How Azul Finished 2020 With More Liquidity And More Planes

Despite the COVID-19 crisis, Azul Linhas Aereas almost doubled its liquidity in 2020 and increased its fleet by 13%, signaling one of the best recoveries worldwide. How did the Brazilian low-cost operator manage to do this? Let’s investigate further.

Azul Linhas Aereas
Azul increased the size of its fleet in 2020. Photo: Getty Images.

From April’s low point to a near recovery in December

In April, Azul had to nearly stop 100% of its operations due to the COVID-19 pandemic. Suddenly, the company went from having 116 destinations to 25, operating only a skeleton route of 70 daily flights.

Fast forward ten months and Azul has recovered 92 destinations. Now it flies to 117 cities, with 700 daily departures. Moreover, the airline expects that its domestic capacity for 2021’s first quarter will be higher than 2019’s first quarter.

Azul and GOL Linhas Aereas are cruising on the Brazilian domestic recovery. LATAM is also recovering quite well, although it is a little bit behind because it relies more on the international market.

John Rodgerson, Azul’s CEO, said,

“Our diversified fleet combined with our unique network advantages resulted in one of the fastest recoveries of any airline in the world. We ended the year with more than 90% of our domestic capacity recovery while remaining true to our network strategy by being the only carrier in 80% of the routes we fly.”

In 2020, Azul carried 14.79 million passengers, a 46.5% decrease compared to the previous year.

GOL and Azul Getty
GOL and Azul are having fast recoveries from the COVID-19 crisis. Photo: Getty Images.

The fleet plans going forward

Unlike many other low-cost carriers in the world, Azul has a very diverse fleet. GOL Linhas Aereas, for instance, only operates Boeing 737, and Volaris in Mexico has an Airbus A320 family fleet.

Instead, Azul has Airbus widebodies and narrowbodies, Embraer E1 and E2 family, ATRs, and Cessnas for commercial operations.

In 2020, many carriers reduced their fleets due to the COVID-19 crisis. Aeromexico rejected leasing contracts of many older airplanes; Lufthansa reduced its overall fleet size by 150 aircraft. Azul went the other way around.

The Brazilian carrier increased its fleet by 12.8% in 2020. It added two new Airbus widebodies and four new Airbus narrowbodies.

Additionally, Azul received five new Embraer E2 during the year, although it reduced its Embraer E1 fleet from 70 to 63.

Finally, the largest fleet growth came from the Cessna department. In 2020, Azul acquired Two Taxi Aéreo and rebranded it as Azul Cargo. The acquisition included 17 Cessna Caravan that are used for both cargo and passenger operations.

This year, Azul expects to receive four new Airbus aircraft. The remainder of E2 deliveries are delayed until 2024, said the airline management during the fourth quarter investors’ call.

Azul Conecta
Azul increased its fleet size by receiving 17 Cessna Caravan in 2020. Photo: Azul Linhas Aereas

What about liquidity?

In 2020, Azul nearly doubled its immediate liquidity. In January 2020, it had $2.2 billion reais in cash, and by December, it had more than four billion (US$710 million).

The airline managed to do this through cut-cost initiatives and capital raising. By December 31, cash represented 69.6% of its last twelve months’ revenues. Plus, the company had no significant debt repayments expected for the next twelve months. That means that Azul is in a good financial position overall.

John Rodgerson said,

“Azul begins 2021 in a strong position, but we are also aware of the continuing uncertainty. Therefore we must maintain strong discipline in capacity, costs, and cash. One year ago, we had 2.2 billion reais in cash, no vaccines on the horizon and we were flying only 70 flights a day. One year later, we have four billion in cash, 220 million vaccines arriving in the next four months, and more than 700 flights a day.”

There are still challenges ahead, but Azul started 2021 feeling confident of its competitive position, Rodgerson added.

Have you ever traveled with Azul? How was it? Let us know in the comments.