Azul Reports Second Quarter Results

Azul B3:AZUL4, NYSE:AZUL) the largest airline in Brazil by number of cities and departures, announces today its results for the second quarter of 2018 ("2Q18"). The following financial information, unless stated otherwise, is presented in Brazilian reais and in accordance with International Financial Reporting Standards (IFRS). Prior periods presented have been adjusted to reflect adoption of new IFRS accounting standards.

Financial and Operating Highlights for 2Q18

• Net income adjusted for non-recurring items totaled R$238.3 million, compared to a net loss of R$38.6 million in 2Q17
• Adjusted operating income was R$75.8 million yielding a margin of 3.7% compared with R$98.8 million and a margin of 5.8% in 2Q17.
• Passenger traffic (RPKs) increased 17.4% over a capacity increase of 18.6% resulting in a load factor of 80.1%, 0.8 percentage points lower than in 2Q17
• In addition to the double-digit growth in capacity, RASK and PRASK adjusted for the loss in revenue from the truckers' strike in Brazil increased 1.6% and 1.1% year over year. Assuming a flat stage-length, RASK rose 8.1% year over year.
• Adjusted CASK ex-fuel increased 0.3%, despite the 12.2% devaluation of the Brazilian real. On an exchange rate neutral basis, CASK ex-fuel would have been lower by 5.1%.
• Net financial expenses decreased 26.9% from R$111.8 million to R$81.8 million due to lower average cost of debt and lower leverage year over year.
• At the end of 2Q18, our total cash and receivables position totaled R$3.8 billion, representing 45% of the last twelve months' revenues.
• Azul's operating fleet totaled 121 aircraft at the end of the quarter, including 15 next-generation A320neo aircraft, representing 24% of total capacity.
• TudoAzul recorded a 38% year over year increase in gross billings ex-Azul.
• Azul cargo recorded a 64% year over year increase in revenue.
• For the eighth year in a row, Azul won the Skytrax award of Best Regional Airline in South America, and also Best Airline Staff.
• During the quarter, Azul maintained its leadership position on all customer satisfaction categories measured by ANAC's customer platform, consumidor.gov.br
• Azul was the most on-time airline in Brazil in 1H18 with an on-time performance of 86.4% (FlightStats).

Refer to full documentation in the attachments box below.