Brazilian Airline Azul Confirms Full Recovery of Business Travel

In many regions of the globe, the lucrative business travel market has yet to bounce back.

Many European and North American airlines claim that their passenger numbers are barely 60-80% back to pre-pandemic levels.

That's not the case in Brazil. On Tuesday, Abhi Shah, Azul's chief revenue officer, said that business travel income and volume had entirely rebounded in the month of August, while the company is one of the in the world to announce this achievement.

Despite the unprecedentedly high demand for airline tickets in Brazil, Azul's major rivals, Gol and Latam Airlines, have not yet announced complete recoveries in business travel. CEO Celso Ferrer said in July that Gol's corporate travel numbers had only partially rebounded. Overall airfare increases have helped the industry bounce back in Brazil and abroad.

According to Azul's quarterly earnings report, the airline's average ticket was 550 Brazilian reals ($110) in the second quarter, an increase of 45.1% year over year. Revenue per available seat kilometer (RASK) increased by 26% while CASK increased by just 18%.

Despite its importance to the overall recovery, Azul's business travel accomplishment is now unprecedented. Roads, and especially buses, and aircraft make up the bulk of the country's transportation infrastructure, allowing people to travel across wide distances.

The up-tick in business travel has slowed, according to reports from airlines throughout Europe and North America. Delta Air Lines' business passenger traffic in July was 70-80% more than it was four years ago, while Lufthansa Group's business passenger volume in August was back to about 2019 levels. Airline executives in nations with thriving rail markets, such as France and Germany, have expressed concern that domestic business travel may never recover.

When it came to rescuing business passengers, Azul did have some assistance. Since January, when additional flights were gained via a slot allocation system, the airport's passenger capacity has more than quadrupled at the nearby Congonhas airport in Sao Paulo. The airport's convenient location near Sao Paulo's central business sector has resulted in an increase in business passengers for Azul.

Top Azul officials were similarly optimistic about the outcome of the company's financial restructuring. The airline was able to effectively restructure its debt and lease obligations outside of court after rumours surfaced earlier in the year that it had recruited restructuring experts. By refinancing some of its aircraft leasing obligations into long-tenor debt, Azul was able to cut its aircraft lease costs by roughly a third, to 9.2 billion Brazilian reals, and postpone its largest debt instalments until 2028. Additionally, lessors have the option to convert a portion of the additional debt given to them into airline stock.

 

Source: airlineweekly.skift.com