Azul S.A. is a Brazilian airline founded on January 3, 2008 by entrepreneur David Neeleman, beginning operations on December 15 of the same year. From the outset, the company adopted a strategy focused on investing in a scalable operating platform and a young fleet, supported by initial capital of approximately R$ 400.7 million. In less than six months of operation, in May 2009, it became the third-largest airline in the country in terms of domestic market share, according to ANAC. A key milestone in its trajectory was the acquisition of TRIP in August 2012, then the largest regional carrier in South America in terms of number of destinations, whose operational integration was completed in 2014 and consolidated Azul as one of the leading companies in the regional aviation segment in Brazil. Azul’s shares, under the ticker AZUL3, are traded on B3, placing it among the listed companies in the passenger and cargo air transportation sector in the Brazilian capital markets.

Azul’s business model is primarily structured around passenger air transportation, complemented by cargo and logistics, tourism, and loyalty services. The company’s corporate purpose includes taking equity stakes in companies engaged in passenger, cargo and mail air transportation activities, with Azul Linhas Aéreas Brasileiras S.A. (ALAB) as its main operating subsidiary. The company pursues a strategy of broad reach and connectivity, operating a diversified fleet composed of Embraer E-Jets, ATR, Airbus narrowbody and widebody aircraft, as well as Cessna Caravan aircraft in its regional subsidiary Azul Conecta. As of December 31, 2024, the operational passenger fleet totaled 179 aircraft, with an average age of 8.5 years (excluding Cessna), enabling capacity adjustments to demand in markets of different sizes. This diversity of aircraft types is central to its strategy of achieving a low average cost per flight and serving both major centers and smaller cities.

Azul’s main activities are concentrated in scheduled passenger air transportation, which accounted for about 98.7% of net revenue in the fiscal year ended December 31, 2024, including related ancillary revenue such as the sale of points for the Azul Fidelidade program, baggage allowances, cancellation, no-show and ticket change fees. The company also operates adjacent businesses through Azul Cargo, a logistics solutions unit responsible for cargo transportation, and Azul Viagens, its tour operator. Azul Cargo provides services to approximately 7,000 cities and communities in Brazil, with more than 17,000 routes served within up to 48 hours and around 350 service locations, supported both by belly capacity in passenger flights and by dedicated freighter aircraft, such as converted Airbus A321 and E-Jets. Azul Viagens, in turn, sells packages that combine air tickets, lodging and ground transportation, through its own stores and thousands of partner travel agencies, leveraging fleet flexibility and a diversified network to expand margins during periods of lower corporate utilization, especially on weekends.

Azul’s route network is one of the company’s main competitive advantages. As of December 31, 2024, the airline offered approximately 980 daily flights serving 169 domestic and international destinations, resulting in more than 400 direct routes, with leadership in 134 Brazilian cities in terms of departures, according to ANAC. In the domestic market, the company served 160 destinations in Brazil, nearly twice as many as its main competitors GOL and LATAM, and was the sole operator in 94 of these destinations. The network is structured around three main hubs: Viracopos (Campinas), its primary connection center and leader in daily domestic flights; Belo Horizonte, with a strong presence in Minas Gerais; and Recife, which strengthens connectivity in the Northeast. In addition to these hubs, Azul maintains a significant presence at strategic airports such as Guarulhos, Congonhas, Santos Dumont, Galeão, Porto Alegre, Cuiabá, Belém and Manaus. The subsidiary Azul Conecta, acquired through the purchase of TwoFlex in 2020, further expands this reach, serving more than 570 destinations in Brazil with Cessna Caravan aircraft and operating slots on the auxiliary runway at Congonhas Airport in São Paulo.

The demand profile served by Azul combines higher-yield corporate passengers with more price-sensitive leisure travelers. The company maintains a significant share in the corporate segment, with about 31.5% of revenue from corporate travel agencies in Brazil in 2024, according to ABRACORP, supported by its network connectivity and its position as the only option in several regional markets. In leisure, Azul operates a segmented pricing model, offering more attractive fares for advance purchases, as well as exclusive nonstop leisure routes, often used on weekends through Azul Viagens. There is no significant revenue concentration in any single customer, and the company reports having no customers responsible for more than 10% of total net revenue, a typical feature of scheduled airlines with a highly fragmented base of end consumers and travel intermediaries.

Azul’s operations are not limited to passenger and cargo transportation; the company has also developed important complementary assets, particularly the Azul Fidelidade loyalty program and its partnership and codeshare strategy. As of December 31, 2024, Azul Fidelidade had more than 18 million members, with around 1.1 million active members per month, generating revenue both through the issuance of points on tickets and the sale of points to partners, including financial institutions. This program is reinforced by financial products such as co-branded credit cards and is considered a strategic tool for customer retention and recurring revenue generation. In the field of international partnerships, Azul maintains codeshare agreements with airlines such as United and TAP, providing access to hundreds of additional destinations around the world and integrating its domestic network into global passenger flows. In innovative segments, a highlight is the agreement announced in 2021 with Lilium for the development of an eVTOL network in Brazil, linked to the company’s strategy of seeking lower-carbon air mobility solutions, subject to certifications and regulatory approvals.

Azul’s shares (AZUL3) traded on B3 represent a company operating in an environment that is heavily regulated by Brazilian civil aviation legislation and specific government bodies. The company is subject to the Brazilian Aeronautical Code and to regulations issued by entities such as the National Civil Aviation Agency (ANAC), responsible for regulating, authorizing and supervising air services, certifying operators and setting operational safety rules; the National Civil Aviation Secretariat, linked to the Ministry of Ports and Airports, in charge of policy-making and sector planning; and the Airspace Control Department (DECEA), which manages airspace and air traffic control. Azul’s activities are also influenced by decisions and guidelines from the Civil Aviation Council (CONAC), INFRAERO, at the airports it manages, and the National Commission of Airport Authorities (CONAERO), as well as international conventions ratified by Brazil, such as Warsaw, Chicago, Geneva and Montreal, which regulate liability, safety and operating standards in international air transportation.

From an environmental, social and governance standpoint, Azul has outlined initiatives related to innovation and sustainability in its fleet and air mobility strategy. The alliance with Lilium, which envisions the future introduction of 100% electric, zero-carbon eVTOL aircraft, illustrates the company’s interest in transportation solutions with lower environmental impact, still subject to technical certifications and regulatory authorizations. On the social and customer service front, the company invests in intensive crew training, emphasizing operational safety and service, and monitors satisfaction metrics such as Net Promoter Score, which reached 42.7 points in 2024. In terms of governance, Azul has a concentrated shareholding structure, with founder David Neeleman as controlling shareholder, holding a significant portion of voting capital, and maintains a board of directors composed of members with business backgrounds and industry experience, reflecting a typical configuration for capital-intensive companies in the commercial aviation segment.

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