Azul reports loss, enters negotiations to postpone deliveries
After falling in the red for the first quarter of 2020, Azul (AZUL) , Brazil’s third-biggest airline, entered negotiations with Embraer to defer 59 195-E2 deliveries.
Azul Linhas Aéreas Brasileiras reported a loss of 6.1 Brazilian real ($1 billion) in the first quarter of 2020, against a profit of 125 Brazilian real ($21 million) in the same period of 2019. To cope with the drop in demand and alleviate the effects of the pandemic felt by the whole airline sector, the carrier took a series of cost-cutting measures.
“Since the beginning of the pandemic, Azul (AZUL) quickly adjusted its network, and in the second half of March it reduced its capacity by 50%,” it said in a statement. “Azul (AZUL) expects capacity reduction between 75% to 85% in the second quarter of 2020 compared to the second quarter of 2019.”
Azul (AZUL) managed to reduce its salary expenses by more than 50% in the period, as more than 10,500 crew members, 78% of the carrier’s workforce, have joined its unpaid leave program.
"Approximately 90% of our fleet is under an operational lease, which gives us more flexibility to work with our partners during this uncertain environment," notes the airline.
Azul to delay fleet expansion “as much as possible”
Additionally to the reduction in operating costs, Azul (AZUL) entered negotiations with the Brazilian manufacturer Embraer to defer the delivery of 59 195-E2. Initially scheduled between 2020 and 2023, the aircraft deliveries could be postponed to 2024.
Azul (AZUL) was the first company to receive the manufacturer’s brand new E195-E2 jet, in August 2019.
The airline is reportedly negotiating similar deals with Airbus and ATR. The current fleet expansion plan was to add 40 A320neos to its fleet by 2024.
“Although our results will be impacted by the COVID-19 pandemic in the short term, I am confident that we are best positioned to overcome this challenge and that we will come out of this crisis stronger than ever before,” commented John Rodgerson, CEO of Azul (AZUL) .
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