Azul Reports Reports Third Quarter Net Income of R$117 million

Revenue increased 23% year over year reaching a record R$2.4 billion

Azul B3:AZUL4, NYSE:AZUL) the largest airline in Brazil by number of cities and departures, announces today its results for the third quarter of 2018 ("3Q18"). The following financial information, unless stated otherwise, is presented in Brazilian reais and in accordance with International Financial Reporting Standards (IFRS).

Financial and Operating Highlights for 3Q18

• Operating income was R$174.1 million, representing a margin of 7.1%, even with the 25.1% devaluation of the Brazilian real and the 47.1% increase in fuel price per liter.
• EBITDAR increased 7.6% to R$675.4 million, representing a margin of 27.7%.
• Net income totaled R$116.6 million, compared to R$199.2 million in 3Q17.
• Passenger traffic increased 20.2% over a capacity increase of 19.3%, resulting in a higher load factor of 83.7%, 0.6 percentage points higher than in 3Q17.
• In addition to the double-digit growth in capacity, RASK increased 2.7% year over year. Assuming a flat stage-length, RASK rose 8.0% year over year.
• Total CASK increased 8.7% despite the intense currency volatility and the sharp increase in fuel. CASK ex-fuel decreased 1.8%. On an exchange rate and fuel neutral basis, CASK would have been lower by 6.8%.
• Net financial expenses decreased 9.4% to R$96.2 million due to the lower average cost of debt.
• At the end of 3Q18, our total liquidity position totaled R$4.1 billion, up R$ 1.0 billion compared to 3Q17, representing 46.2% of the last twelve months' (LTM) revenues.
• Total debt considering the effect of currency swaps decreased R$99.6 million in the quarter to R$3.5 billion resulting in an adjusted net debt to EBITDAR leverage ratio of 4.2x.
• Azul's operating fleet totaled 120 aircraft at the end of the quarter, including 17 next-generation A320neo aircraft, which represented 27% of total capacity. Average fleet utilization increased 10.5% year over year to 11.6 hours.
• Year to date, TudoAzul recorded a 36% increase in gross billings ex-Azul compared to the same period in 2017.
• Azul cargo recorded a 62% year-over-year increase in revenue.
• Azul was the most on-time airline in Brazil in 9M18 and one of the top five in the world, with an on-time performance of 87.1% (FlightStats).

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