash flows.
On performing the Company's going concern assessment, management considered the financial position and results of operations up to December 31, 2024, as well as other foreseen or occurred events up to the date of issuance of these individual and consolidated financial statements.
| 30 |
| --- |
Management understands that even with the existence of a certain degree of uncertainty regarding the Company's ability to fulfill its obligations, the renegotiations carried out between the Company and its creditors, including lessors and other suppliers, as disclosed in notes 20, 21 and 41, corroborate Management's assessment of the Company's reasonable expectation of having sufficient resources to continue operating in the foreseeable future.
Additionally, Management's conclusion is based on the Company's business plan approved by the Board of Directors in December 2024 and the entire debt restructuring process described in these individual and consolidated financial statements. The Company's business plan includes future actions, macroeconomic and aviation sector assumptions, such as the level of demand for air transport with corresponding increase in fees and estimated exchange rates and fuel prices.
Management confirms that all relevant information specific to the individual and consolidated financial statements is being disclosed and corresponds to that used by it in the development of its business management activities.
| 2.2 | Extreme weatherevent |
|---|
During the quarter ended June 30, 2024, there was an extreme weather event with heavy rains in the central region of the State of Rio Grande do Sul in Brazil, making it impossible to provide air services due to flooding and the consequent closure of Salgado Filho Airport in Porto Alegre, the main airport in the region. The Company dedicated humanitarian efforts with the aim of supporting actions carried out by local authorities who acted in response to the emergency with the affected population. In order to face this scenario, the Company began to monitor and establish operational and financial strategies to get through this period until the resumption of operations, increasing flights to nearby cities, in order to serve affected passengers.
Since October 2024, air services gradually resumed at Salgado Filho international airport.
| 2.3 | Tax transaction |
|---|
In 2024, the Company signed an individual settlement agreement with the Attorney General's Office (“AGU”), through the Attorney General's Office of the National Treasury (“PGFN”) and the Special Secretariat of the Federal Revenue of Brazil (“RFB”), for the regularization of tax debts.
The total amount of the renegotiated debts is approximately R$2.9 billion, of which more than R$1.8 billion will be deducted with the use of tax losses and effective reductions of interest, fines and charges, with the remaining balance, paid within 60 months for social security debts and 120 months for other debts.
As collateral, the Company offers: airport slots, media spaces on aircraft and other proprietary vehicles, current contracts with different government agencies, in addition aircraft parts and engines in second-degree.
Adherence to the tax transaction brought economic benefits to the Company, such as reductions in litigation, interest, fines, charges and the use of tax losses.
Due to the ongoing consolidation of the tax transaction, these amounts will change over the next few periods.
| 31 |
| --- |
The movement of tax transactions is as follows:
| Consolidated | ||||
|---|---|---|---|---|
| Description | Airport taxes and fees | Taxes payable | Total | |
| Social security | Other debts | |||
| Renegotiated debts | 1,317,815 | 539,255 | 1,032,262 | 2,889,332 |
| Reductions | (415,392) | (262,770) | (541,366) | (1,219,528) |
| Use of tax losses | - | (193,540) | (343,627) | (537,167) |
| Remaining balance | 902,423 | 82,945 | 147,269 | 1,132,637 |
| At December 31, 2024 | ||||
| Current | 109,743 | 16,589 | 14,727 | 141,059 |
| Non-current | 792,680 | 66,356 | 132,542 | 991,578 |
The effects on the result of the tax transaction are presented below:
| Consolidated | |
|---|---|
| Description | Total |
| Operating result | 57,460 |
| Financial result | 195,508 |
| Total | 252,968 |
| 2.4 | Net workingcapital and capital structure |
| --- | --- |
As of December 31, 2024, the Company's working capital and liquid equity position are as shown below:
| Description | December 31, 2024 | December 31, 2023 | Variation |
|---|---|---|---|
| Net working capital | (15,684,277) | (9,704,733) | (5,979,544) |
| Equity | (30,435,270) | (21,327,848) | (9,107,422) |
The negative variation in the balance of net working capital is mainly due to the increase in liabilities in foreign currency, due to the 27,9% devaluation of the real against the US dollar and the postponement of accounts payable and leases payments.
The negative variation of equity is mainly due to the Company's negative financial result, which exceeds by R$9,190,174 the operating profit due to the foreign currency exchange mentioned above and interest on leases, loans and financing.
| 32 |
| --- |
3. BASIS OF PREPARATION AND PRESENTATION OF THE INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS
The Company’s individual and consolidated financial statements have been prepared in accordance with accounting practices adopted in Brazil and the International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”). The accounting practices adopted in Brazil include those included in the Brazilian corporation law and the technical pronouncements, guidelines and interpretations issued by the Accounting Pronouncements Committee (“CPC”), approved by the Federal Accounting Council (“CFC”) and the Brazilian Securities and Exchange Commission (“CVM”).
The Company’s individual and consolidated financial statements have been prepared based on the real (“R$”) as a functional and presentation currency. All currencies shown are expressed in thousands unless otherwise noted.
The Company operates mainly through its aircraft and other assets that support flight operations, making up its cash generating unit (CGU) and its only reportable segment: air transport.
The preparation of the Company's individual and consolidated financial statements requires Management to make judgments, use estimates and adopt assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. However, the uncertainty related to these judgments, assumptions and estimates can lead to results that require a significant adjustment to the carrying amount of assets, liabilities, income and expenses in future years.
When preparing these individual and consolidated financial statements of the Company, Management used the following disclosure criteria to understand the changes observed in the equity and in its performance, since the end of the last fiscal year ended December 31, 2023, disclosed on April 12, 2024: (i) regulatory requirements; (ii) relevance and specificity of the information; (iii) informational needs of users of the individual and consolidated financial statements; and (iv) information from other entities participating in the passenger air transport market.
As a consequence of the improvements made to the presentation of some items in the statements of cash flows and costs and expenses by nature, the following reclassifications were carried out to ensure comparability of balances from the previous year:
| Consolidated | |||
|---|---|---|---|
| December 31, 2023 | |||
| Statements of Cash Flows | As reported | Reclassifications | Reclassified |
| Changes in operating assets and liabilities | |||
| Advances to suppliers | (2,888,463) | 2,888,463 | - |
| Accounts payable | 2,795,585 | (2,888,463) | (92,878) |
| Total | (92,878) | - | (92,878) |
The individual and consolidated financial statements have been prepared based on the historical cost, except for the items significant:
| 33 |
| --- |
Fair value:
· Long-term investments –TAP Bond;
· Derivative financial instruments; and
· Debenture conversion right.
Other:
· Investments accounted for under the equity method.
| 3.1 | Approval andauthorization for issue of the individual and consolidated financial statements |
|---|
The approval and authorization for issue of these individual and consolidated financial statements occurred at the Board of Directors’ meeting held on February 24, 2025.
| 4. | MATERIAL ACCOUNTING POLICIES AND PRACTICES |
|---|
The material accounting policies and practices adopted by the Company are described in each corresponding note, except those that refer to more than one note, described below. The accounting policies have been consistently applied for the comparative years presented and for the Company’s individual and consolidated financial statements.
| 4.1 | Consolidation |
|---|
The consolidated financial statements include information about the Company and its subsidiaries in which it held direct or indirect control. Control of a subsidiary is achieved when the Company is exposed, or has rights, to variable returns in such subsidiaries and has the power to influence the investee's operating and financial decisions.
The financial statements of the subsidiaries have been prepared using the same accounting policies as the Company.
All assets, liabilities, equity, income and expenses related to transactions between related parties are eliminated in full in the consolidation process.
| 4.2 | Impairment |
|---|
An annual review for impairment indicators to assess events or changes in economic, technological, or operating conditions that may indicate that an asset is impaired.
The recoverable amount of an asset or cash-generating unit is the higher of its fair value, less costs to sell and its value in use. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, a provision for impairment is set up by adjusting the carrying amount.
The previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset's recoverable amount. The reversal is limited, so that the carrying amount of the asset does not exceed its recoverable amount, nor does it exceed the carrying amount previously determined, net of depreciation or amortization.
| 34 |
| --- |
In estimating the asset's value in use, estimated future cash flows are discounted to present value, using a pre-tax discount rate that reflects the weighted average cost of capital for the cash-generating unit.
| 4.3 | Statement ofvalue added (“SVA”) |
|---|
Its purpose is to evidence the wealth generated by the Company and its distribution during a given year, and is presented by the Company as required by Brazilian corporate law as part of its individual financial statements and as supplementary information to the consolidated financial statements, as it is not an expected or mandatory statement according to IFRS standards, being prepared based on information obtained from the accounting records following the provisions contained in CPC 09 - Statement of value added.
| 4.4 | Main accountingestimates |
|---|
As disclosed in note 3, Management makes judgments that have a significant effect on the amounts recognized in the individual and consolidated financial statements, namely:
| Description | Note |
|---|---|
| Provision expected loss with accounts receivable | 8 |
| Provision expected loss with inventories | 10 |
| Provision for losses with maintenance reserves | 11 |
| Provision expected loss taxes withheld | 12 |
| Provision expected loss advances to suppliers | 13 |
| Impairment of property and equipment | 17 |
| Analysis of the recoverable value of goodwill and slots | 19 |
| Revenue from ticket breakage and loyalty programs | 27 |
| Provision for return of aircraft and engines | 30.1.1 |
| Provision for tax, civil and labor risks | 30.1.2 |
| Provision for post-employment benefit | 30.1.3 |
The Company continually reviews the assumptions used in its accounting estimates. The effect of revisions on accounting estimates is recognized in the financial statements in the year in which such revisions are made.
| 4.5 | New relevantaccounting standards, changes and interpretations effective 2024 |
|---|
The following accounting standards came into effect on January 1, 2024 and did not significantly impact on the Company's balance sheet or income statement.
| Norm | Charge |
|---|---|
| CPC 26 – equivalent to IAS 1 | Classification of liabilities as current and non-current |
| CPC 06 – equivalent to IFRS 16 | Lease liabilities in a sale and leaseback transaction |
| CPC 03 – equivalent to IAS 7 | Reverse factoring |
| CPC 40 – equivalent to IFRS 7 | Reverse factoring |
| CPC 09 | Clarification of the requirements for applying the standard and concept for preparation and dissemination. |
| 35 |
| --- |
| 4.6 | New relevantaccounting standards, changes and interpretations effective from 2025 |
|---|
The following accounting standards will into force from January 1, 2025, and Management is analyzing the impacts on the Company's balance sheet or statement of operations.
| Norm | Charge |
|---|---|
| CPC 02 – equivalent to IAS 21 | Lack of convertibility between currencies |
| CPC 40 – equivalent to IFRS 7 | Classification and measurement of financial instruments |
| CPC 48 – equivalent to IFRS 9 | Classification and measurement of financial instruments |
| CPC 18 – equivalent to IAS 28 | Application of the equity method for the measurement of investments in subsidiaries |
| ICPC 09 | Review for writing correction and reference |
| IFRS 18 | New presentation and disclosure requirements in financial statements |
| IFRS 19 | Reduced disclosures for subsidiaries without public accountability |
| 4.7 | Foreign currencytransactions |
| --- | --- |
Foreign currency transactions are recorded at the exchange rate in effect at the date the transactions take place. Monetary assets and liabilities designated in foreign currency are determined based on the exchange rate in effect on the balance sheet date, and any difference resulting from currency conversion is recorded under the heading “Foreign currency exchange, net” in the statements of operation.
The exchange rates to Brazilian reais are as follows:
| Exchange rate | ||||||
|---|---|---|---|---|---|---|
| Final rate | Average rate | |||||
| Years ended | ||||||
| Description | December 31, 2024 | December 31, 2023 | Variation % | December 31, 2024 | December 31, 2023 | Variation % |
| U.S. dollar | 6.1923 | 4.8413 | 27.9% | 5.8369 | 4.9553 | 17.8% |
| Euro | 6.4363 | 5.3516 | 20.3% | 6.2275 | 5.3325 | 16.8% |
| 5. | SEGMENT INFORMATION | |||||
| --- | --- |
The Company considers that it has a single reportable segment: air transport. This segment corresponds to 98.7% (99.0% as of December 31, 2023) of the Company's revenues. The Company's activities have functional relationship, making them inseparable from other revenues and reflects the way in which the Company's Management analyzes financial information to make decisions. The main decision makers are the Company’s directors.
The Company segregates revenues as shown below:
| Consolidated | ||||
|---|---|---|---|---|
| Revenue | December 31, 2024 | % | December 31, 2023 | % |
| Air transport | 19,278,094 | 98.7% | 18,374,696 | 99.0% |
| Other revenues | 248,114 | 1.3% | 179,729 | 1.0% |
| Total | 19,526,208 | 100.0% | 18,554,425 | 100.0% |
| 36 |
| --- | | 6. | CASH AND CASH EQUIVALENTS | | --- | --- | | 6.1 | Accountingpolicies | | --- | --- |
Cash and cash equivalents include cash balances, bank deposits and short-term investments with immediate liquidity, which are readily convertible into a known amount of cash with an insignificant risk of change in value.
| 6.2 | Breakdownof cash and cash equivalents | ||||
|---|---|---|---|---|---|
| Parent company | Consolidated | ||||
| --- | --- | --- | --- | --- | --- |
| Description | Weighted average rate p.a. | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Cash and bank deposits | - | 1,960 | 1,709 | 167,998 | 271,857 |
| Cash equivalents: | |||||
| Bank Deposit Certificate – CDB | 92.1% of CDI | - | - | 698,979 | 1,354,020 |
| Repurchase agreements | 94.4% of CDI | 55 | 1,100 | 294,470 | 268,432 |
| Time Deposit ^(a)^ | 5.1% | - | - | 48,554 | 2,985 |
| Investment funds | 10.8% | - | - | 8 | 42 |
| 2,015 | 2,809 | 1,210,009 | 1,897,336 | ||
| (a) | Investment in U.S. dollar. | ||||
| --- | --- | ||||
| 7. | SHORT AND LONG-TERM INVESTMENTS | ||||
| --- | --- | ||||
| 7.1 | Accountingpolicies | ||||
| --- | --- |
In the presentation and measurement of the financial investments, the Company considers the provisions of CPC 48 - Financial Instruments, equivalent to IFRS 9, which determines that financial assets should be initially measured at fair value less costs directly attributable to their acquisition. In turn, the subsequent measurement is divided into two categories:
7.1.1****Amortized cost
Long-term investments are measured at amortized cost when all the following conditions are met:
| · | The Company plans to hold the<br>financial assets to collect cash flows set forth in contract; |
|---|
· Contractual cash flows represent solely payments of principal and interest (“SPPI”); and
| · | The Company did not opt for the<br>fair value methodology to eliminate measurement inconsistencies or an “accounting mismatch”. |
|---|
7.1.2****Fair value
| · | Through comprehensive income:<br>short and long-term investments shall be measured at fair value through comprehensive income when both<br>of the following conditions are met: |
|---|---|
| (i) | the Company plans to hold the<br>financial asset to collect cash flows set forth in contract and sell the asset; and |
| --- | --- |
| (ii) | contractual cash flows represent<br>SPPI. |
| --- | --- |
| 37 |
| --- | | · | Through profit or loss:<br>it is a residual category, in other words, the Company does not plan to hold the financial asset to collect cash flows set forth in contract<br>and/or sell the asset, it shall be measured at fair value through profit or loss. | | --- | --- |
Financial instruments designated at fair value through profit or loss are used to eliminate or significantly reduce an accounting mismatch and are therefore measured at fair value.
| 7.2 | TAP Bond |
|---|
On March 14, 2016, the Company acquired series A convertible debt issued by TAP (“TAP Bond”) in the amount of €90 million. The TAP Bond has a maturity of 10 years from its issuance, with annual interest of 3.75% until September 20, 2016, and 7.5% in subsequent years. The accrued interest will be paid on the maturity date or early redemption of the securities, whichever occurs first.
TAP Bond is being measured at fair value through profit or loss.
| 7.3 | Breakdownof short and long-term investments | |||
|---|---|---|---|---|
| Consolidated | ||||
| --- | --- | --- | --- | --- |
| Description | Weighted average rate p.a. | Maturity | December 31, 2024 | December 31, 2023 |
| TAP Bond | 7.5% | Mar-26 | 1,004,505 | 780,312 |
| Investment funds | 12.6% | Jun-26 | 107,847 | - |
| 1,112,352 | 780,312 | |||
| Current | 71,898 | - | ||
| Non-current | 1,040,454 | 780,312 | ||
| 8. | ACCOUNTS RECEIVABLE | |||
| --- | --- | |||
| 8.1 | Accountingpolicies | |||
| --- | --- |
Accounts receivables are measured based on the invoiced amount, net of the provision for losses, and approximate the fair value given their short-term nature.
Considering the requirements of CPC 48 - Financial Instruments, equivalent to IFRS 9, the provision for losses on receivables are measured by applying the simplified approach, through the use of historical data, projecting the expected loss over the life of the contract, by segmenting the receivables portfolio into groups that have the same pattern of collection and according to the respective maturities. Additionally, for certain cases, the Company carries out individual analyses to assess the risks of collecting the receivables to recognize an additional provision, if necessary.
| 38 |
| --- |
| 8.2 | Breakdownof accounts receivable | |
|---|---|---|
| Consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| Local currency | ||
| Credit card companies | 720,938 | 498,609 |
| Cargo and travel agencies | 234,036 | 282,654 |
| Travel package financing entities | 19 | 29,203 |
| Loyalty program partners | 37,497 | 114,932 |
| Others | 43,583 | 40,121 |
| Total local currency | 1,036,073 | 965,519 |
| Foreign currency | ||
| Credit card companies | 19,659 | 18,556 |
| Reimbursement receivable for maintenance reserves | 101,487 | 57,528 |
| Airline partner companies | 14,455 | 8,612 |
| Clearinghouse - agencies and cargo | 37,748 | 30,533 |
| Others | 593,676 | 55,894 |
| Total foreign currency | 767,025 | 171,123 |
| Total | 1,803,098 | 1,136,642 |
| Allowance for losses | (27,724) | (27,234) |
| Total net | 1,775,374 | 1,109,408 |
The increase in “Other” accounts receivable in foreign currency mainly refers to contractual guarantees from aeronautical manufacturers and sale and leaseback operations.
In Brazil, credit card receivables are not exposed to credit risk of the cardholder. The balances can easily be converted into cash, when necessary, through advance payment with credit card companies.
During the year ended December 31, 2024, the Company anticipated the receipt of R$11,398,429 in accounts receivable from credit card administrators, without right of return, with an average cost of 0.9% p.m. on the anticipated amount. On the same date, the balance of accounts receivable is net of R$4,434,864 due to such advances (R$3,349,391 on December 31, 2023).
| 39 |
| --- |
The breakdown of accounts receivable by maturity, net of allowances for losses:
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Not past due | ||
| Up to 90 days | 682,785 | 802,461 |
| 90 to 360 days | 553,415 | 167,685 |
| 1,236,200 | 970,146 | |
| Past due | ||
| Up to 90 days | 311,261 | 802,461 |
| 90 to 360 days | 219,495 | 46,085 |
| Over 360 days | 8,418 | 884 |
| 539,174 | 139,262 | |
| Total | 1,775,374 | 1,109,408 |
As of January 31, 2025, of the total amount due, R$68,024 has been received.
The movement of allowances for losses is presented below:
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Balances at the beginning of the year | (27,234) | (24,084) |
| Additions | (27,643) | (34,183) |
| Reversal | 26,051 | 29,098 |
| Write-off of uncollectible amounts | 1,102 | 1,935 |
| Balances at the end of the year | (27,724) | (27,234) |
| 9. | AIRCRAFT SUBLEASE | |
| --- | --- | |
| 9.1 | Accountingpolicies | |
| --- | --- |
The aircraft subleases are transactions whereby the lessee, in this case the Company, subleases an asset that is leased from a third party, thus becoming an intermediate lessor. CPC 06 (R2) – Leases, equivalent to IFRS 16, requires an intermediate lessor to classify the sublease as finance or operating.
Considering that the contracts entered by the Company covered most of the term of the head lease, the subleases were accounted for as follows:
| · | Derecognition of the right-of-use<br>asset related to the head lease and recognition of the receivables arising from the sublease contracts at present value; |
|---|---|
| · | Recognition in profit or loss<br>for the year of any difference between the right of use written off and the receivables arising from the sublease contract at present<br>value; |
| --- | --- |
| · | Maintenance of the lease obligations<br>of the host contract in the statement of financial position; |
| --- | --- |
| 40 |
| --- | | · | Recognition of financial income<br>over the term of the sublease, and | | --- | --- | | · | Recognition of financial expenses<br>relating to obligations of the host lease contract. | | --- | --- |
As of December 31, 2024, the Company did not have any sublease (3 aircraft of December 31, 2023).
| 9.2 | Breakdownof aircraft sublease | |
|---|---|---|
| Consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| 2024 | - | 15,386 |
| 2025 | - | 15,386 |
| 2026 | - | 4,001 |
| Gross sublease | - | 34,773 |
| Accrued interest | - | (3,971) |
| Net sublease | - | 30,802 |
| Current | - | 14,592 |
| Non-current | - | 16,210 |
| 10. | INVENTORIES | |
| --- | --- | |
| 10.1 | Accountingpolicies | |
| --- | --- |
Inventory balances mainly comprise parts and materials for maintenance. Inventories are measured at average acquisition cost plus expenses such as non-recoverable taxes, customs expenses, and transportation expenses. Expenses with freight transfers between operational bases are not capitalized. Provisions for obsolescence of inventories are recorded for items not expected to be realized.
| 10.2 | Breakdownof inventories | |
|---|---|---|
| Consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| Maintenance materials and parts | 966,701 | 825,499 |
| Flight attendance, uniforms and others | 30,430 | 21,367 |
| Provision for losses | (53,553) | (47,658) |
| Total net | 943,578 | 799,208 |
| 41 |
| --- | |
|---|---|
| --- | --- |
11.1****Accounting policies
| 11.1.1 | Security deposits |
|---|
Security deposits are represented by amounts deposited by the Company, mostly to the lessors of aircraft and engines, as guarantee for the fulfillment of the lease contract. Security deposits do not bear interest and are reimbursable at the end of the contracts. Judicial deposits are also classified in this group.
| 11.1.2 | Maintenance reserves |
|---|
Certain master lease agreements provide for the payment of aircraft and engine maintenance reserves made to be held as collateral for the performance of major maintenance activities, and therefore these deposits are reimbursable upon completion of the maintenance event in an amount equal to or less than:
| · | the amount<br>of the maintenance reserve held by the lessor associated with the specific maintenance event; or |
|---|---|
| · | the costs<br>related to the specific maintenance event. |
| --- | --- |
Substantially all these maintenance reserve payments are calculated based on an aircraft utilization measure, such as flight hours or cycles.
As of the date of these individual and consolidated financial statements, we assess whether the maintenance reserve deposits required by the master lease agreements are expected to be recovered through reimbursement of future expenses with carrying out with the performance of qualifying maintenance on the leased assets. Maintenance deposits expected to be recovered are held in assets, and the amounts identified as non-recoverable are readily transferred to statement of operations.
Aircraft and engine maintenance reserves are classified as current or non-current depending on the dates on which the amounts are expected to be recovered.
| 42 |
| --- |
11.2****Breakdown of deposits
| Parent company | Consolidated | |||
|---|---|---|---|---|
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Security deposits | 65 | 7,872 | 688,034 | 418,537 |
| Maintenance reserves | - | - | 2,942,716 | 2,153,310 |
| Total | 65 | 7,872 | 3,630,750 | 2,571,847 |
| Provision for loss | - | - | (238,088) | (278,352) |
| Total net | 65 | 7,872 | 3,392,662 | 2,293,495 |
| Current | - | 7,802 | 328,876 | 515,692 |
| Non-current | 65 | 70 | 3,063,786 | 1,777,803 |
The movement of security deposits and maintenance reserves is as follows:
| Parent company | Consolidated | |||
|---|---|---|---|---|
| Description | Security deposits | Security deposits | Maintenance reserves | Total |
| At December 31, 2022 | 8,486 | 374,960 | 2,164,601 | 2,539,561 |
| Additions | 212 | 234,972 | 357,759 | 592,731 |
| Returns | (220) | (169,432) | (417,725) | (587,157) |
| Provision movement | - | - | 135,284 | 135,284 |
| Use by the lessor | - | - | (221,054) | (221,054) |
| Foreign currency exchange | (606) | (21,963) | (143,907) | (165,870) |
| At December 31, 2023 | 7,872 | 418,537 | 1,874,958 | 2,293,495 |
| Additions | 78 | 220,698 | 397,277 | 617,975 |
| Returns | (8,895) | (57,028) | (183,923) | (240,951) |
| Provision movement | - | - | 113,149 | 113,149 |
| Use by the lessor | - | - | (41,042) | (41,042) |
| Foreign currency exchange | 1,010 | 105,827 | 544,209 | 650,036 |
| At December 31, 2024 | 65 | 688,034 | 2,704,628 | 3,392,662 |
| At December 31, 2024 | ||||
| Current | - | 113,799 | 215,077 | 328,876 |
| Non-current | 65 | 574,235 | 2,489,551 | 3,063,786 |
| At December 31, 2023 | ||||
| Current | 7,802 | 64,788 | 450,904 | 515,692 |
| Non-current | 70 | 353,749 | 1,424,054 | 1,777,803 |
| 43 |
| --- |
The movement of provision for loss of maintenance reserves is as follows:
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Balances at the beginning of the year | (278,352) | (446,342) |
| Movements | ||
| Additions ^(a)^ | (74,324) | (208,287) |
| Reversals ^(a)^ | 149,873 | 163,498 |
| Use by the lessor | 37,600 | 180,073 |
| 113,149 | 135,284 | |
| Foreign currency exchange | (72,885) | 32,706 |
| Balances at the end of the year | (238,088) | (278,352) |
| (a) | Such balances refer to the “Additions”<br>line disclosed on December 31, 2023. | |
| --- | --- | |
| 12. | TAXES RECOVERABLE | |
| --- | --- | |
| 12.1 | Accounting policies | |
| --- | --- |
Recoverable taxes represent rights that will be realized, for the most part, through offsets against taxes payable arising from the Company's operating activities. The Company continually reviews the realizability of these assets. When necessary, provisions are made to ensure that these assets are accounted for at their realizable value.
| 12.2 | Breakdown oftaxes recoverable | |||
|---|---|---|---|---|
| Parent company | Consolidated | |||
| --- | --- | --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| PIS and COFINS | - | - | 76,420 | 73,029 |
| IRPJ and CSLL | - | 4,917 | 317 | 8,315 |
| ICMS | - | - | 53,018 | 19,940 |
| Taxes withheld | 11 | 67 | 114,454 | 121,216 |
| Allowance for withheld taxes losses | - | - | (4,972) | (3,875) |
| Others | - | - | 850 | 808 |
| 11 | 4,984 | 240,087 | 219,433 | |
| Current | 11 | 4,984 | 203,951 | 219,433 |
| Non-current | - | - | 36,136 | - |
| 13. | ADVANCE TO SUPPLIERS |
|---|---|
| 13.1 | Accounting policies |
| --- | --- |
Advances to suppliers represent the advance payment for goods or services that will be delivered in the future and are recognized at the time such amounts are paid. Such amounts are presented net of provision for losses.
| 44 |
| --- |
| 13.2 | Breakdown ofadvances to suppliers | |
|---|---|---|
| Consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| Local currency | 138,352 | 124,866 |
| Foreign currency | 205,203 | 124,861 |
| Provision for loss ^(a)^ | (69,273) | (28,676) |
| 274,282 | 221,051 | |
| (a) | Such balances were presented net<br>in the amount of R$6,424 and R$22,252 in the national currency and foreign currency lines, respectively, disclosed on December 31, 2023. | |
| --- | --- |
The movement of the provision for losses on advances from suppliers is presented below:
| Consolidated | ||||
|---|---|---|---|---|
| Description | December 31, 2024 | December 31, 2023 | ||
| Balances at the beginning of the year | 28,676 | 23,057 | ||
| Additions | 46,559 | 21,556 | ||
| Reversal | (5,962) | (15,937) | ||
| Balances at the end of the year | 69,273 | 28,676 | ||
| 14. | OTHER ASSETS | |||
| --- | --- | |||
| 14.1 | Compositionof other assets | |||
| --- | --- | |||
| Parent company | Consolidated | |||
| --- | --- | --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Insurances | 2,357 | 2,031 | 97,683 | 82,197 |
| Maintenance | - | - | 737,297 | 192,214 |
| Others | - | 48 | 426,773 | 114,888 |
| Total | 2,357 | 2,079 | 1,261,753 | 389,299 |
| Current | 2,357 | 2,079 | 850,052 | 245,518 |
| Non-current | - | - | 411,701 | 143,781 |
| 15. | INCOME TAX AND CONTRIBUTION | |||
| --- | --- | |||
| 15.1 | Accountingpolicies | |||
| --- | --- |
15.1.1****Current taxes
In Brazil, current taxes comprise corporate income tax (“IRPJ”) and social contribution on profit (“CSLL”), which are calculated monthly based on taxable profit, after offsetting tax losses and negative basis social contribution, limited to 30% of real profit. A rate of 15% plus an additional 10% for IRPJ and 9% for CSLL applies to this base.
| 45 |
| --- |
The result from foreign subsidiaries is subject to taxation in accordance with the rates and legislation in force. In Brazil such income is taxed in accordance with Law No. 12,973/14, in which it provides that the parent company, directly or indirectly, of a company abroad adds the results of its subsidiaries when calculating the real profit for the period.
15.1.2****Deferred taxes
Deferred taxes represent credits and debits on tax loss carryforwards, as well as temporary differences between the tax and accounting bases. Deferred tax and contribution assets and liabilities are classified as non-current. When the Company's internal studies indicate that the future use of these credits is not likely, such values are promptly transferred to the result.
Deferred tax assets and liabilities are presented net if there is a legally enforceable right to set off tax liabilities against tax assets, and if they are related to taxes levied by the same tax authority on the same taxable entity; therefore, for presentation purposes, balances of tax assets and liabilities which do not meet the legal criteria for realization are disclosed separately. Deferred tax assets and liabilities shall be measured at the rates that are expected to be applicable in the period in which the asset is realized or the liability is settled, based on the tax rates and legislation in force at the reporting date. The projections for future taxable profits on tax loss carryforwards are prepared based on the business plans and are reviewed and approved annually by the Board of Directors.
15.1.3****Uncertainty over income tax treatments
On January 1, 2019, the accounting standard ICPC 22 – Uncertainty over Income Tax Treatments, equivalent to IFRIC 23, became effective, addressing the application of recognition and measurement requirements when there is uncertainty over income tax treatments.
The Company analyzes the relevant tax decisions of higher courts and whether they conflict in any way with the positions adopted. For known uncertain tax positions, when necessary, the Company establishes a provision based on the legal opinions issued by its legal advisors. The Company evaluates continuously the positions taken in which there are uncertainties about the tax treatment adopted.
| 46 |
| --- |
| 15.2 | Breakdownof deferred taxes | ||||||
|---|---|---|---|---|---|---|---|
| Parent company | Consolidated | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Description | December 31, 2023 | Profit or loss | December 31, 2024 | December 31, 2023 | Profit or loss | December 31, 2024 | |
| Deffered liabilities | |||||||
| Breakage | - | - | - | (195,923) | (98,496) | (294,419) | |
| Foreign currency exchange | (191,219) | (346,691) | (537,910) | (191,219) | (346,691) | (537,910) | |
| Leases | - | - | - | (3,034,585) | (831,567) | (3,866,152) | |
| Others | - | - | - | (1,057) | (956) | (2,013) | |
| Total | (191,219) | (346,691) | (537,910) | (3,422,784) | (1,277,710) | (4,700,494) | |
| Deffered assets ^(a)^ | |||||||
| Allowance for losses | - | - | - | 48,889 | (46,697) | 2,192 | |
| Financial instruments | - | - | - | 21,112 | 1,116 | 22,228 | |
| Foreign currency exchange | 149,986 | 437,878 | 587,864 | 149,986 | 437,878 | 587,864 | |
| Provisions | 1,707 | (753) | 954 | 1,403,989 | 363,027 | 1,767,016 | |
| Leases | - | - | - | 4,199,370 | 1,653,998 | 5,853,368 | |
| 151,693 | 437,125 | 588,818 | 5,823,346 | 2,409,322 | 8,232,668 | ||
| Deferred tax asset reducer | - | (50,908) | (50,908) | (2,440,088) | (1,092,086) | (3,532,174) | |
| Total | 151,693 | 386,217 | 537,910 | 3,383,258 | 1,317,236 | 4,700,494 | |
| Total income tax and deferred social contribution | (39,526) | (39,526) | - | (39,526) | (39,526) | - | |
| (a) | Such balances were totaled in<br>the disclosure on December 31, 2023. | ||||||
| --- | --- | ||||||
| 15.3 | Reconciliationof the effective income tax rate | ||||||
| --- | --- | ||||||
| Parent company | Consolidated | ||||||
| --- | --- | --- | --- | --- | |||
| Years ended | |||||||
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 | |||
| Loss before income tax and social contribution | (9,190,897) | (2,340,930) | (9,190,174) | (2,340,930) | |||
| Combined nominal tax rate | 34% | 34% | 34% | 34% | |||
| Taxes calculated at nominal rates | 3,124,905 | 795,916 | 3,124,659 | 795,916 | |||
| Adjustments to determine the effective rate | |||||||
| Equity | (3,011,024) | (613,862) | - | - | |||
| Unrecorded benefit on tax losses and temporary differences ^(a)^ | (182,623) | (171,934) | (2,857,978) | (890,067) | |||
| Mark to market of convertible instruments | 148,592 | (8,584) | 148,592 | (8,584) | |||
| Permanent differences | (40,324) | (41,062) | (395,579) | 43,764 | |||
| Others ^(b)^ | - | - | 19,109 | 19,445 | |||
| 39,526 | (39,526) | 38,803 | (39,526) | ||||
| Current income tax and social contribution | - | - | (723) | - | |||
| Deferred income tax and social contribution | 39,526 | (39,526) | 39,526 | (39,526) | |||
| 39,526 | (39,526) | 38,803 | (39,526) | ||||
| Effective rate | 0.4% | (1.7%) | 0.4% | (1.7%) | |||
| (a) | Such balances refer to the line<br>"Result from investments not taxed abroad" and "Unrecorded benefit on tax losses and temporary differences" disclosed<br>on December 31, 2023. | ||||||
| --- | --- | ||||||
| (b) | Such balances refer to the line<br>"Rate differential" and "Others" disclosed on December 31, 2023. | ||||||
| --- | --- |
| 47 |
| --- |
The Company has tax losses that are available indefinitely for offset against 30% of future taxable profits on which deferred income tax and social contribution assets have not been created, as it is not likely that future taxable profits will be available for the Company to use them, as below:
| Parent company | Consolidated | |||
|---|---|---|---|---|
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Tax losses and negative bases | 1,197,171 | 924,637 | 21,160,095 | 18,325,916 |
| Tax loss (25%) | 299,293 | 231,159 | 5,290,024 | 4,581,479 |
| Negative social contribution base (9%) | 107,745 | 83,217 | 1,904,409 | 1,649,332 |
| 16. | INVESTMENTS | |||
| --- | --- | |||
| 16.1 | Accountingpolicies | |||
| --- | --- |
In the individual financial statements, investments represent the Company's equity interest in subsidiaries. Investments are initially stated at cost and subsequently adjusted using the equity method. The Company does not have equity interests in companies over which it does not hold the control.
| 16.2 | Direct investments | ||
|---|---|---|---|
| Company equity interest | |||
| --- | --- | --- | --- |
| Description | Paid-up capital | Voting capital | Equity |
| December 31, 2023 | |||
| ALAB | 100% | 100% | (20,130,955) |
| IntelAzul | 100% | 100% | (20,209) |
| Goodwill – IntelAzul | 100% | 100% | 780,991 |
| Azul Cayman Holdco | 25% | 25% | - |
| Total | (19,370,173) | ||
| December 31, 2024 | |||
| ALAB | 100% | 100% | (28,938,351) |
| IntelAzul | 100% | 100% | (21,818) |
| Goodwill – IntelAzul | 100% | 100% | 780,991 |
| Azul Cayman Holdco | 25% | 25% | - |
| Total | (28,179,178) |
| 48 |
| --- | |||
|---|---|---|---|
| --- | --- | ||
| Description | ALAB | IntelAzul | Total |
| --- | --- | --- | --- |
| At December 31, 2022 | (18,392,028) | 761,125 | (17,630,903) |
| Equity | (1,805,133) | (343) | (1,805,476) |
| Share-based payment | 68,381 | - | 68,381 |
| Post-employment benefit | (2,175) | - | (2,175) |
| December 31, 2023 | (20,130,955) | 760,782 | (19,370,173) |
| Equity | (8,854,345) | (1,609) | (8,855,954) |
| Share-based payment | 44,138 | - | 44,138 |
| Post-employment benefit | 2,811 | - | 2,811 |
| December 31, 2024 | (28,938,351) | 759,173 | (28,179,178) |
| Investments | 759,173 | ||
| Provision for loss on investment | (28,938,351) | ||
| 17. | PROPERTY AND EQUIPMENT | ||
| --- | --- | ||
| 17.1 | Accountingpolicies | ||
| --- | --- |
Property and equipment are stated at acquisition cost.
Depreciation is calculated according to the estimated economic useful life of each assets using the straight-line method. The estimates and depreciation methods are reviewed annually, and the effects of any changes are accounted for prospectively.
When there are indications of assets recorded with values that exceed their recovery values, the Company must estimate the recoverable value of the asset.
An item of property and equipment is derecognized upon its disposal or when no future economic benefits are expected from the use of the asset. Any gains or losses arising on the sale or derecognition of an item are determined by the difference between the amount received on the sale and the carrying amount of the asset and are recognized in statements of operation.
The Company receives credit from manufacturers when purchasing certain aircraft and engines, which can be used to pay for maintenance services. These credits are recorded as a reduction in the acquisition cost of aircraft and related engines.
17.1.1****Sales and leaseback transactions
First, sale and leaseback transactions are analyzed within the scope of CPC 47– Revenue from Contracts with Customers, equivalent to IFRS 15, in order to verify whether the performance obligation has been satisfied, and therefore to account for the sale of the asset. If this requirement is not met, it is financing with the asset given as guarantee.
If the requirements related to the performance obligation set out are met, the Company measures a right-of-use asset arising from the sale and leaseback transaction in proportion to the carrying amount of the asset related to the right of use retained by the Company. Accordingly, only the gains or losses related to the rights transferred to the buyer-lessor are recognized.
| 49 |
| --- |
During the year ended December 31, 2024, the Company carried out “sale and leaseback” transactions of three engines and two aircraft, where the revenue, net of sales costs, corresponds to a gain of R$91,613 (loss of R$6,356 on December 31, 2023) being recognized under the heading “Other costs of services provided”.
17.1.2****Advance payments for acquisition of aircraft
Prepayments for the acquisition of aircraft during the manufacturing phase are recorded in fixed assets and are recognized when such amounts are paid.
| 17.2 | Breakdownof property and equipment | |||||
|---|---|---|---|---|---|---|
| Consolidated | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Description | Weighted average rate (p.a.) | December 31, 2023 | Acquisitions | Write-offs | Transfers ^(a)^ | December 31, 2024 |
| Cost | ||||||
| Maintenance materials and parts ^(a)^ | 2,036,144 | 332,469 | (191,944) | (43,654) | 2,133,015 | |
| Equipment | 195,810 | 21,356 | (5,124) | 818 | 212,860 | |
| Aircraft, engines and simulators ^(a)^ | 593,953 | 323,056 | (533,279) | 552 | 384,282 | |
| Improvements | 555,412 | 59,848 | (24,445) | 69,809 | 660,624 | |
| Maintenance ^(a)^ | 44,016 | 75,692 | (34,551) | - | 85,157 | |
| Others | 29,231 | 2,877 | (3,606) | - | 28,502 | |
| Construction in progress | 96,095 | 64,822 | (65,582) | (36,021) | 59,314 | |
| Advance payments for acquisition of aircraft | 298,040 | 738,334 | - | - | 1,036,374 | |
| 3,848,701 | 1,618,454 | (858,531) | (8,496) | 4,600,128 | ||
| Depreciation | ||||||
| Maintenance materials and parts ^(a)^ | 8% | (785,204) | (164,285) | 53,518 | - | (895,971) |
| Equipment | 13% | (120,860) | (25,310) | 4,685 | - | (141,485) |
| Aircraft, engines and simulators ^(a)^ | 7% | (271,104) | (39,385) | 64,084 | - | (246,405) |
| Improvements | 12% | (188,987) | (68,273) | 23,752 | - | (233,508) |
| Maintenance ^(a)^ | 27% | (19,616) | (12,101) | 5,686 | - | (26,031) |
| Others | 8% | (23,289) | (2,482) | 3,597 | - | (22,174) |
| (1,409,060) | (311,836) | 155,322 | - | (1,565,574) | ||
| Property and equipment | 2,439,641 | 1,306,618 | (703,209) | (8,496) | 3,034,554 | |
| Impairment | (143,790) | - | 143,790 | - | - | |
| Total property and equipment, net | 2,295,851 | 1,306,618 | (559,419) | (8,496) | 3,034,554 |
(a) Such balances refer to the “Aircraft” line disclosed on December 31, 2023.
(b) The transfer balances are between the groups “Right-of-use assets” and “Intangible”.
| 50 |
| --- | ||||||
|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- |
| Description | Weighted average rate (p.a.) | December 31, 2022 | Acquisitions | Write-offs | Transfers ^(b)^ | December 31, 2023 |
| Cost | ||||||
| Aircraft ^(a)^ | 2,656,771 | 388,247 | (392,148) | 21,243 | 2,674,113 | |
| Improvements | 524,075 | 104,167 | (97,188) | 24,358 | 555,412 | |
| Equipment and facilities | 222,482 | 30,296 | (56,968) | - | 195,810 | |
| Others | 32,205 | 2,340 | (5,314) | - | 29,231 | |
| Construction in progress | 44,243 | 88,991 | (13,984) | (23,155) | 96,095 | |
| Advance payments for acquisition of aircraft | 109,487 | 192,399 | - | (3,846) | 298,040 | |
| 3,589,263 | 806,440 | (565,602) | 18,600 | 3,848,701 | ||
| Depreciation | ||||||
| Aircraft ^(a)^ | 9% | (965,066) | (230,143) | 119,285 | - | (1,075,924) |
| Improvements | 14% | (214,411) | (71,643) | 97,067 | - | (188,987) |
| Equipment and facilities | 11% | (151,732) | (25,139) | 56,011 | - | (120,860) |
| Others | 8% | (25,888) | (2,715) | 5,314 | - | (23,289) |
| (1,357,097) | (329,640) | 277,677 | - | (1,409,060) | ||
| Property and equipment | 2,232,166 | 476,800 | (287,925) | 18,600 | 2,439,641 | |
| Impairment | (279,077) | - | 135,287 | - | (143,790) | |
| Total property and equipment, net | 1,953,089 | 476,800 | (152,638) | 18,600 | 2,295,851 |
(a) Includes aircraft, engines, simulators and flight equipment.
(b) Transfer balances are between the groups “Property and equipment”, “Right-of-use assents” and “Intangible”
| 18. | RIGHT-OF-USE ASSETS |
|---|---|
| 18.1 | Accountingpolicies |
| --- | --- |
CPC 06 (R2) – Leases, equivalent to IFRS 16, establishes the principles for the recognition, measurement, presentation and disclosure of leasing operations and requires lessees at the start date of the contract to recognize a lease liability to make payments and an asset representing the right to use the underlying asset during the lease term (“ROU”). Lessees must separately recognize interest expenses on the lease liability and the depreciation expense of the right-of-use asset in the statements of operation.
Lessees are also required to reassess the lease liability in the event of certain events, for example, change in the lease term, or a change in future lease payment flows as a result of a change in an index or rate used to determine such payments. In general, the lessee must recognize the remeasurement amount of the lease liability as an adjustment to the right-of-use asset.
Considering the dollar-denominated environment in which the Company raises funds, in determining the discount, the Azul used as a basis the funding rates for loans and financing in foreign currency on the start and/or modification dates of the lease agreements.
| 51 |
| --- |
18.1.1****Componentization of aircraft
At the receipt and initial recognition of right-of-use assets, the Company allocates the total cost of the aircraft between five major components: airframe, auxiliary power unit (“APU”), or propeller landing gear and two engines. The useful life of each component is limited to the final term of the contract/and or the estimated useful life of the asset component, the smaller of the two.
18.1.2****Capitalization of heavy maintenance events
Heavy maintenance events that increase the useful life of assets are capitalized. Such contracts are usually of the “power-by-the-hour” type, in which the amounts owed to maintenance providers are calculated based on the flight hours and cycles.
Subsequently, they are depreciated during the period of use considering the shorter period between the next scheduled maintenance or the end of the lease of the two. Repairs and other routine maintenance are appropriate to the results during the year in which they are incurred.
18.1.3****Recognition of contractual obligationsrelating to return of aircraft
The costs resulting from the maintenance events that will be carried out to return of the aircraft to the lessors are recognized at present value, increasing the value of the asset as a balancing item to an obligation, if they can be reasonably estimated. Assets are depreciated on a straight-line basis over the lease contract term, while liabilities are updated by interest rates and exchange effects.
| 18.2 | Breakdownof right-of-use assets | ||||||
|---|---|---|---|---|---|---|---|
| Consolidated | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Weighted average rate (p.a.) | December 31, 2023 | Acquisitions | Write-offs | Modifications | Transfers ^(a)^ | December 31, 2024 |
| Cost | |||||||
| Aircraft, engines and simulators | 14,279,939 | 2,701,036 | (439,430) | 248,712 | 66,248 | 16,856,505 | |
| Maintenance | 1,552,036 | 744,988 | (105,738) | (12,390) | - | 2,178,896 | |
| Restoration | 1,699,610 | 713,649 | (56,491) | (208,098) | - | 2,148,670 | |
| Others | 324,650 | 64,138 | (40,407) | 2,544 | - | 350,925 | |
| 17,856,235 | 4,223,811 | (642,066) | 30,768 | 66,248 | 21,534,996 | ||
| Depreciation | |||||||
| Aircraft, engines and simulators | 8% | (7,417,554) | (1,185,460) | 439,430 | - | - | (8,163,584) |
| Maintenance | 23% | (616,379) | (362,563) | 95,121 | - | - | (883,821) |
| Restoration | 26% | (701,501) | (445,171) | 54,633 | 211,506 | - | (880,533) |
| Others | 18% | (109,243) | (58,989) | 31,853 | - | - | (136,379) |
| (8,844,677) | (2,052,183) | 621,037 | 211,506 | - | (10,064,317) | ||
| Right-of-use assets, net | 9,011,558 | 2,171,628 | (21,029) | 242,274 | 66,248 | 11,470,679 | |
| Right-of-use assets, net | 9,011,558 | 2,171,628 | (21,029) | 242,274 | 66,248 | 11,470,679 | |
| (a) | The transfer balances are between<br>the groups “Aircraft sublease”, “Inventories”, “Other assets” and “Property and equipment”. | ||||||
| --- | --- |
| 52 |
| --- | |||||||
|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Weighted average rate (p.a.) | December 31, 2022 | Acquisitions | Write-offs | Modifications | Transfers ^(b)^ | December 31, 2023 |
| Cost | |||||||
| Aircraft ^(a)^ | 12,753,324 | 1,063,167 | (833,855) | 1,281,755 | 15,548 | 14,279,939 | |
| Maintenance of aircraft and engines | 1,938,788 | 568,874 | (892,072) | (30,128) | (33,426) | 1,552,036 | |
| Restoration of aircraft and engines | 1,819,438 | 501,864 | (455,967) | (165,725) | - | 1,699,610 | |
| Properties | - | - | - | - | - | - | |
| Others | 226,621 | 21,763 | - | 76,266 | - | 324,650 | |
| 16,738,171 | 2,155,668 | (2,181,894) | 1,162,168 | (17,878) | 17,856,235 | ||
| Depreciation | |||||||
| Aircraft ^(a)^ | 8% | (7,228,226) | (958,351) | 769,937 | - | (914) | (7,417,554) |
| Maintenance of aircraft and engines | 17% | (1,159,612) | (327,401) | 870,634 | - | - | (616,379) |
| Restoration of aircraft and engines | 31% | (628,522) | (557,984) | 455,967 | 29,038 | - | (701,501) |
| Others | 22% | (58,914) | (50,329) | - | - | - | (109,243) |
| (9,075,274) | (1,894,065) | 2,096,538 | 29,038 | (914) | (8,844,677) | ||
| Right-of-use assets | 7,662,897 | 261,603 | (85,356) | 1,191,206 | (18,792) | 9,011,558 | |
| Impairment | (110,349) | - | 110,349 | - | - | - | |
| Right-of-use assets, net | 7,552,548 | 261,603 | 24,993 | 1,191,206 | (18,792) | 9,011,558 |
(a) Includes aircraft, engines and simulators.
(b) Transfer balances are between the groups “Property and equipment”, “Right-of-use assets” and “Intangible”.
| 19. | INTANGIBLE ASSETS |
|---|---|
| 19.1 | Accountingpolicies |
| --- | --- |
19.1.1****Finite useful life
Intangible assets acquired are measured at cost at the time of their initial recognition. After initial recognition, intangible assets with finite useful lives, generally software, are stated at cost, less accumulated amortization, and accumulated impairment losses, where applicable. Intangible assets generated internally, excluding development costs, are not capitalized and the expense is reflected in the statements of operations for the year when it was incurred.
19.1.2****Indefinite useful life
| 19.1.2.1 | Goodwill |
|---|
This category records the values corresponding to the goodwill arising from the business combinations of IntelAzul and Conecta. The goodwill value is tested annually by comparing the carrying value of the CGU with the value in use. Management makes judgments and establishes assumptions to assess the impact of macroeconomic and operational changes, to estimate future cash flows and measure the recoverable value of assets.
| 53 |
| --- |
| 19.1.2.2 | Rights of operations in airports (slots) |
|---|
In the business combination of IntelAzul and Conecta, slots were acquired that were recognized at their fair values on the acquisition date and are not amortized. The estimated useful life of these rights was considered indefinite due to several factors and considerations, including applications and authorizations for permission to operate in Brazil and limited availability of operating rights at the most important airports in terms of air traffic volume. The value of slots is tested annually by comparing the book value with the value in use.
| 19.2 | Breakdownof intangible assets | |||||
|---|---|---|---|---|---|---|
| Consolidated | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Description | Weighted average rate (p.a.) | December 31, 2023 | Acquisitions | Write-offs | Transfers ^(a)^ | December 31, 2024 |
| Cost | ||||||
| Goodwill | - | 901,417 | - | - | - | 901,417 |
| Slots | - | 126,547 | - | - | - | 126,547 |
| Software | - | 776,311 | 300,595 | (178,404) | (37) | 898,465 |
| 1,804,275 | 300,595 | (178,404) | (37) | 1,926,429 | ||
| Amortization | ||||||
| Software | 28% | (341,028) | (201,431) | 175,643 | - | (366,816) |
| (341,028) | (201,431) | 175,643 | - | (366,816) | ||
| Total intangible assets, net | 1,463,247 | 99,164 | (2,761) | (37) | 1,559,613 |
(a) The transfer balances are between the group “Property and equipment”.
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| Description | Weighted average rate (p.a.) | December 31, 2022 | Acquisitions | Write-offs | Transfers ^(c)^ | December 31, 2023 |
| Cost | ||||||
| Goodwill ^(a)^ | 901,417 | - | - | - | 901,417 | |
| Slots ^(b)^ | 126,547 | - | - | - | 126,547 | |
| Software | 946,516 | 251,683 | (422,080) | 192 | 776,311 | |
| 1,974,480 | 251,683 | (422,080) | 192 | 1,804,275 | ||
| Amortization | ||||||
| Software | 19% | (547,957) | (182,264) | 389,193 | - | (341,028) |
| (547,957) | (182,264) | 389,193 | - | (341,028) | ||
| Total intangible assets, net | 1,426,523 | 69,419 | (32,887) | 192 | 1,463,247 |
(a) The transfer balances are between the group “Property and equipment”, “Right-of-use assets” and “Intangible”.
19.3****Impairment of intangible assets withouta finite useful life
On December 31, 2024, the Company carried out annual recoverability tests of the book value, through the discounted cash flow of the cash generating unit.
| 54 |
| --- |
The assumptions used in the impairment tests of goodwill and slots are consistent with the Company's operating plans and internal projections, prepared for a period of five years. After this period, a perpetuity rate of growth of operating projections is assumed. The discounted cash flow that determined the value in use of the cash-generating unit was prepared according to the Company’s business plan approved by the Board of Directors in December 2024.
The following assumptions were considered:
| · | Fleet and capacity: plan<br>for operational fleet, utilization and capacity of aircraft in each route; |
|---|---|
| · | Passenger revenue: historical<br>revenue per seat per kilometer flown with growth in line with the Company's business plan; |
| --- | --- |
| · | Operating costs: specific<br>performance indicators by cost line, in line with the Company's business plan, as well as macroeconomic assumptions; and |
| --- | --- |
| · | Investment needs: aligned<br>with the Company’s business plan. |
| --- | --- |
The macroeconomic assumptions commonly adopted include the Gross Domestic Product (“GDP”) and projections of the US dollar, both obtained from the Focus Report issued by the Central Bank of Brazil, in addition to future kerosene barrel prices and interest rates, obtained from specific Bloomberg disclosures.
The result of the goodwill and slots impairment test demonstrated that the estimated recoverable value is significantly greater than the carrying value allocated to the cash generating unit and, therefore, no adjustment to the recoverable value to be recorded during the year ended December 31, 2024, was identified. To calculate recoverable value, a pre-tax discount rate of 12.4% (11.4% as of December 31, 2023) and a growth rate in perpetuity of 4.8% (3.0% as of December 31, 2023).
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Carrying amount - Goodwill and slots | 1,027,964 | 1,027,964 |
| 20. | LOANS AND FINANCING | |
| --- | --- | |
| 20.1 | Accountingpolicies | |
| --- | --- |
Loans and financing are initially recognized at fair value, less any directly attributable transaction costs. After initial recognition, these financial liabilities are measured at amortized cost using the effective interest method.
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| --- | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| --- | --- | ||||||||
| Parent company | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Effective ratem p.a | Maturity | December 31, 2023 | Funding <br><br>(–) costs | Payment of principal | Payment of interest | Interest incurred | Amortized cost | December 31, 2024 |
| In local currency - R | |||||||||
| Debentures | 17.3% | Nov-24 | - | 245,554 | (250.000) | (21,141) | 21,141 | 4,446 | - |
| Total in R | - | 245,554 | (250.000) | (21,141) | 21,141 | 4,446 | - |
All values are in US Dollars.
| 56 |
| --- | | Consolidated | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Description | Effective rate p.a. | Maturity | December 31, 2023 | Funding <br><br>(–) costs | Payment of principal | Payment of interest | Interest incurred | Foreign currency exchange | Effects of restructuring | Amortized cost | December 31, 2024 | | In foreign currency – US | | | | | | | | | | | | | Senior notes – 2024 | 6.3% | Oct-24 | 332,099 | - | (397.696) | (12,017) | 17,121 | 59,679 | - | 814 | - | | Senior notes – 2026 | 7.8% | Jun-26 | 152,572 | - | - | (13,299) | 12,998 | 43,322 | - | 648 | 196,241 | | Senior notes – 2028 | 13.3% | Aug-28 | 3,922,731 | 905,219 | | (620,516) | 633,483 | 1,325,488 | (7,502) | 37,378 | 6,196,281 | | Senior notes – 2029 | 11.5% | May-29 | 1,165,545 | 41,476 | | (148,653) | 149,819 | 325,472 | - | - | 1,533,659 | | Senior notes – 2030 | 10.9% | May-30 | 2,777,513 | 93,517 | | (335,174) | 337,752 | 775,577 | - | - | 3,649,185 | | Bridge notes – 2025 | 37.8% ^(b)^ | Jan-25 | - | 856,502 | - | - | 18,726 | 65,215 | - | 36,525 | 976,968 | | Aircraft, engines and others | 9.8% | May-26 | 79,086 | 545,797 | - | (36,214) | 40,895 | 99,546 | - | - | 729,110 | | | 11.3% | Jun-27 | - | 104,892 | | (1,819) | 2,616 | 10,021 | - | 435 | 116,145 | | | 5.9% | Mar-29 | 284,279 | - | (183.580) | (11,328) | 9,961 | 45,547 | - | 943 | 145,822 | | | | | 8,713,825 | 2,547,403 | (581.276) | (1,179,020) | 1,223,371 | 2,749,867 | (7,502) | 76,743 | 13,543,411 | | In local currency - R | | | | | | | | | | | | | Working capital | 20.0% | Jan-25 | 29,648 | 982,796 | (477.191) | (9,811) | 44,118 | - | - | 23,079 | 592,639 | | Debentures | 15.2% | Dec-28 | 919,072 | 542,660 | (637.676) | (143,788) | 129,410 | - | 18,173 | 14,007 | 841,858 | | Aircraft, engines and others | 10.0% | May-25 | 12,771 | - | (7.039) | (7,173) | 1,362 | - | - | 79 | - | | | 6.5% | Mar-27 | 23,596 | - | (19.984) | (936) | 833 | - | - | - | 3,509 | | | | | 985,087 | 1,525,456 | (1,141,890) | (161,708) | 175,723 | - | 18,173 | 37,165 | 1,438,006 | | Total in R | | | 9,698,912 | 4,072,859 | (1,723,166) | (1,340,728) | 1,399,094 | 2,749,867 | 10,671 | 113,908 | 14,981,417 | | Current | | | 1,100,051 | | | | | | | | 2,207,199 | | Non-current | | | 8,598,861 | | | | | | | | 12,774,218 |
All values are in US Dollars.
| (a) | This balance refers to the “Working<br>capital” lines with maturities in February 2024 and September 2025, disclosed on December 31, 2023. |
|---|---|
| (b) | The effective rate of 37.8% p.a.<br>is due to the very short maturity period and transaction costs. |
| --- | --- |
| 57 |
| --- | | Consolidated | | | | | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | | Description | Effective<br> rate | Maturity | December<br> 31, 2022 | Funding<br> <br><br> (–) costs | Transfers<br> ^(a)^ | Payment of principal | Payment of interest | Interest incurred | Foreign currency exchange | Effects of restriction<br> ^(b)^ | Amortized cost | December<br> 31, 2023 | | In foreign currency – US | | | | | | | | | | | | | | Senior notes – 2024 | 6.3% | Oct-24 | 2,097,402 | - | (1,596,972) | - | (92,985) | 76,569 | (157,024) | 1,212 | 3,897 | 332,099 | | Senior notes – 2026 | 7.8% | Jun-26 | 3,095,665 | - | (2,725,010) | - | (126,950) | 121,218 | (253,595) | 34,278 | 6,966 | 152,572 | | Sênior notes – 2028 | 13.5% | Aug-28 | - | 3,643,382 | 186,005 | - | (173,450) | 218,885 | 31,138 | - | 16,771 | 3,922,731 | | Sênior notes – 2029 | 11.5% | May-29 | - | - | 1,410,967 | (277,961) | (52,893) | 65,165 | 20,267 | - | - | 1,165,545 | | Sênior notes – 2030 | 10.9% | May-30 | - | - | 2,725,010 | - | (112,453) | 140,308 | 24,648 | - | - | 2,777,513 | | Aircraft, engines and others | 9.3% | Mar-29 | 731,224 | - | (1,067) | (402,994) | (42,727) | 47,720 | (53,401) | - | 5,524 | 284,279 | | | 10.0% | May-26 | - | 79,222 | - | - | - | 196 | (332) | - | - | 79,086 | | | | | 5,924,291 | 3,722,604 | (1,067) | (680,955) | (601,458) | 670,061 | (388,299) | 35,490 | 33,158 | 8,713,825 | | In local currency - R | | | | | | | | | | | | | | Working capital | CDI +3,1% | Feb-24 | 496,997 | 301,098 | - | (770,795) | (59,807) | 58,454 | - | - | 1,544 | 27,491 | | | | Sep-25 | 2,675 | - | - | (546) | (155) | 183 | - | - | - | 2,157 | | Debentures | 16.3% | Dec-28 | 747,170 | 585,661 | - | (431,530) | (123,907) | 131,629 | - | - | 10,049 | 919,072 | | Aircraft and engines and others | 17.4% | May-25 | 19,284 | - | - | (4,697) | (4,714) | 2,868 | - | - | 30 | 12,771 | | | 6.3% | Mar-27 | 42,282 | - | - | (18,600) | (2,111) | 1,912 | - | - | 113 | 23,596 | | | | | 1,308,408 | 886,759 | - | (1,226,168) | (190,694) | 195,046 | - | - | 11,736 | 985,087 | | Total in R | | | 7,232,699 | 4,609,363 | (1,067) | (1,907,123) | (792,152) | 865,107 | (388,299) | 35,490 | 44,894 | 9,698,912 | | Current | | | 1,112,940 | | | | | | | | | 1,100,051 | | Non-current | | | 6,119,759 | | | | | | | | | 8,598,861 |
All values are in US Dollars.
(a) The balances of the transfers are between the headings “Loans and financing” and “Leases”.
(b) This refers mainly to the write-off of borrowing costs considered extinguished in accordance with the requirements of paragraph 33.6 of CPC 48 – Financial instruments equivalent to IFRS 9, which determines that a substantial modification of the terms of an existing financial liability, or part thereof, will be accounted for with an extinguishment of such obligation.
| 58 |
| --- |
20.3 Schedule of amortization of debt
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| 2024 | - | 1,100,051 |
| 2025 | 2,207,199 | 222,201 |
| 2026 | 1,211,585 | 355,930 |
| 2027 | 160,172 | 116,146 |
| 2028 ^(a)^ | 6,267,806 | 3,998,142 |
| After 2028 ^(a)^ | 5,134,655 | 3,906,442 |
| 14,981,417 | 9,698,912 | |
| Current | 2,207,199 | 1,100,051 |
| Non-current | 12,774,218 | 8,598,861 |
(a) Such balances refer to the “After 2027” line disclosed on December 31, 2023.
| 20.4 | New funding |
|---|
20.4.1****Senior notes 2028
In February 2024, the subsidiary Azul Secured issued additional notes in the principal amount of R$740,585 (equivalent to US$148,700), with funding costs of R$13,289, with interest of 11.9% per year paid quarterly and principal due in August 2028. These notes were issued to qualified institutional investors.
20.4.2****Aircraft, engines and others
During the year ended December 31, 2024, the subsidiary Azul Finance raised R$545,797 (equivalent to US$100,664), respectively, with interest equivalent to Sofr 1M + 4.6% p.a., payment monthly interest and maturity in May 2026.
During the year ended of December 31, 2024, the subsidiary Azul Investments raised R$109,057 (equivalent to US$19,462), with funding costs of R$4,165, with interest equivalent to Sofr 3M + 2.6% p.a., quarterly payments and maturity in June 2027.
20.4.3****Working capital
In March 2024, the subsidiary ALAB funding R$450,000, with costs of R$1,802, with interest equivalent to CDI+1.5% p.a. and single payment of interest and principal in the second quarter of 2024.
In June 2024, the subsidiary ALAB funding R$556,000, with costs of R$19,048, interest equivalent to CDI+1.6% p.a. and single payment of interest and principal in January 2025.
| 59 |
| --- |
20.4.4****Debentures
In March 2024, the Board of Directors approved the issuance of simple debentures not convertible into shares, of the type with real guarantee, with additional personal guarantee, in a single series by Azul, in the total amount of R$250,000, with costs of R$4,446, nominal unit value of R$1, interest equivalent to CDI+6.0% p.a., payment of quarterly interest and maturity in March 2027.
In June 2024, the Board of Directors approved the issuance of simple debentures not convertible into shares, of the type with real guarantee, with additional personal guarantee, in a single series, from the subsidiary ALAB, in total value of up to R$600,000. During the year ended December 31, 2024, the subsidiary ALAB issued respectively the amount of R$303,333, with costs of R$3,630, nominal unit value of R$1, interest equivalent to CDI+6.3% p.a., monthly amortization and maturity in June 2026.
20.4.5****Bridge notes 2025
In October 2024, the subsidiary Azul Secured 2 raised R$910,072 (equivalent to US$157,500), with costs of R$53,570 (equivalent to US$9,268), interest equivalent to between 8.3% p.a. and 10.7% p.a. + Sofr Index, maturing in January 2025. In January 2025, the balance paid off.
| 20.5 | Renegotiations |
|---|
The loans and financing below were renegotiated and in accordance with CPC 48 – Financial Instruments, equivalent to IFRS 9, the Company concluded that the renegotiation does not fall within the scope of debt extinguishment.
20.5.1****Working capital
In April 2024, the subsidiary ALAB renegotiated the R$450,000, resulting in the postponement of the payment deadline to June 2024 with additional costs of R$2,354. In June 2024, the balance paid off.
20.5.2****Debentures
During the second quarter, the subsidiary ALAB renegotiated the terms of the debentures, with a total value of R$700,000, with costs of R$2,597 in order to postpone the due date of the principal installments from 2024 to March 2025. There was no change in rates of interest.
In September 2024, the Company renegotiated the terms of the simple debentures not convertible into shares, with a total value of R$250,000, in order to postpone the maturity date to November 2024. In October 2024, the balance was paid off.
20.5.3****Senior notes
In November 2024, the subsidiary Azul Secured renegotiated the terms of the Senior Notes 2028, 2029 and 2030, with amounts of R$177,923, R$41,476 and R$93,517 (equivalent to US$29,392, US$6,851 and US$15,448), respectively, to incorporating the interest payable for a specific period into the principal.
| 60 |
| --- |
| 20.6 | Covenants |
|---|
The Company measures restrictive clauses (“covenants”) in some of its loan and financing contracts, as shown below:
| Covenantrelated to: | Frequency of measurement | Indicators needed to a measurement | Reached |
|---|---|---|---|
| 12^th^ ALAB debentures issue | Quarterly | (i) Immediate Liquidity exceeding R$1 billion. | Reached |
| Annual | (ii) Leverage: equal to or less than 3.75x, as of December 31, 2024, with said ratio being obtained by adjusted net debt / adjusted EBITDA. | Waiver | |
| 9^th^ and 10^th^<br><br> ALAB debenture issue | Annual | (i) adjusted debt service coverage ratio (ICSD) equal to or greater than 1.2;<br><br>(ii) financial leverage less than or equal to 6.5 in 2023; 5.0 in 2024 and 2025; and 4.5 in 2026 and 2027. | Waiver |
| Aircraft, engines and others | Quarterly | (i) The total cash balance on the last day of the quarter is not less than R$1 billion. | Reached |
| Annual | (ii) Leverage: equal to or less than 5.50, with the referred Index being obtained by net debt / EBITDA on the last day of the year. | Waiver |
As per the table above, the Company requested a waiver from the counterparty and obtained them for the year ending December 31, 2024. Therefore, the related debt continues to be classified in these financial statements in accordance with the contractual flow originally established.
- LEASES
21.1Accounting policies
Lease liabilities are recognized, measured, presented, and disclosed in accordance with CPC 06 (R2) – Leases, equivalent to IFRS – 16, against right-of-use assets. Other accounting policies adopted by the Company for leasing operations are presented in note 18.
In 2023, the Company defined the general conditions for renegotiations and began to enter into definitive agreements with its lessors, who agreed to receive negotiable debt securities maturing in 2030 (“Notes”) and with the possibility of settlement in preferred shares of Azul or cash, at the Company's discretion (“Convertible to Equity”).
21.2Lease Composition
| Parent company | Consolidated | |||
|---|---|---|---|---|
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Leases | - | - | 17,338,698 | 12,455,827 |
| Leases – Notes | - | - | 1,356,984 | 1,030,845 |
| Leases – Convertible to equity | 2,683,165 | 1,659,739 | 2,683,165 | 1,659,739 |
| 2,683,165 | 1,659,739 | 21,378,847 | 15,146,411 | |
| Current | 1,241,318 | 216,388 | 6,314,221 | 3,687,392 |
| Non-current | 1,441,847 | 1,443,351 | 15,064,626 | 11,459,019 |
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| --- | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| --- | --- | ||||||||||
| Consolidated | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Average remaining term | Weighted average rate p.a. | December 31, 2023 | Additions | Modifications | Payments | Interest incurred | Transfers ^(a)^ | Write-offs | Foreign currency exchange | December 31, 2024 |
| Lease without purchase option: | |||||||||||
| Aircraft, engines and simulators | 8.0 | 16.2% | 11,567,882 | 2,605,615 | 237,065 | (2,955,177) | 1,890,622 | (226,490) | (17,942) | 3,256,343 | 16,357,918 |
| Others | 4.8 | 11.5% | 237,254 | 64,138 | 2,544 | (83,264) | 24,350 | - | (12,916) | 37,780 | 269,886 |
| Lease with purchase option: | |||||||||||
| Aircraft, engines and simulators | 4.0 | 14.5% | 650,691 | - | (8,150) | (188,206) | 89,187 | - | - | 167,372 | 710,894 |
| Total | 12,455,827 | 2,669,753 | 231,459 | (3,226,647) | 2,004,159 | (226,490) | (30,858) | 3,461,495 | 17,338,698 | ||
| Current | 3,349,056 | 4,928,197 | |||||||||
| Non-current | 9,106,771 | 12,410,501 |
(a) Transfer balances are between the “Leases” classifications.
| Consolidated | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Description | Average<br> remaining term | Weighted<br> average rate p.a. | December<br> 31, 2022 | Additions | Modifications | Payments | Interest<br> incurred | Transfers<br> ^(a)^ | Write-offs | Foreign<br> currency exchange | December<br> 31, 2023 |
| Lease without purchase option: | |||||||||||
| Aircraft ^(a)^ | 8.1 | 16.3% | 13,585,810 | 1,086,943 | 1,090,251 | (2,834,794) | 2,209,708 | (2,544,154) | (103,107) | (922,775) | 11,567,882 |
| Others | 4.6 | 10.3% | 185,527 | 21,763 | 76,266 | (55,934) | 19,194 | - | - | (9,562) | 237,254 |
| Lease with purchase option: | |||||||||||
| Aircraft ^(a)^ | 5.0 | 13.8% | 811,496 | - | 70,806 | (192,819) | 99,766 | (90,815) | - | (47,743) | 650,691 |
| Total | 14,582,833 | 1,108,706 | 1,237,323 | (3,083,547) | 2,328,668 | (2,634,969) | (103,017) | (980,080) | 12,455,827 | ||
| Current | 4,025,948 | 3,349,056 | |||||||||
| Non-current | 10,556,885 | 9,106,771 |
(a) Includes aircraft, engines and simulators.
(b) The balances of the transfers are between the headings “Loans and financing”, “Leases”; “Leases: Notes and Equity”; “Suppliers” and “Other liabilities”.
| 62 |
| --- | |
|---|---|
| --- | --- |
| Consolidated | |||||||
|---|---|---|---|---|---|---|---|
| Description | Average remaining term | Weighted average rate p.a | December 31,2023 | Payments | Interest incurred | Foreign currency exchange | December 31,2024 |
| Financing with lessors – Notes | 5.5 | 14.8% | 1,030,845 | (123,703) | 161,996 | 287,846 | 1,356,984 |
| Total | 1,030,845 | (123,703) | 161,996 | 287,846 | 1,356,984 | ||
| Current | 121,948 | 144,706 | |||||
| Non-current | 908,897 | 1,212,278 |
| Consolidated | ||||||||
|---|---|---|---|---|---|---|---|---|
| Description | Average remaining term | Weighted average rate | December 31, 2022 | Additions | Interest incurred | Transfers ^(a)^ | Foreign currency exchange | December 31, 2023 |
| Financing with lessors - Notes | 6.5 | 14.8% | - | 11,097 | 36,292 | 1,018,404 | (34,948) | 1,030,845 |
| Total | - | 11,097 | 36,292 | 1,018,404 | (34,948) | 1,030,845 | ||
| Current | - | 121,948 | ||||||
| Non-current | - | 908,897 |
(a) Transfer balances are between the “Leases” classifications.
| 63 |
| --- | ||||||||
|---|---|---|---|---|---|---|---|---|
| --- | --- | |||||||
| Parent Company and Consolidated | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Average remaining term | Weighted average rate p.a | December 31, 2023 | Payments | Interest incurred | Transfers ^(a)^ | Foreign currency exchange | December 31, 2024 |
| Financing with lessors – Convertible to equity | 2.6 | 14.4% | 1,659,739 | (61,245) | 294,359 | 226,490 | 563,822 | 2,683,165 |
| Total | 1,659,739 | (61,245) | 294,359 | 226,490 | 563,822 | 2,683,165 | ||
| Current | 216,388 | 1,241,318 | ||||||
| Non-current | 1,443,351 | 1,441,847 |
(a) Transfer balances are between the “Leases” classifications.
| Parent Company and Consolidated | ||||||||
|---|---|---|---|---|---|---|---|---|
| Description | Average remaining term | Weighted average rate p.a. | December 31, 2022 | Additions | Interest incurred | Transfers ^(a)^ | Foreign currency exchange | December 31, 2023 |
| Financing with lessors – Convertible to equity | 3.6 | 14.6% | - | 17,270 | 55,597 | 1,640,771 | (53,899) | 1,659,739 |
| Total | - | 17,270 | 55,597 | 1,640,771 | (53,899) | 1,659,739 | ||
| Current | - | 216,388 | ||||||
| Non-current | - | 1,443,351 |
(a) Transfer balances are between the “Leases” classifications.
| 64 |
| --- | ||
|---|---|---|
| --- | --- | |
| Consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| 2024 | - | 3,570,147 |
| 2025 | 5,219,787 | 2,851,258 |
| 2026 | 3,935,627 | 2,615,718 |
| 2027 | 3,473,086 | 2,226,313 |
| 2028 ^(a)^ | 3,095,203 | 1,987,968 |
| After 2028 ^(a)^ | 13,360,566 | 7,606,103 |
| Minimum lease payments | 29,084,269 | 20,857,507 |
| Financial charges | (11,745,571) | (8,401,680) |
| Present value of minimum lease payments | 17,338,698 | 12,455,827 |
| Current | 4,928,197 | 3,349,056 |
| Non-current | 12,410,501 | 9,106,771 |
| (a) | Such balances refer to the “After<br>2027” line disclosed on December 31, 2023. | |
| --- | --- | |
| 21.7 | Schedule of amortization ofleases – Notes | |
| --- | --- | |
| Consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| 2024 | - | 130,432 |
| 2025 | 155,502 | 103,883 |
| 2026 | 132,873 | 103,883 |
| 2027 | 132,873 | 103,883 |
| 2028 ^(a)^ | 132,873 | 103,883 |
| After 2028 ^(a)^ | 1,970,949 | 1,540,940 |
| Minimum lease payments | 2,525,070 | 2,086,904 |
| Financial charges | (1,168,086) | (1,056,059) |
| Present value of minimum lease payments | 1,356,984 | 1,030,845 |
| Current | 144,706 | 121,948 |
| Non-current | 1,212,278 | 908,897 |
(a) Such balances refer to the “After 2027” line disclosed on December 31, 2023.
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| --- |
| 21.8 | Schedule of amortization ofleases – Convertible to equity | |
|---|---|---|
| Parent company and consolidated | ||
| --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 |
| 2024 | - | 235,897 |
| 2025 | 1,292,650 | 726,247 |
| 2026 | 1,058,962 | 726,247 |
| 2027 | 757,234 | 490,348 |
| Minimum lease payments | 3,108,846 | 2,178,739 |
| Financial charges | (425,681) | (519,000) |
| Present value of minimum lease payments | 2,683,165 | 1,659,739 |
| Current | 1,241,318 | 216,388 |
| Non-current | 1,441,847 | 1,443,351 |
| 21.9 | Covenants | |
| --- | --- |
As of December 31, 2024, the Company had leases subject to restrictive clauses (“covenants”) related to the level of indebtedness and coverage of debt payments.
| Covenantrelated to: | Indicators for themeasurement | Frequency of measurement | Required | |
|---|---|---|---|---|
| Aircraft lease | Annual | (i) Adjusted debt service coverage ratio (DSCR); and<br><br>(ii) Financial leverage | (i) equal to or greater than 1.2; and <br><br>(ii) less than or equal to 5.5. | Waiver |
As per the table above, the Company requested a waiver from the counterparty and was granted one for the year ended December 31, 2024. Therefore, the related debt continues to be classified in these financial statements in accordance with the originally established contractual flow.
- CONVERTIBLE DEBT INSTRUMENTS
| 22.1 | Accounting policies |
|---|
As required by CPC 48 – Financial Instruments, equivalent to IFRS 9, the right to convert debentures into shares was measured at fair value through profit or loss as it is an embedded derivative.
| 22.2 | Renegotiations |
|---|
In the fourth quarter of 2024, the Company renegotiated the terms of the debentures, changing the interest payment term from November 2024 to January 2025.
The balance presented below includes the right to convert the debt into Company shares in the amount of R$51,740 (R$488,775 as of December 31, 2023).
| 66 |
| --- | ||||||||
|---|---|---|---|---|---|---|---|---|
| --- | --- | |||||||
| Parent Company and Consolidated | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Effective rate p.a ^(a)^ | Maturity | December 31, 2023 | Variation of conversion right | Payment of interest | Interest incurred | Foreign currency exchange | December 31, 2024 |
| In foreign currency – US | ||||||||
| Debentures | 12.3% | Oct-28 | 1,201,610 | (437,035) | (76,382) | 273,826 | 220,349 | 1,182,368 |
| Total in R | 1,201,610 | (437,035) | (76,382) | 273,826 | 220,349 | 1,182,368 | ||
| Current | 25,807 | 124,321 | ||||||
| Non-current | 1,175,803 | 1,058,047 |
All values are in US Dollars.
| (a) | Does not consider the conversion<br>right. | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Parent Company and Consolidated | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Effective rate p.a ^(a)^ | Maturity | December 31, 2023 | Variation of conversion right | Payment of principal | Payment of interest | Interest incurred | Foreign currency exchange | Restructuring result | Amortized cost | December 31, 2023 |
| In foreign currency – US | |||||||||||
| Debentures | 12.3% | Oct-28 | 1,403,719 | 25,249 | (542,496) | (100,928) | 242,608 | (62,232) | 233,068 | 2,622 | 1,201,610 |
| Total in R | 1,403,719 | 25,249 | (542,496) | (100,928) | 242,608 | (62,232) | 233,068 | 2,622 | 1,201,610 | ||
| Current | 14,789 | 25,807 | |||||||||
| Non-current | 1,388,930 | 1,175,803 |
All values are in US Dollars.
(a) Does not consider the conversion right.
| 22.4 | Schedule of amortization |
|---|
| Parent company and Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| 2025 | 124,321 | 25,807 |
| 2029 | 1,058,047 | 1,175,803 |
| 1,182,368 | 1,201,610 | |
| Current | 124,321 | 25,807 |
| Non-current | 1,058,047 | 1,175,803 |
- ACCOUNTS PAYABLE
| 1.1 | Accounting policies |
|---|
Amounts payable to suppliers are initially recognized at fair value and subsequently increased, when applicable, by the corresponding charges and monetary and exchange variations.
| 67 |
| --- |
| 1.2 | Breakdown of accounts payable |
|---|
In 2023, due to negotiations with aircraft service and parts suppliers, the Company issued Notes with interest of 7.5% p.a. to be paid quarterly starting in December 2023 and principal due in June 2030, as well as Equity with consecutive quarterly payments, starting in January 2025.
| Parent company | Consolidated | |||
|---|---|---|---|---|
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Accounts payable | 6,642 | 10,651 | 4,624,784 | 3,077,225 |
| Accounts payable – Notes | - | - | 511,389 | 401,702 |
| Accounts payable – Convertible to equity | 173,448 | 119,841 | 173,448 | 119,841 |
| 180,090 | 130,492 | 5,309,621 | 3,598,768 | |
| Current | 72,674 | 10,651 | 4,147,225 | 2,277,841 |
| Non-current | 107,416 | 119,841 | 1,162,396 | 1,320,927 |
| 24. | REVERSE FACTORING | |||
| --- | --- |
24.1****Accounting policies
The Company promotes negotiations with suppliers with the aim of extending their payment terms. In this way, agreements were signed with financial institutions that allow their suppliers to advance the payment titles, mainly fuel, with interest rates ranging from 1.19% and 1.27% p.m.
When the notes payable is included in the drawn risk, this amount is transferred from the item “Accounts payable” to “Reverse factoring”.
24.2****Movement of reverse factoring
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| Description | December 31, 2023 | Addition | Payment | Interest paid | Interest incurred | December 31, 2024 |
| Reverse factoring | 290,847 | 208,804 | (496,286) | (13,589) | 10,224 | - |
| 290,847 | 208,804 | (496,286) | (13,589) | 10,224 | - | |
| Consolidated | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Description | December 31, 2022 | Addition | Payment | Interest paid | Interest incurred | December 31, 2023 |
| Reverse factoring | 753,352 | 391,676 | (831,477) | (39,714) | 17,010 | 290,847 |
| 753,352 | 391,676 | (831,477) | (39,714) | 17,010 | 290,847 |
| 68 |
| --- |
25. DERIVATIVE FINANCIAL INSTRUMENTS
| 25.1 | Accounting policies |
|---|
Variations in interest rates, exchange rates and aviation fuel prices expose the Company and its subsidiaries to risks that may affect their financial performance. In order to mitigate such risks, the Company contracts derivative financial instruments. Operations present the variation in their fair value recorded directly in the financial result.
25.2****Breakdown of derivative financial instruments
| Consolidated | ||||||
|---|---|---|---|---|---|---|
| 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) | (168,378) | 13,796 | (24,552) | (25,249) | (238,458) |
| Payments (receipts) | 213,245 | 136,977 | (1,530) | (210,694) | - | 137,998 |
| Restructuring ^(b)^ | - | - | - | (346,555) | (346,555) | |
| At December 31, 2023 | - | (60,102) | 12,266 | - | (488,775) | (536,611) |
| Gains (losses) recognized in result | - | (108,435) | (10,871) | - | 437,035 | 317,729 |
| Payments (receipts) | - | 103,162 | (1,395) | - | - | 101,767 |
| At December 31, 2024 | - | (65,375) | - | - | (51,740) | (117,115) |
| Obligations with current derivative financial instruments | - | (65,375) | - | - | - | (65,375) |
| Non-current convertible debt instruments | - | - | - | - | (51,740) | (51,740) |
| - | - | |||||
| - | (65,375) | - | - | (51,740) | (117,115) | |
| (a) | Balance recorded in the parent<br>company. | |||||
| --- | --- | |||||
| (b) | Refers to the effects of the extinction<br>and reconstitution of the right of conversion. | |||||
| --- | --- |
26. AIRPORT TAXES AND FEES
| 26.1 | Accounting policies |
|---|
The amounts payable in airport taxes and fees are initially recognized at fair value and subsequently increased, when applicable, by the corresponding charges and monetary and exchange variations.
26.2****Breakdown of airport taxes and fees
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Tax transaction ^(b)^ | 916,690 | - |
| Government installment payment program federal ^(a)^ | - | 97,271 |
| Airport fees ^(a)^ | 212,125 | 1,393,243 |
| Boarding tax | 231,913 | 248,689 |
| Other taxes | 16,691 | 20,880 |
| 1,377,419 | 1,760,083 | |
| Current | 584,739 | 588,404 |
| Non-current | 792,680 | 1,171,679 |
| (a) | Such balances refer to the “Airport<br>fees” line disclosed on December 31, 2023. | |
| --- | --- | |
| (b) | The difference in the balance<br>in note 2.3 refers to the movement after the signing of the tax transaction. | |
| --- | --- |
| 69 |
| --- |
27. AIR TRAFFIC LIABILITY AND LOYALTY PROGRAM
| 27.1 | Accounting policies |
|---|
Air traffic liability and loyalty program line comprises the Company’s obligations for the early receipt of air transport services and other auxiliary services related to the main obligation with its customers. They are accounted for at the amount of the transaction and as they are non-monetary items they are not subject to exchange differences or monetary adjustment of any nature. These obligations are extinguished with the provision of the transport services against operating income in the statements of operations for the year.
The breakage revenue consists of the calculation based on the historical issuance of tickets that will expire due to non-use, that is, passengers who purchased tickets and are highly likely not to use them. For the purpose of recognizing this revenue, the average periods for providing air transport services are also considered, and these assumptions are included in a statistical model that determines the forecast breakage rate to be adopted. At least annually, the calculations are reviewed to reflect and capture changes in customer behavior regarding ticket expiration.
In the loyalty program, the Company estimates the points that will expire without being used historical data and recognizes the corresponding revenue upon point issuance (breakage) considering the average exchange term.
27.2****Breakdown of air traffic liability and loyalty program
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Air traffic liability and loyalty program | 7,191,998 | 5,782,121 |
| Breakage | (865,941) | (576,245) |
| 6,326,057 | 5,205,876 | |
| Average use term ^(a)^ | 59 days | 56 days |
| Current | 6,326,057 | 5,205,876 |
| Non-current | - | - |
(a) Does not consider the loyalty program.
28. SALARIES AND BENEFITS
| 28.1 | Accounting policies |
|---|
Amounts payable relating to salaries and social security obligations are initially recognized at fair value and subsequently increased, when applicable, by the corresponding charges and monetary and exchange rate variations.
| 70 |
| --- |
28.2****Breakdown salaries and benefits
| Parent company | Consolidated | |||
|---|---|---|---|---|
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Salaries and benefits | 2,470 | 2,344 | 508,412 | 473,060 |
| Share-based payment | - | - | 36 | 1,737 |
| 2,470 | 2,344 | 508,448 | 474,797 |
29. TAXES PAYABLE
| 29.1 | Accounting policies |
|---|
Amounts payable in respect of taxes payable represent tax obligations arising from the Company’s operating activities, mainly from the passengers and cargo transport are initially recognized at fair value and subsequently increased, when applicable, by the corresponding charges and monetary and exchange rate variations.
| 29.2 | Breakdown of taxes payable | |||
|---|---|---|---|---|
| Parent company | Consolidated | |||
| --- | --- | --- | --- | --- |
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Tax transaction | 899 | - | 230,214 | - |
| Government installment payment program federal | - | - | - | 157,970 |
| PIS and COFINS | 5 | 2 | 419 | 4,231 |
| Taxes withheld | 504 | 421 | 80,868 | 76,520 |
| Import taxes | 357 | 83 | 9,497 | 13,483 |
| Others | - | - | 2,955 | 2,251 |
| 1,765 | 506 | 323,953 | 254,455 | |
| Current | 956 | 506 | 125,055 | 142,168 |
| Non-current | 809 | - | 198,898 | 112,287 |
30. PROVISIONS
| 30.1 | Accounting policies |
|---|
30.1.1 Provisionfor return of aircraft and engines
Aircraft and engines negotiated under lease without purchase options regularly provide for contractual obligations establishing conditions for the return of these assets.
In this way, the Company provides for return costs, since these are present obligations arising from past events and which will generate future disbursements, which are measured with reasonable certainty.
| 71 |
| --- |
These expenses basically refer to aircraft reconfiguration (interior and exterior), obtaining licenses and technical certifications, verifications of returns, maintenance, painting, etc., as established in the contract. The cost of return is initially recognized at present value as part of the cost of right-of-use assets, and the provision for aircraft return costs is recorded in the “Provisions” account. After initial recognition, the liability is updated according to the capital remuneration rate estimated by the Company, with a corresponding entry recorded in the financial result. Any changes in the estimate of expenses to be incurred are recognized prospectively against the right of use asset or in the statement of operations for the year if the right-of-use balance is insufficient.
30.1.2 Tax,civil and labor risks
The Company is a party to several legal and administrative proceedings, mainly in Brazil. Assessments of the likelihood of loss in these cases include an analysis of the available evidence, the hierarchy of laws, the available case laws, the most recent court decisions and their significance in the legal system, as well as the assessment of lawyers.
Provisions are revised and adjusted to reflect changes in circumstances, such as the applicable statute of limitations, conclusions of tax inspections or additional exposures identified based on new matters or court decisions.
The Company’s Management believes that the provision for tax, civil and labor risks is sufficient to cover any losses on legal and administrative.
30.1.3 Post-employmentbenefits
The Company recognizes actuarial liabilities related to health insurance benefits offered to its employees in accordance with CPC 33 (R1) – Employee Benefits, equivalent to IAS 19. Actuarial gains and losses are recognized in other comprehensive income based on the actuarial report prepared by independent experts, while the current service cost and interest cost are recognized in statement of operations for the year.
| 72 |
| --- |
30.2****Breakdown of provisions
| Consolidated | ||||
|---|---|---|---|---|
| Description | Return of aircrafts and engines ^(a)^ | Tax, civil and labor risks ^(b)^ | Post-employment benefit | Total |
| At December 31, 2022 | 2,675,266 | 560,727 | 7,001 | 3,242,994 |
| Additions | 501,864 | 216,778 | 115 | 718,757 |
| Modifications | (250,134) | - | - | (250,134) |
| Write-offs | (401,014) | (237,313) | - | (638,327) |
| Interest incurred | 239,078 | 17,581 | 760 | 257,419 |
| Benefit paid by the plan | - | - | (141) | (141) |
| Effect of change in financial assumptions | - | - | (23) | (23) |
| Effect of plan experience | - | - | 2,198 | 2,198 |
| Foreign currency exchange | (191,890) | - | - | (191,890) |
| - | - | - | - | |
| At December 31, 2023 | 2,573,170 | 557,773 | 9,910 | 3,140,853 |
| Additions | 503,080 | 85,889 | 154 | 589,123 |
| Write-offs | (77,086) | (346,047) | - | (423,133) |
| Interest incurred | 151,153 | (75,136) | 972 | 76,989 |
| Effect of plan experience | - | - | (2,811) | (2,811) |
| Foreign currency exchange | 798,015 | - | - | 798,015 |
| At December 31, 2024 | 3,948,332 | 222,479 | 8,225 | 4,179,036 |
| At December 31, 2024 | ||||
| Current | 560,587 | 110,135 | - | 670,722 |
| Non-current | 3,387,745 | 112,344 | 8,225 | 3,508,314 |
| At December 31, 2023 | ||||
| Current | 497,525 | 238,905 | - | 736,430 |
| Non-current | 2,075,645 | 318,868 | 9,910 | 2,404,423 |
(a) Nominal discount rate 10.8% p.a. (10.7% p.a. on December 31, 2023).
(b) Considers provision for civil risks in the amount of R$142 in the parent company (R$30 as of December 31, 2023).
30.2.1 Tax,civil and labor risks
The balances of the proceedings with estimates of probable and possible losses are shown below:
| Consolidated | ||||
|---|---|---|---|---|
| Probable loss | Possible loss | |||
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Tax | 78,936 | 284,638 | 89,826 | 432,109 |
| Civil | 76,608 | 131,464 | 126,818 | 49,930 |
| Labor | 66,935 | 141,671 | 194,234 | 68,789 |
| 222,479 | 557,773 | 410,878 | 550,828 | |
| 30.2.1.1 | Taxes | |||
| --- | --- |
The Company has tax-related lawsuits and, as detailed in note 2.3, lawsuits were added to the tax transaction regardless of the probability of loss in which they were classified.
| 73 |
| --- |
| 30.2.1.2 | Cível |
|---|
The Company has civil lawsuits, mainly related to compensation actions in general, such as flight delays and cancellations, lost and damaged luggage. The values are dispersed, and it is not possible to highlight any specific process.
During the second quarter of 2024, the Company changed the risk of lawsuits involving flight delays and cancellations from probable to possible after a detailed analysis of recent court decisions.
| 30.2.1.3 | Labor |
|---|
The Company has labor complaints, mainly related to discussions related to overtime, hazard pay, unhealthy conditions and equal pay. The values are scattered, and it is not possible to highlight any specific process.
During the second quarter of 2024, the Company changed the risk of process involving crew hours on the ground, from probable to possible, taking into account the current stage of the process.
30.2.2 Post-employment benefit
Below are the assumptions used to calculate post-employment benefits:
| Consolidated | ||
|---|---|---|
| Weighted average of assumptions | December 31, 2024 | December 31, 2023 |
| Nominal discount rate p.a. | 11.8% | 9.9% |
| Actual discount rate p.a. | 7.4% | 5.8% |
| Estimated inflation rate in the long term p.a. | 4.1% | 3.9% |
| HCCTR - Average nominal inflation rate p.a. | 7.2% | 7.0% |
| HCCTR - Actual nominal inflation rate p.a. | 3.0% | 3.0% |
| Mortality table | AT-2000 downrated by 10% | AT-2000 downrated by 10% |
31. RELATED-PARTY TRANSACTIONS
| 31.1 | Accounting policies |
|---|
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.
| 31.2 | Transactions between companies |
|---|
31.2.1 Balances
In compliance with accounting standards, such transactions were duly eliminated for consolidation purposes.
| 74 |
| --- | ||||
|---|---|---|---|---|
| --- | --- | --- | --- | --- |
| Creditor | Debtor | Type of operation | December 31, 2024 | December 31, 2023 |
| Azul | Investment | Debt securities exchange offers – costs | 10,826 | 8,464 |
| Azul | Secured | Issuance of debt securities 2028 – costs | 10,320 | 6,676 |
| Azul | ALAB | Renegotiation of accounts payable – Convertible to equity | 173,448 | 119,841 |
| Azul | ALAB | Renegotiation of lease – Convertible to equity | 2,683,165 | 1,659,739 |
| ALAB | Azul | Loan | - | (86,659) |
| ALAB | Azul | Loan | (264,718) | - |
| ALAB | Azul | Renegotiation of convertible debentures – costs | - | (496) |
| Secured | Azul | Renegotiation of convertible debentures – costs | (12,386) | (9,685) |
| Secured | Azul | Loan | (811,195) | (639,052) |
| 1,789,460 | 1,058,828 | |||
| Rights with related parties current | 1,307,350 | 216,388 | ||
| Rights with related parties non-current | 1,570,408 | 1,578,332 | ||
| Obligations with current related parties | (5,291) | (52,129) | ||
| Obligations with related parties non-current | (1,083,007) | (683,763) |
31.2.2 Compensationof 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 and directors. Expenses incurred with remuneration and the respective charges, paid or payable, are shown below:
| Consolidated | ||
|---|---|---|
| Years ended | ||
| Description | December 31, 2024 | December 31, 2023 |
| Salaries and benefits | 57,743 | 19,429 |
| Post-employment benefit | 716 | 595 |
| Share-based payment | 39,870 | 63,529 |
| 98,329 | 83,553 |
Stock-based compensation plan considers the Stock Options, RSU and phantom shares. Such plans are expected to be settled in up to eight years and, therefore, do not represent a cash outflow.
31.2.3 Guaranteesand 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.
| 75 |
| --- |
31.2.4 Technologyservice sharing contract
The Company carried out transactions with Águia Branca Participações S.A. one of its shareholders, for the sharing of information technology resources for an indefinite period and the total involved is not significant. The contract was terminated in February 2024.
31.2.5 Ticketsales contract and corporated contract
On March 2018, the Company entered into a ticket sales contract with Caprioli Turismo Ltda., a travel agency owned by the Caprioli family (which holds an indirect stake in the Company through TRIP former shareholders), whereby Caprioli Turismo Ltda. is granted a R$20 credit line for the purchase and resale of tickets for flights operated by the Company. This credit line is guaranteed by a non-interest-bearing promissory note in the same amount payable.
In August 2024, the Company entered into a corporate agreement with Águia Branca Participações S.A., one of its shareholders, to obtain airline tickets.
31.2.6 Breeze
The Company signed sublease agreements for three aircraft with Breeze Aviation Group (“Breeze”), an airline founded by the controlling shareholder of Azul, headquartered in the United States. The transaction was voted on and approved by 97% of the Azul's shareholders at the Extraordinary General Meeting held on March 2020. Following good corporate practices, the controlling shareholder did not participate in the voting.
During the year ended December 31, 2024, the Company finalized the sublease contracts.
The operations with Breeze are presented below:
| Consolidated | |||||
|---|---|---|---|---|---|
| Creditor | Debtor | Type of operation | Note | December 31, 2024 | December 31, 2023 |
| ALAB | Breeze | Aircraft sublease | Aircraft sublease | - | 30,802 |
| ALAB | Breeze | Reimbursement receivable for maintenance reserves | Accounts receivable | 2,703 | 3,901 |
| Breeze | ALAB | Reimbursement receivable for maintenance reserves | Other liabilities | (11,411) | (19,559) |
31.2.7 Azorra
In August 2022, the Company made agreements for purchase and sale of aircraft and engines with entities that are part of Azorra Aviation Holdings LLC. (“Azorra”), which has become a related party as the Company’s Board of Directors’ Chairman was elected independent member of Azorra’s Board of Directors.
| 76 |
| --- |
The operations with Azorra are presented below:
| Consolidated | |||||
|---|---|---|---|---|---|
| Consolidated | |||||
| Creditor | Debtor | Type of operation | Note | December 31, 2024 | December 31, 2023 |
| ALAB | Azorra | Accounts receivable | Accounts receivable | 118,013 | - |
| ALAB | Azorra | Security deposits | Deposits | 46,213 | 4,643 |
| Azorra | ALAB | Leases | Leases | (473,428) | (302,947) |
| Azorra | Azul Investments | Leases – Notes | Leases | (96,458) | (74,572) |
| Azorra | Azul | Leases – Convertible to equity | Leases | (150,441) | (102,683) |
| Parent company | |||||
| Years ended | |||||
| Revenue | Expense | Type of operation | Note | December 31, 2024 | December 31, 2023 |
| Azorra | ALAB | Interest incurred | Financial expense | 78,451 | 17,106 |
31.2.8 Lilium
In August 2021, the Company announced plans to make a strategic partnership with Lilium GmbH, a wholly owned subsidiary of Lilium N.V. (“Lilium), which has ultimately become a related party as the Company’s Board of Directors’ Chairman was elected independent member of Lilium’s Board of Directors.
As of December 31, 2024, and 2023, the Company has no outstanding balances with Lilium.
31.2.9 United
The Company has agreements with United Airlines Inc. (“United”), one of its shareholders, for the use of the loyalty program and for the re-accommodation of passengers. As of December 31, 2024, the balance is not significant.
32. EQUITY
32.1 Issued capital
| Parent company and Consolidated | ||||
|---|---|---|---|---|
| Value | Quantity | |||
| Description | Company’s capital | AFAC ^(a)^ | Common shares | Preferred shares |
| At December 31, 2022 | 2,313,941 | 61 | 928,965,058 | 335,623,408 |
| Capital payment | 880 | (880) | - | - |
| Share-based payment | - | 1,608 | - | 124,388 |
| At December 31, 2023 | 2,314,821 | 789 | 928,965,058 | 335,747,796 |
| Capital payment | 807 | (807) | - | - |
| Share-based payment | - | 18 | - | 3,000 |
| At December 31, 2024 | 2,315,628 | - | 928,965,058 | 335,750,796 |
(a) Advance for future capital increase.
| 77 |
| --- |
As established in the Company's bylaws, each common share entitles you to 1 (one) vote. Preferred shares of any class do not confer voting rights, however, they provide their holders with:
| · | Capital repayment priority; |
|---|---|
| · | The right to be included in a<br>public offer for the purchase of shares, due to the transfer of control of the Company, under the same conditions and for a price per<br>share equivalent to seventy-five (75) times the price per share paid to the controlling shareholder; |
| --- | --- |
| · | The right to receive amounts equivalent<br>to seventy-five (75) times the price per common share after the division of remaining assets among shareholders; and |
| --- | --- |
| · | The right to receive dividends<br>equal to seventy-five (75) times the amount paid for each common share. |
| --- | --- |
The Company's shareholding structure is presented below:
| Parent company and Consolidated | ||||||
|---|---|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | |||||
| Shareholder | Common shares | Preferred shares | % economic participation | Common shares | Preferred shares | % economic participation |
| David Neeleman | 67.0% | 2.2% | 4.5% | 67.0% | 2.2% | 4.5% |
| Acionistas Trip ^(a)^ | 33.0% | 1.8% | 2.9% | 33.0% | 4.0% | 5.0% |
| United Airlines Inc | - | 5.5% | 5.4% | - | 8.0% | 7.8% |
| Others ^(b)^ | - | 90.4% | 87.1% | - | 85.7% | 82.6% |
| Treasury shares | - | 0.1% | 0.1% | - | 0.1% | 0.1% |
| Total | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% | 100.0% |
| (a) | This<br>refers to Trip Participações S.A., Trip Investimentos Ltda. and Rio Novo Locações Ltda. | |||||
| --- | --- | |||||
| (b) | Such balances refer to the “Black<br>Rock” and “Other” lines disclosed on December 31, 2023. | |||||
| --- | --- |
The Company is authorized, by resolution of the Board of Directors, to increase the issued capital, regardless of any amendments to bylaws, with the issue of up to 230,000,000 (two hundred and thirty million) new preferred shares. The Board of Directors will set the conditions for the issue, including price and payment terms.
32.2Treasury shares
32.2.1 Accountingpolicies
Own equity instruments that are acquired (treasury shares) are recognized at cost and deducted from equity. No gain or loss is recognized in profit or loss on the purchase, sale, issue or cancellation of these equity instruments. Any difference between the carrying amount and the fair value, if the share is reissued, is recognized in the share premium.
| 78 |
| --- |
32.2.2 Movementof treasury shares
| Parent company and Consolidated | |||
|---|---|---|---|
| Description | Number of shares | Amount paid | Average cost (in R$) |
| At of December 31, 2022 | 349,999 | 10,204 | 29.15 |
| Repurchase | 591,866 | 6,826 | 11.53 |
| Transfers | (441,866) | (7,989) | - |
| At December 31, 2023 | 499,999 | 9,041 | 18.08 |
| Repurchase | 210,000 | 2,596 | 12.36 |
| Alienation | (4,125) | (69) | - |
| Transfers | (441,379) | (7,234) | - |
| At December 31, 2024 | 264,495 | 4,334 | 16.39 |
In May 2024, the buyback plan for 1,300,000 preferred shares was approved, maturing in 18 months, in order to keep them in treasury to later meet the obligations of the RSU plan.
| 33. | EARNINGS (LOSS) PER SHARE |
|---|---|
| 33.1 | Accounting policies |
| --- | --- |
The basic result per share is calculated by dividing the net income for the year attributed to the Company's controlling shareholders by the weighted average number of all classes of shares in circulation, except treasury shares, during the year.
Diluted earnings (loss) per share are calculated adjusting the weighted average number of shares outstanding, except those in treasury shares, by instruments potentially convertible into shares. However, due to the losses reported in the years ended December 31, 2024, and 2023, these instruments issued by the company have a non-dilutive effect and therefore were not considered in the total number of shares outstanding to determine the diluted loss per share.
Although there are differences between common and preferred shares as to voting and preemptive rights in the event of liquidation, the Company's preferred shares do not grant the right to receive fixed dividends. Preferred shares have economic power and the right to receive dividends 75 times greater than common shares. Accordingly, the Company considers that the economic power of preferred shares is greater than that of common shares. Therefore, the profit or loss for the year attributable to the controlling shareholders is allocated proportionally in relation to the total economic participation of the amount of common and preferred shares.
| 79 |
| --- |
| 33.2 | Earnings (loss) per sharecalculation | |
|---|---|---|
| Parent company and Consolidated | ||
| --- | --- | --- |
| Years ended | ||
| Description | December 31, 2024 | December 31, 2023 |
| Numerator | ||
| Loss for the year | (9,151,371) | (2,380,456) |
| Denominator | ||
| Weighted average number of common shares | 928,965,058 | 928,965,058 |
| Weighted average number of preferred shares | 335,275,653 | 335,145,967 |
| Economic value of preferred shares | 75 | 75 |
| Weighted average number of equivalent preferred shares ^(a)^ | 347,661,854 | 347,532,168 |
| Weighted average number of equivalent common shares ^(b)^ | 26,074,639,033 | 26,064,912,583 |
| Weighted average number of presumed conversions | 900,031,192 | 220,081,929 |
| Weighted average number of preferred shares that would have been issued<br><br>the average share price at the market price | 2,377,040 | 4,041,744 |
| Basic earnings (loss) per common share – R$ | (0.35) | (0.09) |
| Diluted earnings (loss) per common share – R$ | (0.35) | (0.09) |
| Basic earnings (loss) per preferred share – R$ | (26.32) | (6.85) |
| Diluted earnings (loss) per preferred share – R$ | (26.32) | (6.85) |
| (a) | This refers to the participation<br>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<br>shares at the conversion ratio of 75 common shares for each preferred share. | |
| --- | --- | |
| (b) | This refers to the participation<br>in the value of the Company's total equity, calculated as if the weighted average of preferred shares had been converted into common shares<br>at the conversion ratio of 75 common shares for each one preferred share. | |
| --- | --- | |
| 34. | SHARE-BASED PAYMENT | |
| --- | --- | |
| 34.1 | Accounting policies | |
| --- | --- |
The Company offers executives share-based compensation plans to be settled with Company shares or cash, according to which the Company receives services as consideration.
The cost of instruments is measured based on fair value on the date they were granted or on the date of these financial statements for phantom shares. To determine the fair value of purchase options, the Company uses the Black-Scholes model.
The cost of transactions settled with equity securities is recognized in profit or loss under “Salaries and Benefits”, together with corresponding increase in the “Capital reserve” or “Salaries and social charges” liability for phantom shares, over the period in which performance and/or service condition are met, ending on the date on which the employee acquires full right to the award (vesting date) or settlement and cancellation for phantom shares. The outstanding liability is revalued at fair value on the date of this financial statement.
| 80 |
| --- |
| 34.2 | Compensation plans |
|---|
The Company has three share-based compensation plans: the Stock Option Plan (“Option Plan”), the Restricted Stock Plan (“RSU”) and the Stock Purchase Plan ("phantom Shares"). All of them aim to stimulate and promote the alignment of the objectives of the Company, shareholders, management and employees, and mitigate the risks in the generation of value of the Company by the loss of its executives, strengthening their commitment and productivity in the long-term results.
The movement of the plans is shown below:
| Parent company and Consolidated | ||||
|---|---|---|---|---|
| Number of shares | ||||
| Description | Option plan | RSU | Phantomshares | Total |
| At December 31, 2022 | 19,069,705 | 1,795,401 | 326.472 | 21,191,578 |
| Granted | 1,800,000 | 500.000 | - | 2,300,000 |
| Exercised | (124.388) | (609.313) | (22.884) | (756.585) |
| Canceled | (223.633) | (142.023) | (56.658) | (422.314) |
| At December 31, 2023 | 20,521,684 | 1,544,065 | 246,930 | 22,312,679 |
| Granted | 4,200,000 | 1,007,253 | - | 5,207,253 |
| Exercised | (3,000) | (608,472) | (18,177) | (629,649) |
| Canceled | (94.181) | (101.824) | (47.742) | (243.747) |
| At December 31, 2024 | 24,624,503 | 1,841,022 | 181.011 | 26,646,536 |
| Parent company and Consolidated | ||||
| --- | --- | --- | ||
| Description | December 31, 2024 | December 31, 2023 | ||
| Share price (in reais) | 3.54 | 16.01 | ||
| Weighted average price of the stock option (in reais) | 5.97 | 12.93 | ||
| Weighted average price of the phantom shares (in reais) | 10.35 | 10.35 | ||
| Cash inflow stock option | 18 | 1,608 | ||
| Flat cash inflow of phantom shares | 188 | 237 | ||
| Total obligation related to the phantom shares plan | 36 | 1,736 | ||
| Income tax regarding RSU transfer | 1,439 | 3,239 | ||
| Number of shares equivalent to RSU IR | 167,093 | 167,447 |
The expenses of share-based compensation plans are shown below:
| Consolidated | ||
|---|---|---|
| Years ended | ||
| Description | December 31, 2024 | December 31, 2023 |
| Stock option | 38,794 | 61,646 |
| RSU | 6,361 | 9,093 |
| Phantom shares | (1,700) | 904 |
| 43,455 | 71,643 |
| 81 |
| --- |
Due to the reduction in the share value in the year ended December 31, 2023, from R$16.01 to R$3.54, there was a decrease in the estimated remuneration of phantom shares and consequently a reversal of the expense recorded in previous periods.
| 34.3 | Assumptions |
|---|---|
| 34.3.1 | Stock option |
| --- | --- |
During the fourth quarter the 2024, the Company granted two programs with the following conditions:
| Date of grant | Option exercise price(in R$) | 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 | Deadlineremainder ofvesting period(in years) | Purchasing period up to (years) | Total options granted | Total outstanding options | Total options available for exercise |
|---|---|---|---|---|---|---|---|---|---|---|---|
| December 11, 2009 | 3.42 | 1.93 | 47.7% | 1.1% | 8.8% | 25.0% | - | 4.0 | 5,032,800 | 180,870 | 180,870 |
| March 24, 2011 | 6.44 | 4.16 | 54.8% | 1.1% | 12.0% | 25.0% | - | 4.0 | 1,572,000 | 84,000 | 84,000 |
| April 5, 2011 | 6.44 | 4.16 | 54.8% | 1.1% | 12.0% | 25.0% | - | 4.0 | 656,000 | 6,200 | 6,200 |
| June 30, 2014 | 19.15 | 11.01 | 40.6% | 1.1% | 12.5% | 25.0% | - | 4.0 | 2,169,122 | 708,993 | 708,993 |
| July 1, 2015 | 14.51 | 10.82 | 40.6% | 1.1% | 15.7% | 25.0% | - | 4.0 | 627,810 | 177,592 | 177,592 |
| July 1, 2016 | 14.50 | 10.14 | 43.1% | 1.1% | 12.2% | 25.0% | - | 4.0 | 820,250 | 280,124 | 280,124 |
| July 6, 2017 | 22.57 | 12.82 | 43.4% | 1.1% | 10.3% | 25.0% | - | 4.0 | 680,467 | 442,796 | 442,796 |
| August 8, 2022 | 11.07 | 8.10 | 70.0% | - | 13.0% | 25.0% | 1.6 | 4.0 | 1,774,418 | 1,701,057 | 865,714 |
| August 8, 2022 | 11.07 | 6.40 | 68.8% | - | 13.2% | 33.3% | 0.6 | 3.0 | 1,514,999 | 1,381,249 | 1,029,124 |
| August 19, 2022 | 11.07 | 7.39 | 67.2% | - | 13.6% | 100.0% | - | 1.0 | 4,900,000 | 4,824,333 | 4,824,333 |
| August 19, 2022 | 11.07 | 11.54 | 74.6% | - | 12.7% | 20.0% | 2.6 | 5.0 | 8,900,000 | 8,900,000 | - |
| July 7, 2023 | 15.60 | 10.80 | 75.4% | - | 10.5% | 25.0% | 2.5 | 4.0 | 1,800,000 | 1,737,289 | 439,630 |
| October 23, 2024 | 4.04 | 3.25 | 73.0% | - | 12.9% | 25.0% | 3.8 | 4.0 | 2,200,000 | 2,200,000 | - |
| December 14, 2024 | 4.17 | 2.16 | 72.8% | - | 14.8% | 25.0% | 4.0 | 4.0 | 2,000,000 | 2,000,000 | - |
| 34,647,866 | 24,624,503 | 9,039,376 |
34.3.2 RSU
During the fourth quarter the 2024, the Company granted two programs with the following conditions:
| 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) | Totalgranted | Total notexercised |
|---|---|---|---|---|---|---|
| July 7, 2021 | 25.0% | 42.67 | 0.5 | 4.0 | 300,000 | 55,017 |
| July 7, 2022 | 25.0% | 11.72 | 1.5 | 4.0 | 335,593 | 143,243 |
| July 7, 2022 | 25.0% | 11.72 | 1.5 | 4.0 | 671,186 | 270,095 |
| July 7, 2023 | 25.0% | 19.32 | 2.5 | 4.0 | 500,000 | 365,414 |
| October 23, 2024 | 25.0% | 5.48 | 3.8 | 4.0 | 671,502 | 671,502 |
| December 13, 2024 | 25.0% | 4.17 | 4.0 | 4.0 | 335,751 | 335,751 |
| 2,814,032 | 1,841,022 |
34.1.3 Phantomshares
| Date of grant | Option exercise price(in reais) | Average fair value of option | Historical volatility | Expected dividend | Average risk-free rate of return | Exercise rate per tranche | Remaining term of the vesting period(in years) | Purchasing period up to (years) | Total options granted | Total outstanding | Total options available for exercise |
|---|---|---|---|---|---|---|---|---|---|---|---|
| August 7, 2018 | 20.43 | 0.04 | 75.8% | - | 15.4% | 25.0% | - | 4.0 | 707,400 | 53,520 | 53,520 |
| April 30, 2020 | 10.35 | 0.22 | 75.8% | - | 15.4% | 33.3% | - | 3.0 | 3,250,000 | 99,761 | 99,761 |
| April 30, 2020 | 10.35 | 0.47 | 75.7% | - | 15.7% | 25.0% | - | 4.0 | 1,600,000 | 26,300 | 26,300 |
| August 17, 2021 | 33.99 | 0.16 | 75.% | - | 15.7% | 25.0% | 0.6 | 4.0 | 580,000 | 1,430 | 1,430 |
| 6,137,400 | 181,011 | 181,011 |
| 82 |
| --- |
| 35. | SALES REVENUE |
|---|---|
| 35.1 | Accounting policies |
| --- | --- |
35.1.1 Revenuefrom passenger transport and loyalty program
Revenue from passenger transport is recognized when air transportation is actually provided. Tickets sold, but not yet used are recorded as “Air traffic liability and loyalty program” account, net of breakage revenue estimate (note 27).
Other revenues that include charter flights, rescheduling fees, baggage dispatch and other additional services are recognized along with the primary passenger transport obligation passengers.
In the loyalty program, customers accumulate points based on the amount spent on air transportation and in accordance with the partners' rules. The number of points depends on the customer's category in the loyalty program, market, fare class and other factors including promotional campaigns.
After the sale of a ticket, the Company recognizes a portion of ticket sales as revenue when the transportation service occurs and defers the portion corresponding to loyalty program points in accordance with CPC 47 – Customer Contract Revenue, equivalent to IFRS 15.
The Company determines the estimated selling price of the air transportation and points as if each element had been sold on a separate basis and was therefore based on the stand-alone selling price.
The Company also sells loyalty program points to customers and partners, including credit card companies, financial institutions and retail companies. The related revenue is deferred and recognized when points are redeemed, based on the weighted average price of points sold.
Points not used are recorded under “Air traffic liability and loyalty program”, until their effective use or expiration.
Other revenues
Other revenues mainly include the transportation of cargo and travel packages and are recognized when performance obligations are met.
| 35.2 | Breakdown of sales revenue | |
|---|---|---|
| Consolited | ||
| --- | --- | --- |
| Years ended | ||
| Description | December 31, 2024 | December 31, 2023 |
| Passenger revenue | 18,125,685 | 17,229,732 |
| Other revenues | 1,506,303 | 1,487,286 |
| Total | 19,631,988 | 18,717,018 |
| Taxes levied | ||
| Passenger revenue ^(a)^ | (2,550) | (2,004) |
| Other revenues | (103,230) | (160,589) |
| - | - | |
| Total taxes | (105,780) | (162,593) |
| - | - | |
| Total revenue | 19,526,208 | 18,554,425 |
| (a) | As of January 1, 2023, the PIS<br>and COFINS rates on revenues arising from regular passenger air transport activities were reduced to zero, in accordance with Law 14,592/2023. | |
| --- | --- |
| 83 |
| --- |
Revenues by geographical location are as follows:
| Consolited | ||||
|---|---|---|---|---|
| Years ended | ||||
| Description | December 31, 2024 | December 31, 2023 | ||
| Domestic revenue | 16,084,172 | 14,675,974 | ||
| Foreign revenue | 3,442,036 | 3,878,451 | ||
| Total revenue | 19,526,208 | 18,554,425 | ||
| 36. | COSTS AND EXPENSES BY NATURE | |||
| --- | --- | |||
| Parent company | Consolidated | |||
| --- | --- | --- | --- | --- |
| Years ended | ||||
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Cost of service | ||||
| Aircraft fuel | - | - | (5,583,503) | (5,890,485) |
| Salaries and benefits | - | - | (2,538,629) | (2,274,180) |
| Airport taxes and fees | - | - | (1,074,818) | (1,059,258) |
| Auxiliary services for air transport | - | - | (872,481) | (807,563) |
| Maintenance | - | - | (789,222) | (898,282) |
| Depreciation and amortization ^(a)^ | - | - | (2,552,173) | (2,393,864) |
| Impairment | - | - | 143,790 | 245,636 |
| Insurance | - | - | (72,323) | (77,247) |
| Rental ^(b)^ | - | - | (268,060) | (225,051) |
| Other ^(b)^ | - | - | (703,015) | (1,797,724) |
| - | - | (14,310,434) | (15,178,018) | |
| Selling expenses | ||||
| Salaries and benefits | - | - | (44,921) | (40,765) |
| Advertising and publicity | - | - | (889,224) | (779,264) |
| - | - | (934,145) | (820,029) | |
| Administrative expenses | ||||
| Salaries and benefits | (26,230) | (30,871) | (139,322) | (93,419) |
| Depreciation and amortization ^(a)^ | - | - | (11,809) | (10,359) |
| Insurance | (7,265) | (12,245) | (7,265) | (12,245) |
| Other | (37,906) | (19,312) | (409,061) | (386,167) |
| (71,401) | (62,428) | (567,457) | (502,190) | |
| Other income (expenses) | ||||
| Others ^(c)^ | (431) | 71,624 | (323,540) | (393,094) |
| (431) | 71,624 | (323,540) | (393,094) | |
| Total | (71,832) | 9,196 | (16,135,576) | (16,893,331) |
(a) Net of PIS and COFINS credits in the amount of R$1,468 in the year ended December 31, 2024 (R$1,723 on December 31, 2023).
(b) Such balances refer to the “Other” line disclosed on December 31, 2023.
(c) The revenue in 2023, in the parent company, refers to the debt forgiveness of loan between Azul and ALAB.
| 84 |
| --- |
| 37. | FINANCIAL RESULT |
|---|---|
| 37.1 | Accounting policies |
| --- | --- |
The financial result income and expenses include interest income, leases, loans and financing, exchange differences, changes in the fair value of financial assets and liabilities measured at fair value through profit or loss, gains and losses on derivative instruments, commissions and bank charges, among others. Interest income and expenses are recognized in the statement of profit or loss using the effective interest method.
| 37.2 | Breakdown of financial result | |||
|---|---|---|---|---|
| Parent company | Consolidated | |||
| --- | --- | --- | --- | --- |
| Years ended | ||||
| Description | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Financial income | ||||
| Interest on short and long-term investments | 96 | 272 | 148,162 | 91,353 |
| Sublease receivables | - | - | 1,754 | 13,314 |
| TAP Bond fair value | - | - | 37,610 | 66,053 |
| Others | 3,173 | 3,552 | 51,532 | 49,421 |
| 3,269 | 3,824 | 239,058 | 220,141 | |
| Financial expenses | ||||
| Interest on loans and financing ^(a)^ | (21,141) | - | (1,379,560) | (865,107) |
| Interest on reverse factoring | - | - | (10,224) | (17,010) |
| Interest on lease | - | - | (2,460,514) | (2,420,557) |
| Interest on convertible instruments | (273,826) | (242,608) | (273,826) | (242,608) |
| Interest accounts payable and airport taxes and fees | (36) | - | (328,937) | (418,066) |
| Interest on provisions | - | - | (76,989) | (257,419) |
| Interest on factoring credit card receivables | - | - | (327,771) | (334,896) |
| Amortized cost of loans and financing | (4,446) | - | (113,908) | (44,894) |
| Amortized cost of convertible instruments | - | (2,622) | - | (2,622) |
| Cost of financial operations | (345) | (581) | (130,285) | (84,453) |
| TAP Bond fair value | - | - | (14,842) | (25,736) |
| Restructuring of debentures | - | (352,430) | - | (352,430) |
| Restructuring of loan and financing | - | - | - | (199,635) |
| Others ^(b)^ | (8,244) | (4,805) | (130,558) | (343,338) |
| (308,038) | (603,046) | (5,247,414) | (5,608,771) | |
| Derivative financial instruments, net | 437,035 | (25,249) | 317,729 | (238,458) |
| Foreign currency exchange, net | (395,377) | 79,821 | (7,890,179) | 1,625,064 |
| Financial result, net | (263,111) | (544,650) | (12,580,806) | (4,002,024) |
(a) Net of PIS and COFINS credits in the amount of R$19,534.
(b) These balances refer to the “Guarantee commissions” and “Others” disclosed on December 31, 2023.
- RISK MANAGEMENT
| 38.1 | Accounting policies |
|---|
Operating activities expose the Company and its subsidiaries to the following financial risks: (i) market risk, related to interest rate, fuel price and exchange rate, (ii) credit risk and (iii) liquidity risk.
| 85 |
| --- |
The risks are monitored by the Company’s management and can be mitigated through the use of swaps, terms and options.
All activities with derivative financial instruments for risk management are carried out by specialists with experience and adequate supervision. It is the Company's policy not to operate transactions for speculative purposes.
| 38.2 | Fair value hierarchy of financialinstruments |
|---|
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 fair value hierarchy of the Company's consolidated financial instruments, as well as the comparison between book value and fair value, are identified below:
| Parent company | ||||||
|---|---|---|---|---|---|---|
| Carrying amount | Fair value | |||||
| Description | Note | Level | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Liabilities | ||||||
| Convertible debt instruments – conversion right | 22 | 2 | (51,740) | (488,775) | (51,740) | (488,775) |
| Consolidated | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| Carrying amount | Fair value | |||||
| Description | Note | Level | December 31, 2024 | December 31, 2023 | December 31, 2024 | December 31, 2023 |
| Assets | ||||||
| Long-term investments – TAP Bond | 7 | 2 | 1,004,505 | 780,312 | 1,004,505 | 780,312 |
| Derivative financial instruments | 25 | 2 | - | 21,909 | - | 21,909 |
| Liabilities | ||||||
| Loans and financing | 20 | - | (14,981,417) | (9,698,912) | (13,949,702) | (9,796,608) |
| Convertible debt instruments – conversion right | 22 | 2 | (51,740) | (488,775) | (51,740) | (488,775) |
| Derivative financial instruments | 25 | 2 | (65,375) | (69,745) | (65,375) | (69,745) |
Financial instruments whose fair value approximates their carrying value, based on established conditions, mainly due to the short maturity period, were not disclosed.
| 86 |
| --- |
| 38.3 | Market risks |
|---|
38.3.1 Interestrate risk
38.3.1.1 Sensitivityanalysis
As of December 31, 2024, the Company held assets and liabilities linked to different types of interest rates. In the sensitivity analysis of non-derivative financial instruments, the impact was considered only on positions with values exposed to such fluctuations:
| Consolidated | ||||
|---|---|---|---|---|
| Exposure to CDI | Exposure to SOFR | |||
| Description | Rate (p.a.) | December 31, 2024 | Weighted Rate (p.a.) | December 31, 2024 |
| Exposed assets (liabilities), net | 12.2% | (430,428) | 4.4% | (2,233,707) |
| Effect on profit or loss | ||||
| Interest rate devaluation by -10% | 10.9% | 6,101 | 4.% | 10,016 |
| Interest rate devaluation by -25% | 9.1% | 15,253 | 3.3% | 25,041 |
| Interest rate appreciation by 10% | 13.4% | (6,101) | 4.8% | (10,016) |
| Interest rate appreciation by 25% | 15.2% | (15,253) | 5.5% | (25,041) |
38.3.2 Aircraftfuel 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 December 31, 2024, forward transactions on fuel (note 25).
38.3.2.1 Sensitivityanalysis
The following table demonstrates the sensitivity analysis of the price fluctuation of QAV liter:
| Consolidated | ||
|---|---|---|
| Exposure to price | ||
| Description | Average price per liter(in reais) | December 31, 2024 |
| Aircraft fuel | 4.4 | (5,583,503) |
| Effect on profit or loss | ||
| Devaluation by -10% | 4.0 | 558,350 |
| Devaluation by -25% | 3.3 | 1,395,876 |
| Appreciation by 10% | 4.8 | (558,350) |
| Appreciation by 25% | 5.5 | (1,395,876) |
38.3.3 Foreignexchange risk
The foreign exchange risk arises from the possibility of unfavorable exchange differences to which the Company's cash flows are exposed.
| 87 |
| --- |
The equity exposure to the main variations in exchange rates is shown below:
| Parent company | ||
|---|---|---|
| Exposure to US | Exposure to | |
| Description | December 31, 2024 | December 31, 2024 |
| Assets | ||
| Cash and cash equivalents | 503 | 464 |
| Deposits | - | - |
| Related parties | 2,877,759 | - |
| Total assets | 2,878,262 | 464 |
| Liabilities | ||
| Convertible debt instruments | (1,182,368) | - |
| Leases | (2,683,165) | - |
| Accounts payable | (173,448) | - |
| Related parties | (823,581) | - |
| Total liabilities | (4,862,562) | - |
| Net exposure | (1,984,300) | 464 |
| Net exposure in foreign currency | (320,446) | 72 |
All values are in US Dollars.
| Consolidated | ||
|---|---|---|
| Exposure to US | Exposure to | |
| Description | December 31, 2024 | December 31, 2024 |
| Assets | ||
| Cash and cash equivalents | 76,267 | 6,420 |
| Long-term investments | - | 1,004,505 |
| Accounts receivable | 687,396 | 2,927 |
| Aircraft sublease | - | - |
| Deposits | 3,257,360 | 11,581 |
| Other assets | 72,360 | 5,535 |
| Total assets | 4,093,383 | 1,030,968 |
| Liabilities | ||
| Loans and financing | (13,720,427) | - |
| Leases | (21,250,461) | - |
| Convertible debt instruments | (1,182,368) | - |
| Accounts payable | (3,356,243) | - |
| Airport taxes and fees | (3,373) | - |
| Provisions ^(a)^ | (3,947,439) | - |
| Other liabilities ^(a)^ | (31,055) | (15) |
| Total liabilities | (43,491,366) | (15) |
| Net exposure | (39,397,983) | 1,030,953 |
| Net exposure in foreign currency | (6,362,415) | 160,178 |
All values are in US Dollars.
| (a) | Such balances refer to the “Provisions<br>and other liabilities” line disclosed on December 31, 2023. |
|---|
| 88 |
| --- |
38.3.3.1 Sensitivityanalysis
| Parent company | ||
|---|---|---|
| Exposure to US | Exposure to | |
| Description | Closing rate | Closing rate |
| Exposed assets (liabilities), net | 6.2 | 6.4 |
| Effect on profit or loss | ||
| Foreign currency devaluation by -10% | 5.6 | 5.8 |
| Foreign currency devaluation by -25% | 4.6 | 4.8 |
| Foreign currency appreciation by 10% | 6.8 | 7.1 |
| Foreign currency appreciation by 25% | 7.7 | 8.0 |
All values are in US Dollars.
| Consolidated | ||
|---|---|---|
| Exposure to US | Exposure to | |
| Description | Closing rate | Closing rate |
| Exposed assets (liabilities), net | 6.2 | 6.4 |
| Effect on profit or loss | ||
| Foreign currency devaluation by -10% | 5.6 | 5.8 |
| Foreign currency devaluation by -25% | 4.6 | 4.8 |
| Foreign currency appreciation by 10% | 6.8 | 7.1 |
| Foreign currency appreciation by 25% | 7.7 | 8.0 |
All values are in US Dollars.
| 38.4 | Credit risk |
|---|
Credit risk is inherent to the Company's operating and financial activities, mainly disclosed in cash and cash equivalents, long-term investments, accounts receivable, security deposits and maintenance reserves. The TAP Bond is guaranteed by intellectual property rights and credits related to the TAP mileage program.
Credit limits are established for all customers based on internal classification criteria and the carrying amounts represent the maximum credit risk exposure. Outstanding receivables from customers are frequently monitored by the Company and, when necessary, allowances for expected credit losses are recognized.
Derivative financial instruments are contracted on the over the counter (OTC) market with counterparties that maintain a relationship and can be contracted on commodity and futures exchanges (B3 and NYMEX), which mitigate and contributes to credit risk.
The Company assesses the risks of counterparties in financial instruments and diversifies exposure periodically.
| 38.5 | Liquidity risk |
|---|
The maturity schedules of the Company’s consolidated financial liabilities as of December 31, 2024 are as follows:
| 89 |
| --- | |||||
|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- |
| Description | Carrying amount | Contractual cash flow | Until 1 year | From 2 to 5 years | After 5 years |
| Loans and financing | 14,981,417 | 21,073,217 | 3,660,524 | 13,601,921 | 3,810,772 |
| Leases | 21,378,847 | 34,718,185 | 6,667,939 | 20,479,710 | 7,570,536 |
| Convertible debt instruments | 1,182,368 | 2,006,333 | 374,555 | 1,631,778 | - |
| Accounts payable | 5,309,621 | 5,666,072 | 4,252,796 | 869,788 | 543,488 |
| Airport taxes and fees | 1,377,419 | 1,395,699 | 586,659 | 369,287 | 439,753 |
| 44,229,672 | 64,859,506 | 15,542,473 | 36,952,484 | 12,364,549 | |
| 38.6 | Capital management | ||||
| --- | --- |
The Company seeks capital alternatives in order to satisfy its operational needs, aiming for a capital structure that it considers adequate for the financial costs and the maturity terms of the funding and its guarantees. The Company's Management continually monitors its net debt.
- NON-CASH TRANSACTIONS
| Parent company | |||
|---|---|---|---|
| Description | Security deposits | Transfers | Total |
| Deposits | (8,811) | - | (8,811) |
| Other assets | 8,811 | - | 8,811 |
| Leases | - | (1,023,426) | (1,023,426) |
| Related parties | - | 1,023,426 | 1,023,426 |
| December 31, 2024 | - | - | - |
| Parent company | |||
| Descrição | Transfers | Total | |
| Accounts payable | 118,809 | 118,809 | |
| Leases | 1,659,740 | 1,659,740 | |
| Related parties | (1,778,549) | (1,778,549) | |
| December 31, 2023 | - | - |
| 90 |
| --- | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Description | Acquisition of property and equipment | Acquisition of capitalized maintenance | Acquisition of intangible | Maintenance prepayment | Maintenance reserves | Reverse factoring | Compensation of lease | Compensation of accounts payable | Acquisition of lease | Addition the ARO | Lease Modifications | Transfers | Others | Total |
| Accounts receivable | - | - | - | - | 240,950 | - | (92,703) | (600,978) | - | - | - | - | - | (452,731) |
| Aircraft sublease | - | - | - | - | - | - | (9,467) | - | - | - | - | (27,086) | - | (36,553) |
| Inventories | - | - | - | - | - | - | - | - | - | - | - | (2,261) | (9,878) | (12,139) |
| Deposits | - | - | - | - | (81,304) | - | - | - | - | - | - | - | - | (81,304) |
| Property and equipment | 875,504 | - | - | - | - | - | - | - | - | - | - | (8,496) | (53,137) | 813,871 |
| Right-of-use assets | - | 229,091 | - | - | - | - | - | - | 2,765,174 | 713,649 | 234,860 | 66,248 | - | 4,009,022 |
| Intangible assets | - | - | 65,659 | - | - | - | - | - | - | - | - | (37) | - | 65,622 |
| Other assets | - | - | - | 230,222 | - | - | - | - | - | - | - | (28,368) | - | 201,854 |
| Loans and financing | - | - | - | - | - | - | - | (654,854) | - | - | - | - | - | (654,854) |
| Leases | - | - | - | - | - | - | 102,170 | - | (2,771,846) | - | (231,459) | - | - | (2,901,135) |
| Accounts payable | (875,504) | (229,091) | (65,659) | (230,222) | (159,646) | 208,804 | - | 1,255,832 | 2,769 | - | - | - | 63,015 | (29,702) |
| Reverse factoring | - | - | - | - | - | (208,804) | - | - | - | - | - | - | - | (208,804) |
| Provisions | - | - | - | - | - | - | - | - | - | (713,649) | (3,401) | - | - | (717,050) |
| Other liabilities | - | - | - | - | - | - | - | - | 3,903 | - | - | - | - | 3,903 |
| December 31, 2024 | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Consolidado | ||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Descrição | Aquisição<br> de bens do ativo imobilizado | Aquisição<br> de manutenção capitalizada | Aquisição<br> de bens do ativo intangível | Reservas<br> para manutenção | Acordos<br> de financiamento de fornecedores | Empréstimos<br> e financiamentos | Retroarrenda<br> - mento | Compensações<br> de subarrendamento | Compensações<br> de arrendamento | Aquisição<br> de arrendamentos | Constituição<br> de ARO | Modificações | Transferências | Total |
| Contas a receber | - | - | - | - | - | - | - | - | (401,267) | - | - | - | 587,157 | 185,890 |
| Subarrendamento de aeronaves | - | - | - | - | - | - | - | (39,505) | - | - | - | - | - | (39,505) |
| Estoques | - | - | - | - | - | - | - | - | - | - | - | - | 22,110 | 22,110 |
| Depósitos | - | - | - | 116,173 | - | - | - | - | - | - | - | - | (587,157) | (470,984) |
| Adiantamentos a fornecedores | - | - | - | - | - | - | - | - | - | - | - | - | (2,783,489) | (2,783,489) |
| Imobilizado | 208,154 | - | - | - | - | 79,222 | (3,845) | (641) | 5,052 | - | - | 73,310 | 361,252 | |
| Direito de uso | - | 229,884 | - | - | - | - | - | - | - | 1,084,930 | 501,864 | 987,188 | (18,792) | 2,785,074 |
| Intangível | - | - | 82,712 | - | - | - | - | - | - | - | - | - | 192 | 82,904 |
| Empréstimos e financiamentos | - | - | - | - | - | (79,222) | - | - | - | - | - | - | 1,067 | (78,155) |
| Arrendamentos | - | - | - | - | - | - | - | 39,505 | 239,000 | (1,137,073) | - | (1,237,322) | (24,207) | (2,120,097) |
| Fornecedores | (208,154) | (229,884) | (82,712) | (116,173) | 391,676 | - | 3,845 | - | 38,950 | 10,785 | - | - | 2,672,703 | 2,481,036 |
| Acordos de financiamento de fornecedores | - | - | - | - | (391,676) | - | - | - | - | - | - | - | - | (391,676) |
| Provisões | - | - | - | - | - | - | - | - | - | - | (501,864) | 250,134 | 97,819 | (153,911) |
| Outros ativos e passivos | - | - | - | - | - | - | - | - | 123,958 | 36,306 | - | - | (40,713) | 119,551 |
| 31 de dezembro de 2023 | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| 91 |
| --- |
- COMMITMENTS
| 40.1 | Aircraft acquisition |
|---|
Through contracts with manufacturers and lessors, the Company committed to acquiring certain aircraft, as follows:
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| Lessors | 17 | 31 |
| Manufacturers | 94 | 96 |
| 111 | 127 |
The amounts shown below are brought to present value using the weighted discount rate for lease operations, equivalent to 15.8% (15.8% on December 31, 2023) and do not necessarily represent a cash outflow, as the Company is evaluating the acquisition of financing to meet these commitments.
| Consolidated | ||
|---|---|---|
| Description | December 31, 2024 | December 31, 2023 |
| 2024 | - | 916,053 |
| 2025 | 1,960,910 | 1,290,764 |
| 2026 | 2,517,365 | 4,991,454 |
| 2027 | 5,910,751 | 4,359,775 |
| 2028 ^(a)^ | 5,284,514 | 2,595,179 |
| After 2028 ^(a)^ | 10,569,028 | 5,190,358 |
| 26,242,568 | 19,343,583 | |
| (a) | Such balances refer to the “After<br>2027” line disclosed on December 31, 2023. | |
| --- | --- | |
| 40.2 | Letters of credit | |
| --- | --- |
The position of the letters of credit in use by the Company is followed for the following purposes:
| Consolidated | ||||
|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | |||
| Description | R$ | US$ | R$ | US$ |
| Security deposits and maintenance reserve | 2,379,135 | 384,209 | 1,979,883 | 408,957 |
| Bank guarantees | 7,005 | - | 9,161 | - |
| 2,386,140 | 384,209 | 1,989,044 | 408,957 |
- SUBSEQUENT EVENTS
41.1 Non-binding Memorandum of Understanding
In January 2025, the Company signed a non-binding memorandum of understanding (“MoU”) with Abra Group Limited (“Abra”) aligning the terms and conditions for the potential business combination between Azul and Gol Linhas Aéreas Inteligentes S.A. (“Gol”).
| 92 |
| --- |
The MoU understandings about the governance of the combined entity and reinforces their interest in continuing negotiations on a proposed share exchange ratio and other conditions. If the transaction is implemented, Azul and Gol will keep their operating certificates segregated under a single listed entity.
The closing of the transaction is subject to Abra and Azul agreeing on economic terms of the transaction, the satisfactory completion of due diligence, entering into definitive agreements, obtaining corporate and regulatory approvals (including from the Brazilian antitrust authorities), satisfaction of customary closing conditions the consummation of Gol’s Chapter 11 plan of reorganization and receipt by Abra of consideration thereunder.
41.2 Restructuring
In January 2025, the Company completed the restructuring of its obligations with substantially all bondholders, lessors and OEMs, and the closing of offering of Superpriority Notes (“Superpriority Notes”) issued by Azul Secured Finance LLP, together with exchange offers.
The comprehensive restructuring and recapitalization included a structured financing plan, focused on improving liquidity and cash generation, and reducing leverage, with almost US$1.6 billion in debt, with an additional US$525 million principal amount of capital raised, as summarized below:
| 41.2.1 | Restructuringwith Lessors, OEMs and Other Suppliers |
|---|
The restructuring with lessors and OEMs contemplated:
• Elimination of equity issuance obligations owed to lessors and OEMs totaling approximately US$557 million, in exchange for 94 million new preferred shares in a one-time issuance to be completed in the first quarter of 2025;
• Extinguishment of US$243.6 million aggregate principal amount of existing notes held by certain lessors and OEMs (the “2030 Lessor/OEM Notes”) in exchange for other commercial considerations;
• Exchange of the remaining 2030 Lessor/OEM Notes for new unsecured notes due in 2032 and an option to pay interest in kind; and
• Binding definitive agreements with lessors, OEMs and other suppliers, enhancing additional cash flow improvements of over US$300 million across 2025, 2026 and 2027.
By achieving these results, Azul was able to access the full gross proceeds of the Superpriority Notes, including the additional US$100 million that had been reserved upon satisfaction of certain conditions.
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41.2.2.1 Superpriority Notes
The Superiority Notes were issued on a private placement basis to a group of noteholders and holders of convertible debentures, as well as certain other existing noteholders, in the principal amount of US$525 million, with a variable rate and maturity in 2030, guaranteed by the Company, ALAB and substantially all of Azul’s other subsidiaries.
The Superpriority Notes are secured on a superpriority basis by a shared collateral package prior to payments on the New Exchange Notes and certain other debt and obligations of Azul pursuant to priorities established under an intercreditor agreement.
41.2.2.2New Exchange Notes
In exchange for the existing notes subject to the Exchange Offer (“Existing Notes”), the subsidiary Azul Secured issued “New Notes” with the following terms:
| (i) | US$1,048,839 in principal amount<br>of 11.9% Senior Secured First Out Notes due 2028 (“New 2028 Notes”) |
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| (ii) | US$238,015 in principal amount<br>of 11.5% Senior Secured Second Out Notes due 2029 (“New 2029 Notes”), and |
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| (iii) | US$546,620 in principal amount<br>of 10.9% Senior Secured Second Out Notes due 2030 (“New 2030 Notes”). |
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The New 2028 Notes are secured on a “first out” basis after payments on the Superpriority Notes but prior to payments on the New 2029 Notes or the New 2030 Notes, among other debt and other obligations, pursuant to priorities established under an intercreditor agreement.
In addition, Azul has today entered into supplemental indentures to amend the terms of the Existing Notes pursuant to its solicitation of consents to eliminate substantially all of the restrictive covenants, events of default and related provisions in the Existing Notes and to release the collateral securing the Existing Notes.
The restructuring and recapitalization with the bondholders contemplated:
• Initial financing: US$150 million funded in October 2024, which was fully repaid in January 2025;
• 2030 Senior Notes: US$525 million principal amount, with interest on the principal amount can be paid in kind or in cash at Azul’s election; and
| • | Equitization into preferred shares<br>(including represented by ADRs) of US$784.6 million of the new exchanged 2029 and 2030 notes (“New Exchange Notes”), as follows: |
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| o | 35.0% of the principal amount<br>of the New Exchange Notes shall be equitized no later than April 30, 2025; and |
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| o | 12.5% of the principal amount<br>of the New Exchange Notes shall be equitized upon completion of an equity offering that raises net proceeds of at least US$200 million. |
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The remaining 52.5% of the principal amount of the New Exchange Notes shall be exchanged no later than April 30, 2025 into new exchangeable with interest at a rate of 4.0% cash plus 6.0% PIK.
| 41.3 | Approval of the share capitalincrease limit |
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On February 4, 2025, the Board of Directors, approved the Company's capital increase, within the limit of the authorized capital provided for in Article 6 of the Company's Bylaws, through the private subscription of new preferred shares, in the amount of, at least, R$1,509,288 and, at most, R$6,132,393, with the issuance of at least 47,033,273 and a maximum of 191,101,066 preferred shares, all nominative and with no par value, at an issue price of R$32.0897878718 reais per preferred share, which was fixed without unjustified dilution for the current shareholders, based on negotiations between the Lessors/OEMs and the Company, independent and unrelated parties with different interests, taking into consideration, among other aspects, the criteria set out in items I and III of article 170, paragraph 1 of Law 6,404/1976 (“Capital Increase”).
Pre-emptive rights will be granted to holders of common and preferred shares issued by the Company, under the terms of article 171 of Law No. 6,404/1976, in accordance with the information provided in the Notice to Shareholders.
41.4Approval of the share capital increase limit subject to approval of the Bylaws
On February 20, 2025, the Board of Directors approved, subject to the approval of the change in the limit of the authorized capital at the Extraordinary General Meeting of February 25, 2025 (“EGM”), the Company's capital increase, within the limit of the authorized capital, under the new wording of article 6 of the Company's Bylaws submitted to the EGM, through the private subscription of new common shares and new preferred shares, to be issued in the current existing proportion, in the amount of, at least, R$72,000 and, at most, R$3,370,259, with the issuance of at least 1,200,000, and a maximum of 2,000,000 new common shares and 722,280 new preferred shares, all registered and with no par value, at an issue price of R$0.06 reais for the New Common Shares and R$4.50 reais for the New Preferred Shares.
The differences between the issue price of the New Common Shares and the New Preferred Shares arises exclusively from the ratio of 1:75 corresponding to the economic benefit attributed by the Bylaws to the preferred shares. Thus, all the Company's shareholders will be subscribing for shares at the same economically equivalent price.
Elton Flavio Ribeiro
CRC 1SP 253891/O-0
Controllership, tax and internal control director
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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: February 24, 2025
Azul S.A.
**** By: /s/ Alexandre Wagner Malfitani Name: Alexandre Wagner Malfitani Title: Chief Financial Officer