Azul plans to cut flights due to rising fuel prices, says CEO

Azul plane at Fernando de Noronha airport (PE)
Ana Clara Marinho/g1
Brazilian airline Azul is intensifying "capacity cuts" amid higher jet fuel prices linked to the war in Iran, and the company will continue to reduce flights to protect cash in an uncertain environment, said chief executive John Rodgerson.
Rodgerson told Reuters that the largest companies in the sector have been reducing capacity to better align with demand in the face of higher cost levels, and Azul will follow suit, going beyond previous cuts as the conflict drags on.
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"When we made our initial cuts, we thought the war would be over by now," the executive said in an interview on Friday in preparation for a meeting of global airline leaders in Rio de Janeiro.
"But it [the war in Iran] continues, so we will continue to opportunistically cut some frequencies, making sure we are only flying things that make sense," says Rodgerson.
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The bulk of Azul's reductions in the second quarter occurred on international routes, with additional adjustments focused on domestic frequencies rather than removing entire cities, Rodgerson said.
"You fly to Curitiba six times a day? Maybe, with these fuel prices, it should be four." The airline is prioritizing its main hubs in Campinas, Belo Horizonte and Recife, he added.
"We haven't removed cities yet, but that's always on the agenda. But first you start with utilization and cutting frequencies. You don't want to be using an aircraft 13, 14 hours a day when fuel prices are doubling."
Azul's CEO, John Rodgerson, talks about likely cuts in flights and destinations
REUTERS/Pilar Olivares
Rodgerson said Azul's balance sheet, following a major debt restructuring, put the company in a stronger position than some of its peers to adapt. The company emerged from Chapter 11 in February with support from United Airlines and American Airlines.
Azul expects prices to remain under pressure in the seasonally weaker second quarter, but sees room for higher fares to be sustained as demand strengthens in the third and fourth quarters, he said.
In late May, the government renewed subsidies for jet fuel. Aviation kerosene is a sensitive input for the sector, since, according to the Brazilian Association of Airlines (Abear), it now represents around 45% of airlines' operating costs.
On the first day of June, Petrobras announced that it will reduce the average selling price of aviation kerosene (QAV) to distributors by 14.2%. This corresponds to a decrease of R$0.93 per liter compared to the previous month, the state-owned company said in a statement.

Source: G1