Azul plans to expand its routes by around 30% in 2023, supported in part by winning a significant number of slots at Congonhas airport in São Paulo, said the airline’s chief executive, John Rodgerson.
“We should grow well in Congonhas starting next year,” Rodgerson said in an interview with Reuters at the company’s headquarters in Alphaville, São Paulo.
Although it is the largest airline in the country, according to data from the National Civil Aviation Agency (Anac), Azul has only 26 authorizations for flights and take-offs (slots) in Congonhas, while its rivals — Gol and Latam — have almost 250 each. . For years, the company has been asking to receive a greater number of licenses in the terminal.
“The new rule is fairer,” said the executive.
Changes approved by the National Civil Aviation Agency (Anac) in July include the distribution of 86 slots at Congonhas airport to encourage competition, 45 of which are new and 41 previously held by the former Avianca Brasil.
In a report last month, Bradesco BBI estimated that 84 of the licenses go to Azul. This means that the company’s capacity at the terminal will more than quadruple from 2023.
The increase in capacity by Azul in Congonhas partly reflects the effort of the federal government to increase the number of flights at the terminal, thus increasing the revenues it should receive from the operation by a private entity, after the Spanish company Aena won the auction for the concession of the airport last month.
Rodgerson avoided citing numbers, but said that Azul, which will receive a new plane from Embraer every two months for the next few years, will start selling tickets from the new slots in March.
According to the executive, the new slots will help Azul in its plans to increase the total number of destinations served in Brazil in 2023, from the current 154 to 200 cities, with a focus on regions of high economic growth, in the Midwest, North and Northeast of the country. country. The company’s current fleet comprises 164 aircraft.
The plans reveal how Azul plans to capitalize on the gradual recovery of the country’s air sector from the effects of the Covid-19 pandemic, which practically froze flights for several months, leaving as a consequence a pile of billions of debts.
From the end of 2019, before the pandemic, until last June, Azul’s net debt/Ebitda ratio rose from 2.7 to 6.2 times, to R$16.9 billion.
With a greater focus on domestic operations, Azul has been recovering faster than its rivals and has been using the better-than-expected growth of the country’s economy in 2022 to accelerate revenues, more than doubling compared to last year, to R$16 billion, said Rodgerson.
“We had record sales in September and this month we should reach the mark of 1,000 daily flights”, said the executive. The number is about 10% higher than at the end of 2019.
“We are going to break a yield record (revenue per kilometer flown) in the fourth quarter,” added the president of Azul, explaining that, despite the combination of high interest rates and high inflation in recent months, there is still a strong pent-up demand for flights in the country.
On the international front, the executive said that Azul does not intend to renew a codeshare agreement with United Airlines, which it recently expired. According to him, the Brazilian company wants to have greater flexibility for agreements with other North American airlines that have a more robust operation from Florida, such as JetBlue.
aviation fuel
Rodgerson estimates that the increase in flight offers should help reduce airfare prices, one of the products that have most pressured inflation in the country, with a rise of 75% in the 12 months through August, while IPCA inflation rose 8.73 %.
This evolution mainly reflects the jump of approximately 170% in the price of jet fuel in the last three years, in the wake of the rise in oil and the dollar.
According to the executive, the biggest problem is the cost structure used by Petrobras, responsible for about 90% of the QAV used in the country, which reflects the variation in international prices of the product, exchange variation and the cost of transporting the fuel.
“But if it’s produced here, it doesn’t make sense to charge for the cost of transporting the fuel,” Rodgerson argued.
On another front, the president of Azul said he was optimistic about the possibility of achieving a gradual reduction in the ICMS rate on QAV in new states, as in São Paulo, where it fell from 25% to 12% by 2020, when it was raised to 13.3%. The sector tries to renew the 12% rate for another four years.
Go fly?
Rodgerson said that the multiplication of destinations served in Brazil will open a new phase of growth for Azul, a process on which he will focus in the coming years.
This week, the company surprised the market by announcing the appointment of Vice President of Revenue, Abhi Shah, as president of Azul, reporting to Rodgerson, who remains as CEO.
The executive explained that the change was to make the company’s management more similar to what already happens in large US airlines, taking away from the CEO (executive president) the direct involvement in some day-to-day management duties, and freeing him to take care of strategy.
“I’m not leaving here,” Rodgerson said.
Source: CNN Brasil
Joe Jameson, a technology journalist with over 2 years of experience, writes for top online news websites. Specializing in the field of technology, Joe provides insights into the latest advancements in the industry. Currently, he contributes to covering the world stock market.
