Azul S A Sp/Adr

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. If you have a question, click on the Q&A icon at the bottom of your screen and write your name and company. When your name is announced, please turn your microphone on and proceed. For those who are listening to the conference on the phone, press 9 to join the queue and 6 to accept the audio when requested. I would like to turn the presentation over to Thaís Everly, Head of Investor Relations. Please proceed, Thaís.

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 referenced are available on our IR website. Presented today will be John Rogerson, CEO, and Abishat, the president of Azul. Alex Moffittani, our CFO, is also here for the Q&A session. Before I turn the call over to John, 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 findings. 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 John.

Thank you, Thais. Welcome, everyone, and thank you for joining us today on our first earnings call following successful completion of our restructuring process. Before we begin, I would like to take a moment to recognize our more than 14,000 crew members. Their dedication, professionalism, and passion were essential for Azul to deliver the strongest quarter in our history while simultaneously completing a highly complex restructuring process. What you will see today is a reflection of their unwavering commitment for which we are all very grateful. The fourth quarter was a record-setting quarter for Azul. We reached all-time highs in revenue, RASC, EBITDA, and EBIT. These results highlight not only the strength in our demand and our differentiated nature of our business, but also already reflect the significant improvements in our capital structure and cash generation capabilities while we were still in our restructuring process. This shows how Azul's restructuring process was not only delivered in record time, but exceeded all of our set targets at the onset of our restructuring. On slide three, you can see the summary of our fourth quarter 2025 results. Our revenue was up 5% year over year to a record 5.1 billion reais, with a strong record RASC of more than 46 cents. Our record quarterly EBITDA of 2.1 billion reais. with a margin of 36.9%, an EBIT of 1.4 billion Reais, reflect the strength of our unique business and the competitive advantages keeping Azul at industry-leading levels of profitability. Moving to slide four, we demonstrate our pricing flexibility supported by our disciplined capacity growth. Our RASC increased 3.5% year-over-year to an all-time record while growing capacity. This reflects the unique competitive advantages of our network combined with the effectiveness of our commercial strategy. Another differential of our business is our beyond the metal business units. Compared to fourth quarter 2019, our high margin business units Contribution to RAS grew from 15% to a very strong 21% of top line revenue in fourth quarter 2025. As you can see on slide five, overall our RAS grew 40% over the last six years. Our business students have done an exceptional job expanding beyond the metal, identifying innovative and high margin opportunities beyond the core ticket revenue. Our loyalty business, Azul Fidelity Dodge, our cargo business, Azul Cargo, and our vacations business, Azul Viajings, continue to grow at double digits, providing stable recurring high margin revenue streams, along with our MRO business and our regional aviation business. These units are essential to the diversification of our revenue base and are a major competitive advantage relative to our peers. Moving to slide six, you can see our operating efficiency. Our restructuring was truly transformational for our business. Beyond strengthening our balance sheet, we also took the opportunity to reimagine Azul's entire cost structure. This resulted in productivity increasing 5.7% and our cast remained flat despite a 4.3% inflation and a 1.5% increase in fuel prices. Our continued focus on productivity, automation, and process improvement allowed us to maintain cost discipline while expanding margins. And I just want to reiterate, we have the lowest unit cost in the region. Now that we've reviewed our fourth quarter results, let's turn to the Chapter 11 restructuring and the pivotal role it played in strengthening our company on a go-forward basis. I'm extremely proud of what we've accomplished during the restructuring. We emerged with a much stronger balance sheet, significantly reduced leverage, and enhanced cash generation, all while continuing to deliver strong operational and financial performance. Even more remarkable is that together with the support of our main stakeholders, including our aircraft lessors, creditors, and our two great strategic partners, we were able to implement this comprehensive transformation in less than nine months, while maintaining a strong customer value proposition and enhancing our unique competitive advantages. Turning to slide eight, you will see the magnitude of this transformation. including lease liabilities by $2.6 billion. Even more impactful, we achieved more than a 50% reduction in annual interest payments and cut recurring lease payments by roughly one-third. These improvements brought our net leverage to below 2.5, the lowest leverage in Azul's history. When we embarked upon our restructuring process, our target was three. As you can see, we far exceeded our original goal. We secured $1.375 billion in senior notes, an issuance that was more than seven times subscribed, and $950 million in equity investments. And I want to remind everybody that our existing creditors upsized their equity commitment right before our exit, based on all that we did to restructure the airline. On slide 9, you can clearly see how our capital structure has been transformed when compared to 4Q 2024. Loans and financing were reduced by more than 40%, while lease liabilities decreased by over 46%. And net leverage went from 4.9 in 4Q 2024 to less than 2.5 upon emergence in February 2026. This represents a fundamental de-risking of our business. It reduces volatility, strengthens our cash generation, and gives Azul the financial and fleet flexibility to plan for the future with confidence. It also ensures we can respond effectively to any scenario ahead, including potential macroeconomic challenges. On slide 10, we show the recurring savings generated by our restructuring. Lease payments in 2026 will be 30% lower, and interest payments will be more than 50% lower compared to pre-restructuring estimations. Combined, this represents a $2.2 billion in recurring annual savings. These improvements substantially strengthen our cash flow profile and support long-term deleveraging. We continue to maintain a disciplined approach to liquidity management, ensuring our cash position remains robust and we're well aligned with the needs of our business. Throughout the restructuring and into 2026, we strengthened our balance sheet, reduced financial obligations, and improved our cash generation, giving us a robust liquidity position. Today, Azul is supported by a more efficient capital structure, predictable cash flows, and a clear focus on cash generation. This strong foundation allows us to navigate market volatility, as Avi will now explain in more detail.