Contributor - South America

Richard Pedicini

Brazil’s Azul Linhas Aereas has posted two consecutive quarters of positive earnings and recovered to “109 percent” of its domestic capacity compared with the first quarter of 2019, according to the airline. Azul has leveraged its advantages—it operates the most domestic routes of any Brazilian airline and a heterogeneous fleet that lets it match capacity to demand—to move in the tumult of the pandemic ahead of rivals Gol and TAM with a 37.89 percent market share for the quarter.

 


Serving more destinations also stands as a key advantage for Azul Cargo, where revenue grew 62.8 percent compared with the same period in 2020. Azul has long laid claim as Brazil’s largest airline in destinations served and operations performed, but its mixed fleet of regional and small narrowbody aircraft meant it carried fewer passengers. With the closure of its purchase of TwoFlex in May of last year, Azul added routes and 24 Caravans to its existing fleet of Embraer and ATR aircraft, further increasing its reach and operational flexibility, which helped reduce year-to-year operational expenses by 22.4 percent for the period.

 


As the airline has gradually recovered and expanded its network, load factors dropped from 81 percent during last year’s fourth quarter to 76.5 percent during the first quarter of 2021. While the company has recovered to 2019 levels, it remains behind the first quarter of 2020 in ASKs and RPKs, down 23 and 27.4 percent, respectively. Financial results did not match the operational gains but the company noted that liquidity was “robust.”

 


Azul’s growth had been stymied by its established rivals, who in 2019 blocked its acquisition of parts of the failed Avianca Brasil and so gaining entrance to the coveted Congonhas Airport, from which it had been frozen out. Azul established its hub at Campinas’s underutilized Viracopos Airport, which no one else wanted; expanded its routes to cities no one else served; and with the crisis of the pandemic and its emergencies (Azul was the first airline to offer to carry vaccines free), Azul enjoyed the flexibility to navigate that the crisis demanded, while its rivals, with smaller networks of routes and larger aircraft, did not.&nbsp;

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