Q3 2020 Azul SA Earnings Call
Hello everyone and Welcome to our third quarter 2020 results conference call. My name is Beatrice and I'll be your operator for today. This event is being recorded and all participants will be in a listen-only mode until we conduct a question-and-answer session following the company's presentation should any participant need assistance during this call, please press zero to reach the operator off. I would like to turn the presentation over choot eyes are barely investor relations manager. Please proceed with this morning the outer of this call and it's like the reference are available online investor relations website presents today will receive the email and whose founder and chairman and director CEO Alex and I also use for the Q&A session.
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Be able to cope in the future payments, but just an accepted performance constitute forward-looking statement. The statements are based on a range of that the company believes Irish are subjected to a certain team and they are discussing everything else did not receive him and also during the course of the call. We will discuss Thursday. We should not be considered tonight relation with that. I will turn the call over to this.
These days everybody and thanks for joining us for our third quarter 2020 earnings call. I want to start by saying a big thank you for all the support. We have received from our stakeholders including aircraft manufacturers lessors Banks suppliers and the Brazilian government all part of the management plan. We developed to confront the crisis and optimize the company for the future most importantly as everyone knows how much I care for people at Azul. I have to express deep gratitude to our crew members their passion sacrifice and hard work have put us in a position to emerge from this crisis stronger than ever thanks to their support and all the accomplishments over the past few months. I'm confident in the strength of our company and even more optimistic about the future.
like everyone else who are closely monitoring the pandemic not only in Brazil, but also around the world as you can see on slide for the recent Trends in Brazil have been favorable over the past 90 days New Age discounts have been reduced and treatment capacity has increased some Paulo is now in Phase green of the of its
We also helped my the seasonality here in the southern hemisphere as we move into summer. We plan to continue monitoring Trends and maintaining our operational flexibility too quickly adjust to unforeseen changes safety has always been our number one priority and we continue to innovate and deliver a travel experience. Our crew members and customers are confident in a Flying V. You can see our range of measures we have implemented to focus on the health and safety health and safety when travelling on Azul our digital boarding process called pets or blue carpet is unique in the world resulting in higher scores and quicker boarding times. I truly believe that our focus in delivering a travel experience than enhances customer confidence is one of the reasons for our strong demand recovery.
Moving on to slide six. We give an update on our management plan as we have described before we believe that by working closely with our partners and stakeholders. We would successfully navigate this crisis. Once again, I have to say the team did an incredible job the successful implementation of this plan has given given us eight point four billion in additional working capital and cash savings between March 2020 and December 2021, and that's not including the variable cost savings from the capacity from capacity reduction again, I'm so proud of this team and as a result of their work, we are the only airline in the Americas in one of the very few airlines in the world to preserve liquidity without raising cash in the second and third quarters with that. I will turn the time over to John to give you more details on how well our recovery is going John.
David
Before I begin, I also want to thank our Google crew members for their support and dedication fazool's a special place because of our people looking at slide seven. You can see we ended September with 2.3 bulb in cash and increase over the second quarter. This is a direct result of the effectiveness of the management plan that David described the key component of the management plan was to reduce our fixed costs incurred an aircraft lease payment with these in place the cash inflows from new bookings are significantly higher than the variable cost to fly our Network. This is one of the reasons why the flying that we are doing makes life so much that will be on the Friday. We further strengthened our liquidity earlier this month with a successful issuance of more than one point seven billion of convertible debt with the completion of this offering. We now have like four billion in cash sufficient for more than 5 years at current cash burn levels this strong cash positions willpower recovery and allows us to continue expanding our Logistics business.
Another strategic aspect of our management plan was to be profiled of debt without Financial Partners since the end of the third quarter Alex and his team have successfully concluded these negotiations as you can see on Thursday. We now have only $425 million reais in debt amortizing between now and the end of 2021. We are confident. We have the lowest debt maturities of any airline in our region, which gives us a significant competitive Advantage as we move forward with the recovery. Our financial partners clearly believed in a jewel and will continue to support us over the long term.
I would like to focus on our Network in demand recovery, as you can see on slide ten. Our Diversified Fleet gives us an unmatched level of flexibility. We have aircraft ranging from 9 to 250 which allows us to customize our Network according to demand deploying the right aircraft in the right Market. We also have the greatest percentage of next-gen aircraft in the region.
Flight eleven shows the evolution of our Network by December will have added back a remarkable 88 City. In fact, we'll be serving 113 destinations by the end of this year. I want to suck operating teams for their flexibility and responding to these massive changes to our network is a clear demonstration of our resilience and ability to adapt.
We try to provide a global perspective on our traffic recovery. It was never objected to be one of the fastest to recover. This is a direct result of our unique Fleet competitive advantages and the design of our management plan combined with the recovering demand in Brazil apply 1350 that we remain true to our Network strategy by being the only carrier in sixty-six percent of the markets. We serve is a clear indication that are competitive advantages are stronger than ever by the end of this year. We expect to recover approximately 70% of our total capacity and over eighty percent of our domestic capacity.
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14 I wanted to show you two and four indicators. We are watching on the left is a weekly booked revenue and domestic afks as a percent of last year. The key feature is charging how both measures are improving together usually demand that pulls capacity. But sometimes it's also tragedy that drives Demand on the right. We show how Corporate travel has evolved pre-crisis. We're about 60% corporate. We estimate that currently corporate Revenue represents about 25% of significant sequential improvement over the last six months and much better wage in many parts of the world. It's like 15, we further show how we go in. Our Revenue base has publicly reported corporate ticket prices for a show us down only 4% in September compared to last year average overall is down from lower corporate participation in a much-reduced international Network average fares within each cell phone.
Are showing strong signs of improvement and we're a confident that mix will continue to improve over the coming months moving on this like 16, you can see that are unique route structure and flexibility. Both of us to quickly recover. Keep much of our network capacity, which is Campinas and receiving are already back to pre-crisis levels performing better than other industry Hub and providing the platform for the next recovery.