Azul S.A. (NYSE:AZUL) Q4 2024 Earnings Call Transcript

Azul S.A. (NYSE:AZUL) Q4 2024 Earnings Call Transcript February 24, 2025

Azul S.A. misses on earnings expectations. Reported EPS is $0.09 EPS, expectations were $0.12.

Operator: Hello, everyone, and welcome to Azul’s fourth quarter earnings call. My name is Zach, and I will be your operator for today. This event is being recorded, and all participants will be in listen-only mode until we conduct a Q&A session following the company’s presentation. [Operator Instructions] I would like to turn the presentation over to Thais Haberli, Head of Investor Relations. Please proceed, Thais.

Thais Haberli: Thank you, Zach, and welcome all to Azul’s fourth quarter earnings call. The results that we announced this morning, the audio of this call and the slides that we reference are available on our IR website. Presenting today will be David Neeleman, Azul’s Founder and Chairman; John Rodgerson, our CEO; and Alex Malfitani, our CFO. Abhi Shah, the President of Azul, is also here for the Q&A session. Before I turn the call over to David, I’d like to caution you regarding our forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company’s future plans, objectives and expected performance constitute forward-looking statements. These statements are based on a range of assumptions that the company believes are reasonable but are subject to uncertainties and risks that are discussed in detail in our CVM and SEC filings.

Also, during the course of the call, we will discuss non-IFRS performance measures, which should not be considered in isolation. With that, I will turn the call over to David. David?

David Neeleman: Thank you, Thais. Welcome, everyone, and thank you for joining us today. First, let me begin by thanking our incredible crew members for their passion and dedication. 2024 was a tough year for Azul. Like many airlines around the world, we were impacted by OEMs, supply chain and engine challenges, which created schedule uncertainty and operational disruption. This affected our customers and crew members in addition to a heavy financial impact of over BRL1 billion. Also, the Azul family and Brazil at large were severely impacted by a significant devaluation of the local currency and extreme floods in the state of Rio Grande do Sul, which resulted in the closure of the Porto Alegre Airport for over six months. Despite all these significant challenges, our crew members went above and beyond, taking care of each other and our customers on each and every flight.

I am proud of them, and I cannot thank them enough. Turning to Slide 3. The Azul business model more than ever demonstrated its value, thanks to our strategic and competitive advantages. The combination of a differentiated network with unique fleet flexibility, our high-growth business units, the lowest unit cost in the region, together with passionate crew members and supportive stakeholders is what allowed us to deliver the record results we present to you today. Slide 4. I would like to describe what I think is the strongest of our competitive advantages, our network. From the beginning, Azul was designed to be different. Our focus has always been to grow the market, to access demand that has never been accessed before. While our competitors focus its operations in three cities of Brazil, resulting in high overlap, our unique fleet and network combination allows us to be the only carrier in 82% of our routes, connecting over 150 destinations, many of which are located in the fastest-growing regions of Brazil.

Slide 5 is another clear way to see how differentiated our network truly is. In this chart, we show how much of each airline’s capacity is in the airports where they have over 60% share. As you can see, Azul leads the global industry with 63% of our capacity deployed at airports where we are the most relevant carrier. This means we choose to fly where we are strong, and we are strong in airports where we choose to fly. This is in clear contrast to the industry expectations that as we grew, we would inevitably face more competition. In fact, the opposite has happened. We have grown our markets within our network, increasing our strength and extending our competitive advantage. We truly built a unique business that allows us to succeed even in the most challenging moments.

Proof of that is the tremendous support we have received from all of our stakeholders, whom I would also like to thank. We have truly set up Azul to be successful for the long-term. With that, I will turn the time over to John to give you more details on our record results. John?

John Rodgerson: Thank you, David. We are very proud of what we built, and I too would like to thank our outstanding crew members. On Slide 6, you can see that we are excited to report another tremendous quarter with an all-time record revenue, EBITDA and EBIT. Our revenue was up 10% year-over-year to a record BRL5.5 billion with a strong RASK of BRL0.45. Our record quarterly EBITDA of BRL2 billion with a margin of 35.2% and EBIT of BRL1.2 billion reflects the strength of our unique business and competitive advantages, bringing Azul to industry-leading levels of profitability. On Slide 7, we break down the capacity and unit revenue metrics for the quarter. Even with capacity growth of 11% year-over-year and at the same time that fuel prices dropped 17% year-over-year, we sustained a historically strong RASK of BRL0.45.

This is a clear demonstration of how we can generate high-quality revenue in any macroeconomic environment. In addition to year-over-year trends, we also generated strong quarter-over-quarter improvements, even with Porto Alegre only partially reopening in October and not getting to full capacity until December of last year. As a result, we will see further revenue improvements as we head into the first quarter of this year and beyond. Overall, we see a disciplined industry environment with encouraging revenue trends and more unit revenue gains expected in the quarters ahead. Turning to Slide 8, we highlight another one of our structural competitive advantages, the diversification of our revenue base. Our business units have done a great job of what we call growing Beyond the Metal, finding new and unique ways to increase our revenue outside of just ticket revenue.

Our high-margin business units contribute — contribution to RASK grew from 15% in 4Q ’23 to a very strong 23% in 4Q ’24. All units combined resulted in a positive impact of more than BRL450 million in the quarter and BRL1.5 billion in the year, accounting for 24% of our 2024 EBITDA. The investments we’re making in people, technology and products into these businesses is a key element of creating and extending our competitive advantages, allowing us to continue our profitable growth trajectory for years to come. On Slide 9, I would like to further highlight some key results from each of our business units. Our loyalty program, which continues to do well, now has more than 18 million members and increased 27% in gross billings ex airline year-over-year.

Our co-branded credit card ranked best in the country, has total spending that represents 0.5% of Brazil’s GDP. Let me say that again, 0.5% of the value of Brazil’s GDP is spent on the Azul credit card. Our vacations business continues to expand its network of agencies and stores throughout the country, resulting in an incredible 63% growth in gross billings in 2024. Our logistics business has returned to revenue growth as well, powered by a 9% increase in international revenue for the full year and a very impressive 54% growth in international revenue quarter-over-quarter. In summary, the growth beyond the metal is strategic and is a key part of the Azul story and a fundamental element of our competitive advantages. On Slide 10, we focus on what is becoming yet another competitive advantage.

Our CASK is the lowest amongst our peers. Overall CASK was down 6.5% year-over-year. Even more impressive is that despite an 18% devaluation of the local currency in the fourth quarter and almost 5% inflation in 2024, CASK ex-fuel remained flat. This was driven by our laser focus on efficiency and productivity, two examples of which I will show on the next slide. As you recall from our past two earnings calls, our Elevate plan became a new way of managing our business. In fact, Elevate was so important to us in 2024 that it has been incorporated into our yearly strategic planning moving forward. Slide 11 shows two very beneficial initiatives of our Elevate plan, increased aircraft utilization and productivity, which has been key in driving down our unit cost.

On the left, you can see how aircraft utilization has increased year-over-year. Among other reasons, this was accomplished by reducing aircraft ground time and optimizing our handling, catering and air processes, leading to an increase in utilization of almost 13%. On the right, you could see that the airline today is 10% more productive in terms of ASKs per FTE compared to last year or at any time in our history. Therefore, it’s fair to say that Azul has never been more productive and further gains are on the way. Summing it all up on Slide 12, you can see that the combination of our structural competitive advantages, growing business units and lowest unit cost have put Azul back on the path of consistent profitable expansion. Despite its challenges, 2024 was the best year in our history in terms of EBITDA generation.

2025 in turn is expected to be even brighter with significant revenue growth. With that, we’re in a position to reaffirm our outlook for 2025 with a projected record EBITDA of BRL7.4 billion. This superior operational performance is now paired with an optimized capital structure, thanks to the comprehensive restructuring we have negotiated with our bondholders, OEMs and lessors. I will now turn it over to Alex, who will provide more details about the capital restructuring.

Alex Malfitani: Thanks, John. As we have been communicating consistently, our comprehensive restructuring focused on improving liquidity and cash generation, resulting in reduced debt and leverage. Over the next slides, we will present in detail the robust capital structure that resulted from this plan. On Slide 13, you can see the different liability components we have eliminated from our balance sheet, resulting in almost BRL8.5 billion in debt being extinguished and an additional $500 million of new capital coming into the company. The first step of the plan was the elimination of equity obligations owed to lessors and OEMs totaling approximately BRL3.1 billion in exchange for 96 million new AZUL4 preferred shares, which are being issued right now in the first quarter of 2025.

The BRL2.7 billion you see on this slide represent the present value of these obligations. The agreements also extinguished a significant part of the 2030 notes held by lessors and OEMs with the remaining notes being exchanged for new unsecured notes due two years later in 2032 with an option for Azul to pay interest in kind. That is additional to the cash flow improvements of over $300 million across 2025, ’26 and ’27, also negotiated with our commercial partners. Given the successful agreements with lessors and OEMs, we then moved on to negotiating with our bondholders, we managed to reach an agreement to equitize into preferred shares $785 million of the 2029 and 2030 notes. By April 30, 35% of the notes’ value will be converted into preferred shares and 52.5% will be converted into new exchangeable notes also with a pay-in-kind interest option.

The remaining 12% shall be converted upon completion of an equity offering, raising at least $200 million. By reaching these agreements, we were able to access the full gross proceeds of the super priority notes of $500 million. These transactions significantly improved Azul’s capital structure and operational cash generation by eliminating not only the lessor and OEM equity issuance obligations, but also most of the 2030 lessor and OEM notes as well as the 2029 and 2030 bondholder notes. None of this would have been possible without the support of our partners and investors to whom I’m very thankful. Their support demonstrates how the aviation community and financial markets believe in the Azul business model. Slide 14 shows the resulting share count of all of these agreements.

On a fully diluted basis, once all convertible instruments are exchanged into shares, our total share count on equivalent preferred basis will be 2.3 billion shares. The shares issued to lessors and bondholders represent 85% of that base compared to 30% before we started the restructuring. As you all know, before this restructuring, we had two equity instruments, the convertible debenture issued in 2020 and the lessor and OEM equity instrument, which together would already represent a 30% dilution to our shareholder base. Since the dilution of these instruments is already included in the 85%, the incremental dilution from the new agreement is 55%. This means that we exchanged 55% of the company for a total debt reduction of over BRL6.3 billion.

You can see that illustrated on Slide 15. As we saw before, we reduced our debt by over BRL6.3 billion, including the new super priority notes we issued in January. If you do the simple math, this represents an implied valuation of over $2 billion. We have strengthened our balance sheet and can now turn our attention to expanding our margins and generating positive free cash flow. This has been the focus of a strategic planning effort we have just concluded and which John will now discuss. John?

John Rodgerson: Thanks, Alex. With the successful conclusion, we’re now even more excited about our future. As I mentioned before, we have incorporated Elevate into our long-term strategic plan, as you can see on Slide 16. Under a permanent safety mindset, we will focus on four major pillars to fly Azul into even brighter skies, cash generation and profitability, operational integrity, crew member engagement and customer experience, underpinned by a new framework of governance. Azul is already one of the most profitable airlines in the world. And now with our financial restructure completed, the best is ahead of us. Finally, on Slide 17, you can see how we will continue to expand profitability into 2025 and beyond. We still have significant fleet transformation upside to come with more next-generation aircraft being delivered.

Our business units continue to grow beyond our metal, delivering high margins and unit revenue expansion. Our new business management strategy will produce even lower unit cost and secure every additional revenue opportunity ahead of us. With our exclusive network platform and unique fleet flexibility and the lowest cost in the region, we’re very optimistic about the future. With that, David, Alex, Abhi and I are available to answer your questions as I turn the call over to the operator.

Q&A Session

Operator: [Operator Instructions] Our first question comes from Savi Syth, sell-side analyst, Raymond James. Savi, we’re going to open your audio, so that you can ask you question. Please proceed.

Savi Syth: Thank you. Good morning, and congratulations to the team on completing the current phase of your capital restructuring. Maybe, Alex, could you provide an update on like the major cash flow components for ’25 and ’26 after what’s been completed?

Alex Malfitani: Yeah. I think it’s still consistent with what we provided at Azul Day. If you look at the guidance for free cash flow that we showed, you can see the BRL7.4 billion EBITDA that we reaffirmed. And then you see the additional components of working capital, rent, CapEx and interest. Obviously, those numbers were provided when the real was a little bit stronger than what it is today. I think around the budget time, we were at about BRL5.50, the real shed up to BRL6.20. Now we’re at about BRL5.70. Savi, there’s a little bit of headwind here. But just to remind everyone, I think we’ve given these numbers in the past. But basically, when you see a 10% devaluation in the currency, to get back to breakeven on a free cash flow basis, we only need about a 6.5% increase to fares, right?

And obviously, from BRL5.50 to BRL5.70, we’re only talking about a 3% devaluation of the real. So the fair increase we would need to come back to that free cash flow guidance would be only about 2%, right, which is very much feasible, especially given the demand environment that we are seeing today. So we’ve reaffirmed the $7.4 billion EBITDA. And I think the free cash flow is something that we’re also still continuing to pursue for this year, right? We definitely — I think that’s what we all collectively are looking for. Clearly, we have a very sound strategy. Our EBITDA generation is best-in-class. But we all want to convert as much of that cash flow generation — much of that EBITDA generation into free cash flow going forward.

John Rodgerson: And, Savi, it’s a strategic pillar that the whole company is focused on, right? And so every crew member at Azul is aware of it, and our metrics are driven by it. Our bonuses are linked to cash flow generation now.

Alex Malfitani: Yeah. And that interest number that we talked about already reflects all of the components of this equitization, right? The debt reduction, the PIK option, right? So that is all consistent with everything that we’ve already announced so far.

Savi Syth: That’s helpful. Thank you. And then maybe just on kind of capacity, Abhi, just what are you expecting in terms of kind of the fleet deliveries this year and retirements? And how should we think about kind of domestic versus international growth as you kind of progress through the quarters?

Abhi Shah: Yeah. Hey, Savi, so you will see a higher growth first six months of the year, mostly because of Porto Alegre. So you will see kind of a peak in second quarter, and then it will come down 3Q and 4Q. In terms of deliveries this year, really, it’s only the E2. We have no Airbus deliveries this year. So our focus is going to be on the E2. Obviously, we’re pushing Embraer and like every OEM in the world that has its challenges. It is a constant monitoring and a constant engagement with them. And in terms of retirements, we do have E1 retirements this year. We are selling some aircraft, and we have some ATR retirements as well. And so we’re managing that. In terms of overall capacity, I think we’re going to be somewhere in the 10% to 12% range, mostly driven by international.

Domestic, I would say, is going to be high single-digits in the 8% range and then international is going to be high. The reason international is much higher is because one of the largest OEM impacts we had last year was on the wide-bodies. We had delays early in the year with aircraft that we were expecting that we didn’t get. And then we had impact late in the year with Rolls-Royce engines severely impacting our wide-body fleet. So, I would say, domestic, sort of high single-digits, around 8%, overall capacity growth about 10% to 12%.

Savi Syth: Very helpful. Thank you.

Operator: Thank you. The next question comes from Victor Mizusaki, sell-side analyst at Bradesco. Victor, we will open your microphone so that you can ask your question. Please proceed.

Victor Mizusaki: Hi. I have two questions here. The first one, with regards to the financial restructuring, if I’m not mistaken, there is a plan to raise like BRL200 million of equity. So my first question is if you can comment about the status of this process. And the second one, Azul called a Shareholders’ Meeting to approve the issuance of [owned] (ph) shares as part of the restructuring plan. So can we assume that controlling shareholders will subscribe this deal?

John Rodgerson: Yeah, I’ll take the second one, and then I’ll give the first one to Alex. Yeah, I think we’re excited. I mean, David is on the call, and he’s putting in money into the company right now. I think that’s — it’s a bullish sign for the company overall. And we’re also in the process of going to a single share class, right? And so that’s something that, as part of this restructuring process that will happen in about a year’s time. And so seeing the controlling shareholders put new capital in, they’re doing that at a slight premium to where the stock is today. I think that’s also kind of a bullish sign that they believe in the company and are — plan to be around. So I think that’s a good thing. I’ll let Alex kind of talk to kind of the final steps of the restructure.

Alex Malfitani: Yeah. Thanks, Victor. Yeah. So as we described, there are essentially three capital raises happening, right, as all part of the restructuring that we have already announced. The first one, which is happening right now is the equitization of the lessor and OEM obligations, which are going to generate about 96 million preferred shares at a price of BRL32 and some change, right? Then as also part of this restructuring, as John mentioned, the voting shareholders, the controlling shareholders are putting in more money into the company. That is also a capital increase that we have already announced, which will be made into ONs at the equivalent price of BRL4.50 per preferred share, which is about BRL0.06 per ordinary share.

And then there will be the equitization of the 2029 and 2030 notes. And then consistent with our bylaws and with Brazilian law, all of these capital raises allow for shareholders to participate. So, shareholders can buy together with the lessors at BRL32. They can buy together with the voting shareholders at BRL4.50 per preferred share, and then they will be able to equitize under the same conditions as the bondholders, and we have to do that until April 30, if you’ve seen that on our documentation, right? All of this is public information that we have already announced. So we have to see how much interest there will be from the market on all these capital increases. And then as you’ve also seen from all of our announcements, there is a remaining 12.5% equitization of the 2029 and 2030 notes that do depend on a capital raise of $200 million.

And so we will see the results. We’re focused on implementing all of these capital increases, and then we will see where we are with regard to the remaining requirement.

Victor Mizusaki: Thank you.

Operator: [Operator Instructions] The next question now comes from Rogerio Araujo, Bank of America. Rogerio, we will open your microphones so that you may ask your question. Please proceed.

Rogerio Araujo: Yeah. Hi, guys. Good afternoon. Thanks a lot for the time and also the question. I have a couple actually. One is regarding the number of shares that you just disclosed at BRL2.3 billion. Does it include the $200 million follow-on offer? And also in this restructuring, there is a clause saying the controller shareholders — actually, there is a clause saying that management team and Board members, they may have 11% share in the future, post dilution. It’s — can you disclose a little bit of the terms of those 11% shares and if this is somehow included in this calculation? That’s the first one. Thank you.

John Rodgerson: Rogerio, first question, it’s not included, right? And so we did not include the $200 million capital raise because that’s — that can happen at any time in the future. And so we’re giving the outstanding shares as of now. And yes, you are correct. There is a management incentive plan for the management team. It’s performance-based and time-based from a retention standpoint. And so it can result in up to 10%, 11% dilution as you suggested. However, there are certain criteria to getting there and the Compensation Committee at Azul is defining what those terms are. And that is our new long-term incentive plan that will be available for the company for the years to come. So it extinguishes all old equity plans that we had, and this is the new equity incentive plan to the management team.

Rogerio Araujo: Okay. Sounds clear. Thank you, very clear. The second one is regarding a haircut that was made in the 2030 notes, if I’m not mistaken, about $244 million. You say in the release that this was done in exchange for other commercial agreements. Could you please clarify what commercial agreements does it include?

Alex Malfitani: So, there was a cash component that was paid with a significant discount to face value on those notes. And then there were other, let’s say, commercial items in dispute, for example, maintenance reserve reimbursements or aircraft deliveries. It’s mainly, I think, in general, selecting lessors and continuing with our commercial relationship with lessors under market conditions, right? We have a lot of growth into our future. And so some of the concessions or some of the commercial agreements that we have negotiated essentially locks in some future demand that Azul has for future aircraft deliveries with specific lessors or it settles some disputes that we had in the past. But everything done — as you probably know, we had FDI inside the company here kind of checking all of the agreements that we have negotiated, validating it to make sure that they qualify towards the $100 million annual cash flow improvement that we had as a mission, right, from our bondholders to be able to access the full $500 million and the equitization.

And all of that has been certified and checked.

Rogerio Araujo: Great. Thanks very much, Alex. Have a great one.

Alex Malfitani: Thanks.

Operator: Thank you. The next question now comes from Savi Syth, sell-side analyst, Raymond James. Savi, we’re going to open your microphone, so that you may ask your question. Please proceed.

Savi Syth: Hey, thanks for the follow-up. Just, Abhi, I was wondering if you could provide a little bit more color on the current demand environment. I know there’s a lot of noise. I think the Carnival timing is not great for 1Q, but you do also have easy comps coming up. But just curious what you’re seeing both on kind of the leisure side and the business demand side here.

Abhi Shah: Yeah. Hey, Savi. So actually, we’ve been positively surprised with what we’ve seen January and especially February. You’re right. Normally, with Carnival kind of first week of March, you would expect kind of a lame duck February, if you will, and then corporate demand coming back right after Carnival. But we’ve been actually reasonably positively surprised in February with the [close-in revenue builds] (ph). They’ve actually been better than last year, which is a good sign. We see a disciplined overall discount environment as well. So looking at corporate discounts, looking at travel agency discounts, we see that’s pretty disciplined, which is a very good sign. Talking to our corporate customers, we see no signs of corporate demand slowdown or anyone trying to kind of pull back.

We see a lot of groups demand. We see a lot of demand for in-person trainings and conventions, which has been quite good as well. So — and for us, honestly, our operation has been much more stable than it was at the end of last year, especially on the international side. And so for us, just having less disruptions and less volatility has been a really good positive sign as well. So overall, I think I’ve been positively surprised with what I’ve seen so far in January, February. Next week is Carnival. So it’s going to be dead. But we do expect strong corporate rebound March 10th and onwards. So I would say, overall disciplined environment, overall corporate discounts, disciplined as well. And our operation has been stable, which has been a very good sign also.

Savi Syth: That’s helpful. Thanks, Abhi. If I might, just are you seeing any differences between kind of domestic versus international?

Abhi Shah: International continues to be good. And it was interesting because even when the currency kind of went to BRL6.30, we didn’t really see a slowdown in international either. And now it’s at BRL5.70 and it looks good. We’ve actually had to increase a little bit of capacity for the Carnival time frame because we were a little bit too booked actually. But it looks stable to me. The normal seasonality, spring time frame, very strong in the US. Europe, a little bit weaker. But as we look ahead to the Northern summer, we see Europe coming back strong and the US kind of holding its own. So we announced a Recifi to Porto. That’s already selling, and we will have a couple of more announcements coming down the pike next couple of weeks as well.

So we also announced — come back to Argentina for the peak winter season here. We’re excited about Mendoza and Barajas. So overall, pretty stable international, strong, I think, kind of the commentary that I’m hearing all around.

Savi Syth: Thank you.

Operator: Thank you. The next question comes from Guilherme Mendes, sell-side analyst, JPMorgan. Guilherme, we will open your microphone, so you may ask your question. Please go ahead.

Guilherme Mendes: Hey, thank you all. Hey, John, Alex, Abhi, thanks for taking my question. So regarding the proposal of the M&A with Gol, can you share some expectations regarding the CAT analysis for the proposed M&A in terms of timing and potential remedies? And the second one on the synergies. I mean, what is the timing for your expectation to capture synergies in terms of revenues and in terms of costs? Thanks, again.

Abhi Shah: Yeah. Hi, Guilherme. So obviously, we cannot comment too much publicly here. But what I will tell you is that we’re really confident in the technical analysis and what we propose, right? So let me just give you the quick highlights of what we see as the main benefits to the consumer and to Brazil. First is, we have very low overlap between Azul’s network and GOL’s network, right? And we think that the low overlap is a key driver to future growth. We look at the Brazilian market overall has not grown significantly for the last several years. We want to get to 200 cities served, in Brazil, and we think we can do that when we have these networks that are not overlapping that are very, very complementary to connect together, right?

So we really believe that on the technical case here that it is a case of growth of adding service. We believe that many more cities in Brazil, for example, should and will have service to international destinations, right? And so we think that that’s a key element of growth as well. And also, we think that we can build an airline that is going to be able to compete globally when it comes to fleet, when it comes to engines, when it comes to OEMs, when it comes to access to capital. And those are going to be really, really critical to keep this market growing. So all of this, we think, is our technical case. We see significant consumer benefit coming from this, and that’s the case that we’re putting forward.

Guilherme Mendes: Thanks, Abhi.

Operator: Thank you. The next question now comes from Michael Linenberg, sell-side analyst, Deutsche Bank. Michael, we will your audio, so that you may ask your question.

John Rodgerson: Mike, we can’t hear you. Mike?

Operator: [Operator Instructions]

John Rodgerson: Yeah, we can’t hear Mike. We’ll try to get back to him. If there are any other questions, we can move on. Otherwise, I think we’re done.

Operator: Okay. So, this closes our Q&A session for today. I’ll turn it over now to John so that we can — for closing remarks.

John Rodgerson: Well, I’d like to thank everybody. Obviously, a lot of information. Our IR team, Alex, Abhi, myself will be available to talk to you about Azul going forward. A lot of great things happening, lowest cost, highest EBITDA margins, I think, in close to the world right now. And so we’re very, very excited about the future. We fixed the balance sheet now. Now we’re off to the races, and we appreciate the support of all of our stakeholders, and we’re going to continue to grow a very profitable business. Thanks, everybody.

Operator: Thank you. This concludes Azul’s audio conference call for today. Thank you very much for your participation, and have a good day.