← All companies ← AZN Manual B → ← ALK Airlines CPA →
AZUL, Azul S.A.
An airline, a high-fixed-cost business selling a perishable seat.
The business
What it sells, where the money comes from, the kind of company it is.
The business in brief
What this business is and what moves its needle, from its own SEC filings.
- Situation
- Distress / turnaround. Thin interest coverage, or operating cash burned against real debt, across the record. The balance sheet carries this situation; the debt schedule sets the clock. Cyclical. Margins collapse and recover repeatedly across the record; a single year, good or bad, misstates the through-cycle earning power.
- What moves the needle
- Operating margin has run about 9.0% through the cycle, a thin margin, where volume, cost discipline and the price it gets all bear on the result. The margin is cyclical, swinging between −24% and 20% over the years, so the through-cycle figure carries more than any single year — and the balance sheet at the trough more than the peak. Read this kind of business on load factor against unit cost, and fuel.
Every line is arithmetic on the company's filings, shown in full in the sections below.
Where the money comes from
read the 20-F →Domestic revenue is 79% of revenue, so this is largely a single-region business.
- Domestic revenue79%R$17.2B
- Foreign revenue21%R$4.5B
From the segment footnote of the company's own 20-F. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record
Ten years of arithmetic, read across the cycle.
The record, 2016–2025
realized figures from each filing · older years to the left| 2016’16 | 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | TTMTTMDec 2025 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Income statement | |||||||||||
| R$6.7B | R$7.7B | R$9.1B | R$11.4B | R$5.7B | R$10.0B | R$15.9B | R$18.6B | R$19.5B | R$21.6B | R$21.6B | RevenueRevenue |
| R$344M | R$1.2B | R$1.2B | (R$1.2B) | (R$1.4B) | R$55M | R$1.4B | R$1.7B | R$3.4B | R$4.3B | R$4.3B | Operating incomeOp. inc. |
| 5.2% | 16.1% | 13.2% | −10.4% | −24.4% | 0.5% | 9.0% | 9.0% | 17.4% | 20.0% | 20.0% | Operating marginOp. mgn |
| (R$126M) | R$425M | (R$636M) | (R$2.4B) | (R$10.8B) | (R$4.2B) | (R$722M) | (R$2.4B) | (R$9.2B) | R$125M | R$125M | Net incomeNet inc. |
| — | -3% | — | — | — | — | — | — | — | 0% | 0% | Effective tax rateTax rate |
| Cash flow & returns | |||||||||||
| R$54M | R$1.0B | R$1.8B | R$2.6B | R$976M | (R$311M) | R$2.4B | R$3.4B | R$2.8B | (R$1.2B) | (R$1.2B) | Operating cash flowOp. cash |
| R$301M | R$1.1B | R$1.3B | R$1.6B | R$1.8B | R$1.5B | R$2.1B | R$2.4B | R$2.6B | R$3.0B | R$3.0B | DepreciationDeprec. |
| (R$121M) | (R$474M) | R$1.1B | R$3.4B | R$10.0B | R$2.4B | R$1.1B | R$3.4B | R$9.4B | (R$4.4B) | (R$4.4B) | Working capital & otherWC & other |
| R$386M | R$695M | R$1.1B | R$1.4B | R$343M | R$624M | R$624M | R$464M | R$681M | R$198M | R$198M | CapexCapex |
| 5.8% | 9.0% | 12.0% | 12.5% | 6.0% | 6.3% | 3.9% | 2.5% | 3.5% | 0.9% | 0.9% | Capex / revenueCapex/rev |
| (R$247M) | R$319M | R$678M | R$1.2B | R$633M | (R$935M) | R$1.8B | R$3.0B | R$2.1B | (R$1.4B) | (R$1.4B) | Owner earningsOwner earn. |
| −3.7% | 4.1% | 7.5% | 10.2% | 11.0% | −9.4% | 11.4% | 16.0% | 10.8% | −6.6% | −6.6% | Owner earnings marginOE mgn |
| (R$332M) | R$319M | R$678M | R$1.2B | R$633M | (R$935M) | R$1.8B | R$3.0B | R$2.1B | (R$1.4B) | (R$1.4B) | Free cash flowFCF |
| −5.0% | 4.1% | 7.5% | 10.2% | 11.0% | −9.4% | 11.4% | 16.0% | 10.8% | −6.6% | −6.6% | Free cash flow marginFCF mgn |
| — | R$45M | — | R$13M | R$0 | R$16M | R$4M | R$7M | R$3M | R$4K | — | BuybacksBuybacks |
| Balance sheet | |||||||||||
| R$549M | R$1.1B | R$1.5B | R$1.7B | R$3.1B | R$3.1B | R$668M | R$1.9B | R$1.3B | R$1.0B | R$1.0B | Cash & investmentsCash+inv |
| R$673M | R$914M | R$1.1B | R$1.2B | R$875M | R$998M | R$1.8B | R$1.1B | R$1.8B | R$2.7B | R$2.7B | ReceivablesReceiv. |
| R$107M | R$150M | R$200M | R$261M | R$403M | R$572M | R$722M | R$799M | R$944M | R$973M | R$973M | InventoryInvent. |
| R$1.0B | R$972M | R$1.3B | R$1.4B | R$2.2B | R$1.5B | R$2.5B | R$2.3B | R$4.1B | R$3.9B | R$3.9B | Accounts payablePayables |
| (R$254M) | R$93M | (R$18M) | R$50M | (R$961M) | R$39M | R$8M | (R$369M) | (R$1.4B) | (R$236M) | (R$236M) | Operating working capitalOper. WC |
| R$1.9B | R$3.5B | R$3.7B | R$4.1B | R$5.4B | R$5.8B | R$4.9B | R$5.0B | R$5.7B | R$6.3B | R$6.3B | Current assetsCur. assets |
| R$3.6B | R$4.1B | R$5.3B | R$6.9B | R$10.2B | R$11.7B | R$15.1B | R$14.7B | R$21.3B | R$29.5B | R$29.5B | Current liabilitiesCur. liab. |
| 0.5× | 0.8× | 0.7× | 0.6× | 0.5× | 0.5× | 0.3× | 0.3× | 0.3× | 0.2× | 0.2× | Current ratioCurr. ratio |
| R$8.4B | R$13.9B | R$16.1B | R$19.2B | R$15.8B | R$18.5B | R$18.7B | R$20.5B | R$26.3B | R$23.6B | R$23.6B | Total assetsAssets |
| 0.5× | 1.2× | 1.1× | -0.9× | -0.6× | 0.0× | 0.3× | 0.3× | 0.6× | 0.4× | 0.4× | Interest coverageInt. cov. |
| (R$2.1B) | (R$433M) | (R$1.2B) | (R$3.5B) | (R$14.1B) | (R$18.3B) | (R$19.0B) | (R$21.3B) | (R$30.4B) | (R$29.0B) | (R$3.5B) | Shareholders’ equityEquity |
Owner earnings vs. net income
Owner earningsNet incomeThe accountant's number, and the cash an owner can take; the gap is the tell.
Where the cash went
ReinvestBuybacksDividendsAcquisitionsRetainedEach year's operating cash, by what management did with it: the mix, and how it drifts.
Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.
In fiscal 2025 the business reported R$125M of profit but (R$1.4B) of owner earnings: R$1.6B less than the profit line, taken out by capital spending and the timing of cash.
| FY2025 | FY2024 | FY2023 | FY2022 | FY2021 | |
|---|---|---|---|---|---|
| Reported net income | R$125M | (R$9.2B) | (R$2.4B) | (R$722M) | (R$4.2B) |
| Depreciation & amortizationnon-cash charge added back | +R$3.0B | +R$2.6B | +R$2.4B | +R$2.1B | +R$1.5B |
| Working capital & othertiming of cash in and out, other non-cash items | −R$4.4B | +R$9.4B | +R$3.4B | +R$1.1B | +R$2.4B |
| Cash from operations | (R$1.2B) | R$2.8B | R$3.4B | R$2.4B | (R$311M) |
| Capital expenditurecash put back in to keep running and to grow | −R$198M | −R$681M | −R$464M | −R$624M | −R$624M |
| Owner earnings | (R$1.4B) | R$2.1B | R$3.0B | R$1.8B | (R$935M) |
| Owner-earnings marginowner earnings ÷ revenue | -7% | 11% | 16% | 11% | -9% |
Owner earnings is the cash an owner could pull out without starving the business: operating cash less the capital it must spend to hold its position .
Much of fiscal 2025's profit didn't arrive as operating cash; it sits in “working capital & other” above. That can be a real inventory or timing swing, or profit that doesn't run through operating cash at all: a heavy tax year, equity-method earnings, or investment income booked through investing. For a year like this, owner earnings understates the cash earned; the full cash-flow statement carries the rest.
Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
Will it survive?
- Does not cover its interestOperating income R$4.3B ÷ interest expense R$10.3B
What this means
A full year of operating profit didn't cover the interest bill. This is the zombie zone: the business depends on refinancing, asset sales, or forbearance to service its debt.
- Debt under-captured — leverage unknown, not low
What this means
This company pays far more interest than its tagged debt implies (the rest sits under segment dimensions the data source strips), so its net cash or net debt cannot be read honestly: the gap is unknown, not zero, and 'net cash' here would be exactly the fiction the figure is meant to prevent. Judge it on the record and owner earnings instead.
- Not enough data
What this means
The filing data didn't include the inputs for this check.
Is it a good business?
- Debt under-capturedIndustry peers: median 8%
What this means
This company's interest bill implies far more debt than its filings tag at the consolidated level (the rest sits under segment dimensions the data source strips), so invested capital, and the return on it, cannot be read honestly. Judge this one on Owner Earnings and the record instead.
- Solid through the cycle10-yr median margin, range -9%–16%; latest (R$1.4B) = operating cash (R$1.2B) − maintenance capex R$198MIndustry peers: median 9%
What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -7% of revenue this year, a 7% median across 10 years.
- Are earnings backed by cash? -9.87×Thinly cash-backedCash from ops (R$1.2B) ÷ net income R$125M
What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- No surplus to allocate
What this means
The business didn't generate positive Owner Earnings this year, so any distributions came from the balance sheet or borrowing, not from operations.
- Investing or harvesting? 0.07×HarvestingCapex R$198M ÷ depreciation R$3.0B
What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Graham’s defensive tests · 0 of 3 met
Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.
- Adequate size —Revenue ≥ $2B (a dollar floor) · R$21.6B
What this means
Big enough to weather a storm. Graham's floor is a dollar figure — about $2B of revenue as a conservative modern stand-in. This company reports in its home currency and we carry no exchange rate, so we show the figure and leave the size bar for you to apply rather than convert it with a number we don't have.
- Strong liquidity MissCurrent ratio ≥ 2× · 0.21×
What this means
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt —Debt ≤ working capital · —
What this means
The filings tag only a fraction of the debt this company's interest bill implies (much of it sits under segment dimensions the data source strips), so this test can't be run honestly.
- Earnings stability MissA profit every year (10-yr record) · 8 loss years
What this means
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · none paid
What this means
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth —Earnings +33% over the record · —
What this means
Earnings were negative early in the record, a growth rate isn't meaningful.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. . Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Durability & moat, 2016–2025
Whether the record’s returns held, and what the capital reinvested earned.
- Profitable years 2 of 10
What this means
Lost money in 8 year(s), look at what happened there before trusting the average.
- Operating margin 11% → 15% (3-yr avg ends)
What this means
Through the cycle the operating margin widened — about 11% early to 15% lately, median 9% — pricing power intact or improving.
- Owner earnings growth +28%/yr
What this means
Owner earnings grew about 28% a year over the record.
- Worst year 2020 · −24.4% op. margin
What this means
Operations went underwater in 2020, understand why before trusting the good years.
Does AI threaten the moat?
Low contestabilityThe moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.
AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.
Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.
All figures as filed; the source filing is linked above.
Current Position
as of fiscal year-end, Dec 31, 2025Can the business pay what it owes this year, off the freshest balance sheet: the quality of the assets, the debt actually coming due, and what a low ratio means here.
- Cash & short-term investmentsR$1.0B
- ReceivablesR$2.7B
- InventoryR$973M
- Other current assetsR$1.6B
- Accounts payableR$3.9B
- Other current liabilitiesR$25.5B
From the company's latest filing.
How the cash was used, 2016–2025
Over the record, the business generated R$13.5B of operating cash; how management split it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- ReinvestedR$6.5B · 48%
- BuybacksR$87M · 1%
- Retained (debt / cash)R$6.9B · 51%
- Returned to ownersR$87M
1% of the owner earnings the business produced over the span, R$0 as dividends and R$87M as buybacks.
- Source of fundingOperating cash
Operating cash covered reinvestment and returns; over the span debt rose R$6.2B and cash and short-term investments rose R$469M.
- Average price paid for buybacks—
Buybacks ran R$87M over the span, but the filings don't tag the share count needed to deduce the average price paid.
- Net change in share count—
No continuous share count across the span.
- Dividend record—
No dividend line was reported in the filing data over the span; the record here neither confirms nor rules out a payout.
Buybacks are gross of stock issued to staff; the share-count line above is the net of that, the figure that decides whether owners gained. The average price paid blends a year of purchases (and any accelerated repurchase), so it is close, not exact. The record of where the cash went and on what terms.
Peers, Airlines
The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| DALDelta Air Lines Inc. | $63.4B | — | 9.6% | 16% | 9% |
| UALUnited Airlines Holdings | $59.1B | — | 7.9% | 12% | 9% |
| AALAmerican Airlines Group | $54.6B | — | 5.3% | 8% | 2% |
| LUVSouthwest Airlines Co. | $28.1B | — | 7.6% | 11% | 11% |
| AZULAzul S.A. | R$21.6B | — | 9.0% | — | 9% |
| ALKAlaska Air | $14.2B | — | 6.3% | 7% | 10% |
| JBLUJetBlue Airways Corporation | $9.1B | — | -1.9% | -2% | 4% |
| SKYWSkyWest Inc. | $4.1B | 12% | 11.3% | 6% | 22% |
| Group median | — | — | 7.7% | — | 9% |
The price
What a price has to assume.
What the price implies
reverse-DCFEnter the home-market price, not the US ADR quote. Azul S.A. reports in BRL, and every figure here (owner earnings, book value, the share count) is on that BRL, ordinary-share basis. Enter the price on the same basis: the local-exchange quote per ordinary share in BRL. A US ADR price in dollars bundles the ADR-to-ordinary ratio and the exchange rate, so it will not reconcile with these figures and would throw the multiple off.
Type today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Azul S.A. has delivered.
Azul S.A.’s latest year shows negative owner earnings, a cyclical trough. So the tool opens on the through-cycle base, the cash it would earn at rest; clear the toggle below to read the latest year exactly as reported.
Through the cycle, Azul S.A. earns about R$1.9B on its 8.8% median owner-earnings margin. This year’s −6.6% margin runs below that; the reported figure may understate a lean year. Normalize, below, values the price on that through-cycle figure rather than the latest year.
—
9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.
Enter a price above to run it.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.
Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.
Owner earnings (R$1.4B) on the share count you enter above; net debt R$8.3B. The base opens on the through-cycle figure (the latest year sits off the record’s own median, and Graham’s averaging cuts both ways); clear Normalize to use the year as filed. Net of stock comp treats option pay as the expense it is. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.
Manual order: ← AZN its page in the Manual B →
Industry order: ← ALK the Airlines chapter CPA →