Slide 1: Contents
Contents Statement of financial position Statement of operations Statement of changes in equity Statement of cash flows Statement of values added Notes to the interim condensed individual and consolidated financial statements
Slide 2: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 3: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 4: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 5: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 6: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 7: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 8: The accompanying notes are an integral part of these
The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 9: (a) Not including INSS in the amount
(a) Not including INSS in the amount of R$229,716 in the consolidated. The accompanying notes are an integral part of these interim condensed individual and consolidated financial statements.
Slide 10: Companies based in Brazil and other countries
Ill Companies based in Brazil ll Companies based in other countries
Slide 11: Seasonality
The company Azul Viagens Portugal was incorporated on March, 2023, the Azul Secured on May, 2023 and the companies Azul IP Cayman Holdco and Azul IP Cayman on June, 2023. 1.2 Seasonality The Company’s operating revenues depend substantially on the general volume of passenger and cargo traffic, which
Slide 12: Renegotiated debt
Current liabilities ‘Accounts payable ‘Accounts payable Accounts payable - Notes. Provision Lease obligations Lease Lease -Notes Lease Equity Lease - term extension Loans and financing Non-current liabilities ‘Accounts payable ‘Accounts payable ‘Accounts payable - Notes. ‘Accounts payable - Equity P
Slide 13: Basis of preparation
The interim condensed individual and consolidated financial statements have been prepared based on the historical cost, except for the items significant Fair value: · Short-term investments classified as cash and cash equivalents; · Short-term investments; · Derivative financial instruments; and · D
Slide 14: Exchange rates
Final exchange rates “September 30, December 4, Description 2023 2022 Variation % US. dolar 50078 52177 40% Euro 5,3000 5.5694 4B% ‘Average exchange rates Three month periods ended ine-mnonth periods ended September 30, September,30 September 30, September,0 Description 2023 2022 Variation % 2023 20
Slide 15: Long-term investments
(a) Investment in U.S. dollar . 6. LONG-TERM INVESTMENTS
Slide 16: Accounts receivable
In Brazil, credit card receivables are not exposed to credit risk of the cardholder. The balances can easily be converted into cash, when necessary, by discounting of these receivables with credit card companies. During the nine months ended September 30, 2023, the Company discounted accounts receiv
Slide 17: Accounts receivable past due
Until December 6, 2023, out of the total amount past due within 90 days, R$42,872 had already been received.
Slide 18: Allowance for expected losses
‘September 30, December 31, Description 2023 2022 Balances at the beginning of the period (24,084) (17,817) ore (24,390) (17,333) cos j 20,446 10,750 ie 1,037 316 Write-off of uncollectible amounts Balances at the end of the period
Slide 19: Aircraft sublease
Consolidated ‘September 30, December 31, Description 2023 2022 2023 44,749 89,293 2024 67,561 70,396 2025 48,108 50,127 2026 7,633 7,951 Gross sublease 168,051 217,767 Accrued interest (14,015) (25,838) Provision for losses (20,714) (15,876) Net sublease 133,322 176,053 Current 71,583 70,193 Non-cur
Slide 20: Inventories
Consolidated ‘September 30, December 31, Description 2023 2022 Maintenance materials and parts 777,160 741,101 Flight attendance and uniforms 16,269 21,922 Provision for losses (41,841 (41,285) Total net 751,578 721,738 81578 721,738.
Slide 21: Inventory provision movement
Consolidated September 30, December 31, Description 2023 2022 Balances at the beginning of the period (44,285) (38,935) Additions (16,625) (6,652) Reversal 16,069 3,302 Balances at the end of the period (41,841) (41,285)
Slide 22: Security deposits and maintenance reserves
The movement of security deposits and maintenance reserves is as follows:
Slide 23: Security deposits and maintenance reserves movement
Parent company Consolidated Security Security Maintenance en Description deposits deposits reserves At December 31, 2022 8,486 374,960 __2,164,601 2,539,561 Additions 124 187,609 285,390 442,999 Transfers (129) (123,654) (315,779) (439,433) Provision inclusions and reversals - - 36,748 36,748 Loss -
Slide 24: Provision movement
Consolidated September 30, December 31, Description 2023 2022 Balances at the beginning of the period (446,342) (459,643) Additions (27,875) (74,891) Reversals 64,623 59,581 Foreign currency exchange 20,204 28,411 Balances at the end of the period (389,390) (446,342)
Slide 25: Recoverable taxes
Parent company Consolidated ‘September 30, December 31, September 30, December 31, Description 2023 2022 2023 2022 PIS and COFINS - - 113,225 135,176 IRRF 47 8,064 56,520 39,528 IRPJ and CSLL 6,938 3,508 19,811 29,359 IcMs - - 22,558 21,661 Others - - 12,176 9,167 6,985 41,572 224,290 234,891
Slide 26: Maintenance variation
The variation "Maintenance” mainly refers to the end of contract, the effect accounted for under “Other” in the statement of operations.
Slide 27: Income tax and contribution
15. INCOME TAX AND CONTRIBUTION 15.1 Breakdown of deferred taxes
Slide 28: Reconciliation of effective income tax rate
15.2 Reconciliation of the effective income tax rate
Slide 29: Tax rate reconciliation
Parent company “Three-month periods ended Nine-month periods ended ‘September 30, September 30, September 30, September 30, Description 2023 2022 2023 2022 Profit loss income tax and social contribution, (1.614.898) (2.014.994) (2.327.619) (1.828.420) Combined nominal tax rate 3% 34% % 0% Taxes calc
Slide 30: Tax losses
The Company has tax losses that are available indefinitely for offset against 30% of future taxable profits, as follows:
Slide 31: Investments in subsidiaries
Company interest Description Paid-up capital Voting capital Equity ‘At December 31, 2022 ALAB 100% 100% (18,392,028) Intetazul 100% 100% Goodwill — IntelAzul - - Total At September 30, 2023 ALAB 100% 100% (20,220,351) Intetazul 100% 100% (20,159) Goodwill — IntelAzul - - 780,991 Azul Cayman Holdco 2
Slide 32: Investment movement
Description ALAB Intelazut Total At December 31, 2022 (18,392,028) 761,125 (17,630,903) Equity (1,883,414) (293) (1,883,707) Share-based payment 55,091 = 55,091 At September 30, 2023, (20,220,351) 760,832_ (19,459,519) Investments 760,832 Provision for loss on investment (20,220,351)
Slide 33: Property and equipment
(a) Includes aircraft, engines, simulators and aircraft equipment. (b) The balances of transfers are between “Property and equipment”, “Right-of-use assets” and “Intangible” groups.
Slide 34: Right-of-use assets and intangible assets
(a) Includes aircraft, engines and simulators. (b) The balances of transfers are between “Property and equipment”, “Right-of-use assets” and "Intangible” groups. 19. INTANGIBLE ASSETS
Slide 35: Intangible assets
(a) The balances of transfers are between “Property and equipment”, “Right-of-use assets” and "Intangible” groups.
Slide 36: Loans and financing
(a) The balance of transfers are between “Loans and financing” and “Leases” groups. (b) Refers mainly to the acceleration of the amortization of funding costs considered extinguished in accordance with the requirements of paragraph 33.6 of CPC 48 - Financial instruments equivalent to IFRS 9, which d
Slide 37: New funding
20.2 New fundin 20.2.1 Working capital During the first quarter, the subsidiary ALAB raised R$302,252 at costs of R$1,154, a rate equivalent to CDI+6.4% p.a. and a single payment of interest and principal in June 2023. During the second quarter, there was a renegotiation that resulted in the postpon
Slide 38: Leases
Consolidated ‘September 30, December 31, Description 2023 2022 Leases 12,416,275 14,582,833 Leases - Equity 1,029,890 _ Leases - Notes 1,554,846 Current liabilities Non-current assets 15,001,011 14,582,833 3,650,846 4,025,948 11,350,165 10,556,885
Slide 39: Lease movement
(a) Includes aircraft, engines and simulators. (b) The transfer balances are between the headings “Loans and financing”, “Leases”; “Leases: Notes and Equity”; “Accounts payable” and “Other liabilities”.
Slide 40: Leases - Equity
(a) The transfer balances are between the headings “Leases” and “Leases: Notes and Euity”. 21.3 Leases –Equity
Slide 41: Leases - Notes and Equity
(a) The transfer balances are between the headings “Leases” and “Leases: Notes and Equity”.
Slide 42: Schedule of amortization of Leases - Notes
21.5 Schedule of amortization of Leases – Notes
Slide 43: There were no comparative balances as of December 31, 2022.
There were no comparative balances as of December 31, 2022.
Slide 44: Covenants and convertible instruments
There were no comparative balances as of December 31, 2022. 21.7 Covenants The Company has covenants in some of its lease agreements, as disclosed in the annual financial statements as of December 31, 2022. These conditions will be verified only December 31, 2023, therefore, the related debt is stil
Slide 45: Convertible debentures
_Parent Company and Consolidated Average Foreign nominal rate December31, Variation of Paymentof «Payment of interest. «currency Restructuring ‘September 30, Description pa Maturity 2022 "conversion right _principal interest__incurred_exchange result Amortized cost____2023 In foreign currency - USS
Slide 46: Accounts payable
23. ACCOUNTS PAYABLE Negotiations with suppliers of aircraft services and parts mostly followed the same model as the renegotiation of lease obligations, that is, the Company issued notes in the equivalent amount of US$84,386, with interest to be paid quarterly from December, 2023, at a rate of 7.5%
Slide 47: Accounts payable breakdown
Parent company Consolidated ‘September 30, December 31, September 30, December 31, Description 2023 2022 2023 2022 Accounts payable 3,707 24 2,820,746 3,034,799 Accounts payable - Equity 100,397 - 100,397 Accounts payable - Notes = = 407,234 = 104,104 24 3,328,377 3,034,799 Current 3,707 24 1,902,37
Slide 48: Movement of obligations
Description Consolidated At December 31, 2022 ____753,352_ Addition 104,194 Interest incurred 12,303 Interest paid (38,242) Payment (727,368) At September 30, 2023 104,239
Slide 49: Air traffic liability
(a) Balance recorded in the parent company. (b) Refers to the effects of the extinction and reconstitution of the conversion right. 26. AIR TRAFFIC LIABILITY
Slide 50: Air traffic liability
The balance classified as non-current refers to the TudoAzul points program. 27. TAXES PAYABLE
Slide 51: Taxes payable
Parent company Consolidated ‘September 30, December31, September 30, December 31, Description 2023 2022 2023 2022 Government installment payment program - - 169,391 96,547 PIS and COFINS 107 2 7817 55,385 IRRF 376 535 40,221 49,906 Import taxes 215 96 18,789 15,189 Others, = = 6,658 48,156 698 633 2
Slide 52: Provisions and contingencies
(a) Nominal discount rate 11.2% p.a. (11.2% p.a as of December 31, 2022). 28.1.1 Tax, civil, labor and other risks The balances of the proceedings with estimates of probable and possible losses are shown below:
Slide 53: Tax, civil and labor risks
Consolidated Probable loss Possible loss September 30, December 31, September 30, December 31, Description 2023 2022 2023 2022 Tax 277,997 263,495 414,818 376,510 Civil 121,113 107,980 49,678 87,871 Labor 136,583 121,842 68,571 43,423 Other 3,776 67,410 538,469 560,727 533,067 477,804
Slide 54: Related-party transactions
There were no comparative balances as of December 31, 2022. The table below shows the balances of related-party transactions of the subsidiary ALAB, which were eliminated in the preparation of this consolidated interim information:
Slide 55: Compensation of key management personnel
29.1 Compensation of key management personnel The Company´s employees are entitled to profit sharing based on certain goals agreed annually. In turn, executives are entitled to bonus based on statutory provisions proposed by the Board of Directors and approved by the shareholders. The amount of prof
Slide 56: Stock-based compensation and guarantees
Stock-based compensation plan, considers stock option plans, restricted shares and phantom shares. Such plans are expected to be settled in up to eight years and, therefore, and does not represent a cash outflow. 29.2 Guarantees and pledges granted by the Parent Company The Company has granted guara
Slide 57: Equity: issued capital
30. EQUITY 30.1 Issued capital
Slide 58: Share voting rights
As established in the Company’s bylaws, each common share is entitled to 1 (one) vote. Preferred shares of any class do not have voting rights, however they do provide their holders with rights that were disclosed in detail in the annual financial statements of December 31, 2022.
Slide 59: Treasury shares
This refers to Trip Participações S.A., Trip Investimentos Ltda. and Rio Novo Locações Ltda. (a) 30.2 Treasury shares
Slide 60: Repurchase plan and earnings per share
As of November, 2022 approved the repurchase plan for 1,300,000 preferred shares maturing in 18 months, to keep them in treasury for a subsequent payment of the installments of the Restricted Stock Option plan. Until September 30, 2023, within the said plan, the Company reacquired 851,868 shares. 31
Slide 61: Earnings per share
(a) This refers to the participation in the value of the Company's total equity, calculated as if all 928,965,058 common shares had been converted into 12,386,201 preferred shares at the conversion ratio of 75 common shares for each preferred share. (b) This refers to the participation in the value
Slide 62: Share-based payment plans
Parent company and Consolidated Number of shares, Restricted Stock option sharesplan Phantom Description plan ("RSU") shares Total ‘At December 31, 2022 19,069,705 1,795,401 326,472 __ 21,191,578 Granted 1,800,000 500,000 = 2,300,000 Exercised (124,388) (609,313) (22,884) (756,585) Canceled (180,821
Slide 63: Stock option plan assumptions
The amounts related to stock options and RSU are recorded under “Capital reserves” and amounts for phantom shares are recorded under “Salaries and benefits”. On September 30, 2023, the balance of the obligation related to the phantom shares plans is R$1,428 (R$844 on December 31, 2022). 32.2 Assumpt
Slide 64: Restricted stock option plan
32.1.3 Restricted stock option plan During the third quarter, the Company granted one programs with the following conditions: · vesting period of up to 4 years; and · exercisable at the rate of up to 25% per year.
Slide 65: Stock option grants
Remaining term Fairvalue of of the vesting Purchasing Date of Exercise rate share period period up to Total Total not grant per tranche (in RS) (in years) (years) granted exercised July 7, 2019 25.0% 51.65 - 40 170,000 - June 19, 2020 25.0% 21.80 o7 40 1,382,582 260,706 July 7, 2021 25.0% 42.67 17 4
Slide 66: Revenue
(a) During the three and nine-month period ending on September 30, 2023, the PIS and COFINS rates on revenues arising from regular passenger air transport activities were reduced to zero, in accordance with Law 14,592/2023. Revenues by geographical location are as follows:
Slide 67: Revenue by geography
Consolidated Three-month p ended Nine-month periods ended ‘September 30, September 30, September 30, September 30, Description 2023 2022 2023 2022 Domestic revenue 3,824,519 3,469,086 10,635,231 9,477,818 Foreign revenue 1,091,921 907,725 3,013,732 2,016,797 Total revenue 4,916,440 4,376,811 __13,64
Slide 68: Costs and expenses
(a) Refers to the debt forgiveness for loan operations between Azul and ALAB.
Slide 69: Operating costs
(a) Net of PIS and COFINS credits in the amount of R$404 three month and R$1,278 at the nine month.
Slide 70: Financial result
Parent company ‘Three-month periods ended Nine-month periods ended September 30, September 30, September 30, September 30, Description 2023 2022 2023 2022 Financial income Interest on short-term investments 67 5,910 218 19,655 Others 1,264 66 2,942 842 1,331 5,976 3,160 20,497 Financial expenses Int
Slide 71: Risk management
36. RISK MANAGEMENT 36.1 Accounting classification and fair value hierarchy of financial instruments The following hierarchy is used to determine the fair value of financial instruments: Level 1: quoted prices, without adjustment, in active markets for identical assets and liabilities; Level 2: othe
Slide 72: Financial instruments fair value
Parent company Carrying amount Fair value September 30, December 31, September 30, December 31, Description Level 2023 2022 2023 2022 Assets Cash and cash equivalents 2 2,295 8117 2,295 8117 ‘Security deposits and maintenance reserves - 8,140 8,486 8,140 8,486 Related parties - 1,560,936 - 1,560,936
Slide 73: Fuel price risk
Assets and liabilities linked to LIBOR are being reviewed and will be restated at the published alternative rates. The Company estimates that the updated cash flows will be economically equivalent to the original ones. 36.2.2 Fuel price risk (“QAV”) The price of fuel may vary depending on the volati
Slide 74: Foreign exchange risk
36.2.3 Foreign exchange risk The foreign exchange risk arises from the possibility of unfavorable exchange differences to which the Company's cash flows are exposed.
Slide 75: Foreign currency exposure
Parent company. Exposure to USS Exposure to € September 30, December 31, September 30, December 31, Description 2023 2022 2023 2022 Assets Cash and cash equivalents 658 5,420 386 3IT ‘Security deposits and maintenance reserves 8,070 8,409 - - Related parties 1,560,936 = = : Total assets 1,569,664 13
Slide 76: Credit risk
36.3 Credit risk Credit risk is inherent to the Company's operating and financial activities, mainly disclosed in cash and cash equivalents, long-term investments, accounts receivable, aircraft sublease, security deposits and maintenance reserves. Financial assets classified as cash and cash equival
Slide 77: Capital management
36.5 Capital management The Company seeks capital alternatives in order to satisfy its operational needs, aiming at a capital structure that it considers adequate for the financial costs and the maturity dates of funding and its guarantees. The Company's continuously monitors its net indebtedness, s
Slide 78: Non-cash transactions
Aemistion of Acquistion of Consumption Property and capalzed Acquisition of Maintenance io Compensation of Compensation of Aequistion ot Descriotion ‘equipment’ maintenance mangle reserves creat sublease ese ese ARO ___Modifeaton Transfers Total. ‘ocotrts receivable 5 5 : : ee) 5 : z 04s tease ‘rer
Slide 79: Letters of credit
38.2 Letters of credit The position of the letters of credit in use by the Company follows: