Azul S.A. (NYSE: AZUL) shares went through a significant rebound on Monday, following the release of its revised financial outlook for 2024. After a steep decline of -9.91% during regular trading hours, which saw the stock close at $2.09, Azul’s shares surged 6.22% in after-hours trading, to $2.22.
Expanding Capacity and Making Operational Changes
According to the revised outlook for 2024, Azul intends to boost capacity by around 7% over 2023 levels. But compared to earlier estimates, this expected rise is a more conservative forecast.
The main causes of the adjustment include a number of operational difficulties, such as the catastrophic flooding in Rio Grande do Sul in May that forced the closure of Porto Alegre Airport.
The temporary decrease of both domestic and international capacity, together with delays in aircraft deliveries from manufacturers, has affected the overall growth projections, even if a partial reopening is anticipated by October.
Leverage expectations and financial projections
Additionally, Azul offered revised financial estimates, projecting that its EBITDA will surpass R$6 billion by 2024. The revised capacity growth is the main reason for the decrease in this value when compared to the previous forecasts.
Moreover, Azul anticipates that its leverage ratio will be around 4.2x by the end of 2024. The reason for this forecast is that the company’s debt burden denominated in US dollars has grown due to decreased EBITDA and the devaluation of the Brazilian real against the US dollar.
Connectivity improvements and strategic partnerships
Significantly in a recent expansion move, Azul stated that it will be integrating Viasat Inc., a top worldwide supplier of satellite communications, into its collaboration to outfit seven of its new Airbus A330-900neo aircraft with Viasat’s Ka-band in-flight connectivity system.
It is anticipated that the first of these planes would go into service the following year. This project is a component of Azul’s larger plan to set itself apart in the Brazilian market by providing an enhanced connection experience.
When it comes to addressing the increasing need for in-flight connection, the new Airbus A330-900neos will improve customer satisfaction by offering passengers onboard internet access from gate to gate, along with choices for streaming, online browsing, and messaging.