Hi, everyone. Welcome all to our Azul Day. I'm Thais Haberli, as the Investor Relations Manager. Thank you for joining us today. Sorry about the delay. We have a Wi-Fi issue here over there, that's one of the problems because of type of event in Portugal. Before I turn the presentation over to John, I would like to remind you that today we will have John Rodgerson, our CEO, Alex Malfitani, our CFO, and Abhi Shah, our Chief Revenue Officer. We will present a small video, and then John will kick off the presentation. Thank you. Azul, the largest airline in Brazil in number of cities served and departures. Every day, Azul flies 100,000 customers to 130 destinations on almost 1,000 daily flights. Since we started Azul in 2008, we have helped to double the size of aviation in Brazil. We did that by more than doubling the number of cities served in the country. Azul has, by far, the largest network in Brazil, and that is only possible by flying a diversified fleet. From very large aircraft like the A321, which has 214 seats, which have very low cost per seat, to small aircraft like the ATRs with 70 seats, which have very low trip cost. Flying the right aircraft in the right market leads to higher profitability. It also leads to higher flexibility to adapt to an uncertain environment. With that, we're among the few airlines in the world to have recovered to pre-pandemic levels. As we rebuilt our network, we transformed Azul into a more efficient airline with higher productivity throughout all of our operations. Our broad network and efficient cost structure are complemented by a unique service offering with extra legroom, live TV, onboard Wi-Fi, and free snacks and drinks, and a focus on customer service that led Azul to be voted the world's best airline by Tripadvisor. These competitive advantages also benefit our other business units, such as Azul Cargo, our vacations business, Azul Viagens, and our loyalty program, TudoAzul. These are fast-growing, high-margin businesses that will help us expand even more our industry-leading margins. We are a unique airline that has only become stronger over the last few years, and we're very much looking forward to the future. Welcome everybody. It's a pleasure to be with you here virtually and in person. We're at our fabulous hangar that we're very, very excited about. We haven't even yet inaugurated this with a party because it was open during the pandemic, but this hangar has been very important for us. It's allowed for us to rebuild the network much quicker than our competition have been able to, and so we're very proud to host you here in our hangar today. You know, today is really about understanding the Azul story, why we're different from our competitors, and what are our unique competitive advantages as we move forward. We're gonna walk you through that today. We're gonna have plenty of time for question and answer. I'm sure the consolidation topic will come up, and we'll have the opportunity to talk about that, what the status of that is in the market. But let's get into the slides, and we'll kinda walk you through. Really, today is about why is Azul unique, and we've really built over the last 13 years a very unique airline. We're gonna talk about our network, which is a huge strength of ours. We're gonna talk about our service-oriented culture, our diversified fleet, and our fast-growing, high-margin businesses that we have. Just kinda going to the next slide, you know, this is really important. This is a company led by founders. Abhi, Alex, myself, David, Jason, Flavio, we've all were at Azul before our first flight. We all had the opportunity to leave Azul to do other things, to go work at Breeze in the United States, to go work abroad, to do other things. All of us have decided to stay because we believe in the potential that Azul has, and we're very excited to see what this airline looks like over the next couple of years. We have doubled aviation in Brazil since our founding, and we've been through a very trying time in the last two years. If you look at the last decade, you know, I arrived in Brazil, the real was 1.58. This week it's 5.68. Look at what we've been able to stimulate and build over that same period of time. Brazil has enormous challenges but has even greater opportunities. What we've proven is that we can be a very popular airline in a very difficult market, and it's very difficult to do what we've been able to build over the last 13 years. This is just a look, and many of you that are listening online today, many of you that are here in the room have known us since 2008 when we first started a flight to Salvador on an Embraer aircraft. Then our next flight was to Porto Alegre on the same day. Look at what we've built in that time period, 130 destinations to Europe, the United States, and certainly all over Brazil. We're the only airline that truly serves all of Brazil. There's more growth to come, and we're excited about that growth, and we're proud to be a growing airline. With that, I'll turn it over to Abhi to talk about our network advantages. Thanks, John. Hey, everyone. Thanks for coming. We're in the hangar. We can hear airplanes taking off, so forgive me if I get a little bit distracted. I need to look every time something takes off. Let's talk about the network, because that is really one of our most important competitive advantages together with the fleet that Alex will talk about. Of course, it's a very broad network, covering now 140 cities, increasing to 145, 150 cities. A lot of connectivity, and that connectivity was really important as we got through the pandemic and as we're coming out of the pandemic. It's really allowed us to recover much faster and recover in our network. If you see our growth going forward is very much focused in our network itself. So a lot of connectivity anchored by our three major hubs in Campinas, in Belo Horizonte, in Recife, but lots of little dots all over the network. One thing that we're really, I think, proud about is how we've grown all over Brazil. You know, our competitors, you know, we talk about this a lot, and in fact, even before we ever came to Brazil in the first place, aviation in Brazil was focused on three cities, São Paulo, Rio, and Brasília, right? That's where the focus was. When we came, we first came to Campinas, you know, David, John, we all wanted to do something very, very different, and that's what we've done over the last 13 years. The reason that Azul has contributed to 60% of the market growth in 13 years is because we serve markets, we serve routes that nobody else serves, and we do them outside of São Paulo, outside of Rio, outside of Brasília. If you look at the GDP growth in the last 13 years, that's where the country has grown much faster than in these big cities. That's really powered our growth. In Campinas, where we are here today, when we first started, there were 10 flights a day total. Now, Azul has today 150 departures just today leaving from Campinas. That really has been the foundation of our growth, is growing all outside Brazil. You can see that in this map here, right? We've shown this before. Maybe I should go on this side. We've shown this map before, which is all of these blue dots that we have, this is where we are alone or where we dominate in terms of departures or in terms of destinations. As a result of this footprint that we have, thanks to the fleet, 80% of the routes that we fly, we fly alone. We talk about this a lot. We talk about this in all of our earnings presentations also. This number has actually increased over time. I actually think that's a sign of discipline in the market. The entire market, the industry in Brazil over the years has learned to be more disciplined. Airlines are focusing where they are stronger, and that works for us as well. You know, our crew members ask us about Guarulhos, ask about São Paulo all the time. Why aren't we flying there more? My response is, let each airline focus where they are strong. We have today only 20 flights a day in São Paulo, in Guarulhos, right? It's the largest city in Brazil, all these kinds of things, but it just doesn't make sense for us. Airlines are focusing where they are strong, focusing where they can get the best results, and that works for everybody. I think it's worked well pre-pandemic, and I think that discipline is gonna remain as we go forward, as we exit this pandemic as well. This, in terms of the overlap, you know, 80% of our overlap is we are alone. Look at an airport-to-airport basis. Again, as we look at our growth for next year, 2022, 2023, even our growth in post-IPO, 2019, our growth was in our network, and that's provided the best results for us and I think for the industry overall. That is absolutely our intention going forward. That's how we're gonna get back to pre-pandemic margins or even higher. Our network is obviously very, very connected, and it's very interesting because during the pandemic we actually had gotten to 65% connecting traffic. Now we are coming back a little bit because local demand, corporate demand is starting to come back. Now we are more towards the 55% connecting traffic, which is still very, very high on average. It starts with our hub in Campinas, which is where we are now. We have 136 average departures, 150 on peak days. By far the most destinations of any single domestic hub in South America, domestic destinations. Our entire fleet flies here, right? We have the ATRs, we have Airbuses, we have Embraers, we have A330s flying internationally and domestic. This is where we really build our hub. Now, it's interesting because we're gonna go through each of our hubs here. Each hub is designed to do something different. It doesn't make sense to have hubs doing the same thing. Our Campinas hub is for the south of Brazil, the southeast of Brazil, interior of São Paulo, really bring all of that demand into our network and also where our long-haul flights go from. The next one is Recife. Recife was the first to come back to our network post-pandemic. We have 80 departures a day. We are well over 100% in terms of capacity, and it serves as our Northeast hub, obviously. We connect to all the capitals in the Northeast, and we collect all of the demand from the Northeast, and we distribute it to São Paulo, to Belo Horizonte, but also within the Northeast. It also is a highly, highly connecting hub, so we have local demand, connecting demand, but it really allows us to serve a completely different geography than our Campinas hub. Finally, we have Belo Horizonte. Belo Horizonte was the last to come back post-pandemic. Belo Horizonte as a city was the slowest to recover, I think the slowest to reopen the economy, compared to Campinas, certainly compared to Recife, but it works as our mid-continent hub. All of the Minas cities, interior of Minas, works very well, some Brasília connectivity, Cuiabá as well. It's a shorter distance from Belo Horizonte to places like Belém, places like the north of Brazil, where we don't fly nonstop from Campinas, but we fly from Confins. It's a shorter flight, and we can drive connectivity through there. We talk about our three hubs, which is Campinas, Confins, and Recife. It's really, really important that they each do different things. It doesn't make sense to replicate the same demand in three different places. You'd just be stealing from yourself, actually. Each of our different hubs has a different purpose, and that's the idea as we go forward as well. That's the idea in Cuiabá, in Belém, and all our different focus cities. It's destinations, right? Wherever we focus, we try and serve the most destinations to the most departures. That's been our focus in our hubs and our focus cities, like Cuiabá, for example, which is also our agro hub. We have a lot of ATR and a lot of secondary cities from Cuiabá that we serve, and we connect to São Paulo, we connect to Rio, we connect to Belo Horizonte, we connect to Campinas and to the south of Brazil. That's the idea, is each of our hubs does something very, very different. That's how this network has been created, and that's how it's gonna keep growing. Abhi, I just wanna highlight, I mean, 21 destinations from Cuiabá. I mean, that's pretty remarkable how many destinations we serve from a city in the Midwest of Brazil. Yep. Exactly. It's one of the regions that's growing very, very fast. What's important to remember is that each of these markets actually has very little demand by itself, right? We fly to Sinop, we fly to Sorriso, we fly to Ji-Paraná, all these kinds of places. They cannot sustain a nonstop flight by themselves. In fact, many of our destinations in Campinas do not sustain nonstop flights by themselves. It would be very hard for us to fly 10 times a day to Cuiabá without having these 21 connecting cities. By themselves, the markets are small, but when you aggregate them in the network, that's what really drives the demand throughout our system. We're also starting to focus more and more on international partnerships, and we announced our codeshare with Emirates a month or two ago. We have more partnerships down the line. Obviously, we have our largest codeshares with United, with TAP, with Copa. Our network in Guarulhos is small, which is primarily where these international players fly. We do have some connectivity, but that's something that we will try and to develop over time. For us, what's really important also is our connectivity in the U.S. and in Lisbon for our long-haul flights. Because I think I've mentioned this many times before, it is the long-haul airline that uses this connectivity a lot more than the short-haul airlines. When we fly to Fort Lauderdale, we fly to Orlando or we fly to Lisbon, we need that connectivity. That connectivity is very useful for us with JetBlue, for example, in Florida or with TAP, for example, in Lisbon. That really expands your network and allows you to add more frequencies, and add more capacity if you have that kind of partnership. In Brazil, the foreign airlines flying to Brazil, it's very important for them. When we fly long haul, those partnerships are important for us. Alex, on the fleet. Hello? Now we're back. Thanks, Abhi. You know, I'm really proud of the fleet, right? Because I'm very proud of the network. You can't have our network if you don't have our fleet, right? The fleet is complex, of course, right? It is a requirement for us to be able to fly all over Brazil the way that we fly, right? Like Abhi said, a lot of our destinations do not have demand, you know, to sustain themselves, even with one flight a day, unless you have connectivity. You cannot have connectivity unless you fly several different types of aircraft. The beauty of this is, obviously, you all know that the bigger the aircraft, the smaller the cost per seat, right? You get economies of scale. You know, you have essentially two pilots on every flight. If you can dilute the cost of those pilots, or if you can dilute the cost of the maintenance, normally, the bigger the aircraft, the more the economies of scale and the lower the cost per seat. The higher the trip cost. If you have a very big aircraft, it has a very big cost every time it takes off. If you cannot fill that aircraft, you're going to lose money. It doesn't matter that the cost per seat is low if you're wasting all of those seats by flying them empty, right? The beauty is flying the right aircraft in the right market. There are markets in Brazil that can sustain an A320 or even an A321 if you have the connectivity that we have. There are markets that can only sustain a Cessna, right? With nine seats. The key to fly a diversified network the way we have is having the right aircraft for the right fleet. If we restricted ourselves to only one single fleet type, it would lead us to do what our competitors do, which is to fly to the Rio, São Paulo, Brasília triangle. There's nothing. There's no mistake there. There's nothing wrong with what they're doing. It's just that that is the other side of that coin. You wanna have a single fleet, you're gonna be restricted to flying the markets that can sustain that single fleet type, that can fill that single fleet type, which essentially are just the high- density routes in Brazil, which touch São Paulo, Rio, and Brasília. One thing that a lot of people don't realize, you know, you may look at our financials, look at our CASK and say, "Azul has a high CASK," right? The problem is you're looking at a blended CASK, and we don't compete with the other airlines with a blended CASK. We don't compete a lot with the other carriers, but when we do, we compete with the A320 NEO and the A321 NEO. I know what my CASK on the A320 and the A321 is, they don't know, right? They are significantly lower than our blended CASK, and more importantly, they are significantly lower than our competitor's CASK. That means where we do compete, we are the low-cost operator, right? We are not, you know, facing any competitive disadvantage in the markets that we fly. Actually, we actually have lower cost per seat, right? Again, this is just for you to have an idea of when you're comparing our CASK, which is a blended one, to a carrier that has a single fleet type, you really are kind of comparing apples to oranges. The beauty is that the cost is gonna keep going lower, right? Because we still have a lot of flights where we're operating with the E1, and the E1 has a very high CASK, but we're gonna be swapping all of those E1s for E2s, for A320s, and for A321s. Then you see the dramatic reduction in unit cost when you go from one aircraft to the other, right? When we go from an E1 to the E2, we get 136 extra seats, and we actually spend less every time we fly, right? It's a cheaper aircraft. We pay less in rent. We pay less in fuel. It burns a lot less fuel than an E1, but it gives us 18 extra seats. So those seats essentially come at a negative cost, right? You know, the difference in trip cost divided by the number of extra seats I get is actually a negative number, which is gonna be great for us to stimulate demand, right? We can, you know, as you know, we segment fares, right? The incremental seats that we're offering as we upgauge, those seats can come in at a lower average fare, and that can be used to stimulate traffic. When we go to the NEO, to the A320 NEO, it's a 29%-39% reduction in seat cost, and then the A321 is actually a 34% reduction in seat cost, right, in cost per seat. A dramatic reduction, which is going to allow us to be even more competitive going forward. Most of the benefit, not all of it, but most of the benefit is here, right? Look at these numbers. We're getting an extra 15% seats, and we're burning less fuel every time we fly. With the A330, we're essentially burning the same fuel. You take off from here, from Campinas, you land in Recife with an A320 NEO, and you burned almost exactly the same amount of fuel as an E1, but you took 47% more seats for that fuel, right? That's why you see these dramatic reductions in cost per seat. Alex, did you just kinda highlight the, you know, our competition will go from CEOs to NEOs, NGs to MAXs, but where we're really getting the advantage is the E1 and the upgauging that's taking place. Yeah, because of two things, right? First, you're gonna look at our numbers, and the cost of the E1 is much higher. Our reduction, as we go from old generation to new generation, is going to be bigger than the reduction that our competitors are gonna go through. Like John said, everybody's gonna go to next gen, right? The difference is where are you starting off from, and we're starting off from a very much higher cost than our competitors, and how quickly can you do it, right? We're years ahead of the competition in terms of when we're gonna get to 100% next gen, which you're going to see next, right? You know, even if you compare apples to apples, right, we're gonna show some of the progress that we've done on productivity. We have fewer employees per aircraft than our competitors. We pay less per liter of fuel than our competitors. Even when you compare next gen to next gen, our competitive advantage, our lower cost is going to continue. This is the fuel consumption. We already, you know, reduced fuel by almost 20% since we started the fleet transformation. Obviously, we're gonna continue. We still have a lot of flights being flown on the E1, and as we continue replacing those E1s with next-gen aircraft, we're going to reduce the fuel consumption per ASK. We still have more than a third of our flights are flown on the E1, right? There's still a lot of capacity to be replaced by next-gen aircraft. Here you can see, you know, kind of for your modeling purpose, just to kind of give you an idea of, you know, how many next-gen aircraft we plan to take over the next couple of years. What you'll also see here you can see how many E1s are going to be replaced. It's about 15 that we plan to replace in 2022 and 2023, but there's upside here, right? One thing that you'll notice is that the number of aircraft is going down here. It doesn't mean that we think demand is going down. This is purely our contractual obligation, right? We have the option of accelerating, of advancing E2 and A320 NEO deliveries into 2023 because most likely, we will require more capacity here than we have in 2021, right? But that's an optionality. We can do that, and we can negotiate, you know, good commercial terms for us to do that advance. Because maybe I advance NEOs, maybe I advance E2s, maybe I do a little bit of both. We have the option to advance those aircraft. We're back already to more than 100% capacity, but our suppliers are not back to 100% capacity, right? The OEMs are not putting out as many aircraft as they were before, obviously because a lot of people have a lot of aircraft. That gives us a little bit of an advantage to negotiate this, right? This shows that we have the option that, hey, if we only need 140 aircraft, that's great. If we need more, they will be next-gen aircraft, and they will help us reduce our unit cost even further. We plan, you know, to be flying 100% of our capacity with next-gen by 2026. You know, this is our projection, right? This is not the commercial commitment that we have. We believe that with the options that we have of, you know, moving aircraft to other airlines or converting E1s to freighters, that by 2026, 100% of our capacity will be coming from next-gen aircraft, which essentially is, you know, 2.5 years later than what we originally forecasted. This is a real live operation here, obviously. I apologize for the background noise. All right, back to Abhi. Thanks, Alex. I'm definitely happy to see the hangar is working and get these airplanes out of here. I don't know who approved this airplane parked here. It wasn't me. This airplane needs to be flying. Thanks, Alex. You know, I wanna spend some time talking about our business units. David talked about this in our last earnings call, which was Azul Viagens, but definitely it's important to talk about Azul Cargo. One of our E1s is parked outside here. We went to visit it. I'm very excited about this airplane. I'll tell you more about it. Obviously, our vacations business, Azul Viagens, and our loyalty business is just going from strength to strength. Again, we think these are three unique assets that is just one more reason why, we're growing faster and, we think that we're also delivering better results. Starting with Azul Cargo, right? It's the one that probably has had the most visibility over the last couple of years. Again, we are very excited about this for many reasons. The first one is this map here. You know, we now serve around 4,500 cities, communities around Brazil. 1,000 of them we can serve within 48 hours, and we're always expanding our logistics capabilities, whether it's through our fleet, our belly space, or even just building out our network of last mile, first- mile capabilities all over the country. Again, 80%-85% of this is happening in the bellies, which is very efficient. We fly to all these cities already. The airplane is going there anyway, so the extra marginal cost of carrying an extra logistics package, whether it's e-commerce, whatever it is, it's very, very low. Very, very high contribution margin from this kind of service, and really it has the ability, and it is having the ability to change this logistics all over the country. The business is growing. I think we told you that we would be over BRL 1 billion this year. We're gonna be over BRL 1 billion this year. It is doubling from 2019 to 2021, and we're seeing further growth as well from 2021 to 2022. We've talked about this before, it's where is the growth coming from? That really is the most important part, and it's coming from new customers. When you look at our market share, you might be tempted to think, "Well, you're just stealing from your competitors." That's not true. We're growing faster. Yes, that is true. We are taking customers who previously used ground as their primary mode of logistics, and now they're shifting to air. That's where the growth is coming from, and it's a much, much more sustainable way to grow. If you look at our internally, we look at our incremental revenue from 2019 to 2021, and we break it up into three buckets: new customers, organic customers, or stealing from the competition, right? 40% is coming from new customers. These are customers that previously used ground as the primary way to do logistics. 40% is coming from our organic customers that we've had for a long time. What happens with logistics, as we are learning, as I'm learning, is that nobody will give you their entire business on the first day. It's their supply chain. It takes time. Over time, you gain more and more or different parts of their business. Once you sign up a new customer, they start to grow with you over the years. 20%, we can think of customers that used to use a different provider in Brazil and is now using Azul Cargo. It's easy for them to steal them back, right? That happens all the time. But the new customers and the organic growth, that's what's driving this growth in revenue and in volumes over the next couple of years. We use our entire fleet to make this happen. We use our Caravans in the most remote parts of Brazil. We use our ATRs. We actually have some dedicated ATRs as well, some quick change aircraft. Obviously, the E1s, we have one parked outside here. We have more details on that. A320s, we use the belly space, and we have a lot of A320s coming, and the E2s. We'll show you how the belly space is going to increase in capacity, and that's gonna drive growth. We use our wide-body aircraft. The international market is very strong right now. The global logistics system is gridlocked right now, so international is strong. We have charters to Fort Lauderdale. We're flying to Brussels twice a week right now for auto parts, for example. We fly some A330s here domestically as well to Manaus and to Recife because of palletized cargo. We really use our entire fleet to help the cargo business. The primary method of transport is the belly, and we have a lot of belly space available. Apart from the bags, our cargo holds are about 33% full right now. We can double or even triple our cargo volumes and not run out of space. The reason is e-commerce packages are, you know, in the south of Brazil, places like Rio, places like Curitiba, they're mostly going by road. It's the north of Brazil, the further away destinations that they're using air. We have a lot of space, a lot of opportunity yet to use our bellies to grow our business. As Alex said, there's a potential to anticipate more airplanes if we want. This is an airplane that I'm very, very excited about, which is that we are reformulating our E1s, and I think we have an opportunity to do what we did with passenger 13 years ago. We can now do this with logistics with this aircraft, with the same E1 aircraft, actually, the E1, but in a new way. What we are doing is removing all the seats, and we're putting these bags, these freight bags, containers on the aircraft, that more than double the payload. You don't need flight attendants anymore because they have a fire protection system. You use the E1 trip cost. Azul was built on E1 trip cost 13 years ago. That's how we grew Campinas, that's how we grew Confins, that's how we grew Recife. Now using E1 trip cost, we can now fly to secondary cities like Palmas, like Navegantes, like Goiânia, and provide dedicated e-commerce delivery services. Using the economics of the E1 and having space for e-commerce packages, the problem is never weight, the problem is volume, right? You don't need a freighter for e-commerce. You need a freighter for auto parts and industrial stuff, but you don't need it for e-commerce 'cause the problem is always volume. With this aircraft where we are, it's a much cheaper adaptation of the E1, we can really open up logistics to lots of new markets. I'm very excited about this. We're gonna start with four aircraft in January, and I hope that we can grow this fleet, get E2s into our passenger business and move the E1s into our logistics business. Of course, we have the fleet, the belly from the fleet growth as well. We have both dedicated from E1s, and we have the belly capacity of our scheduled network. We talk a lot about where the growth is coming from. It's coming from the road. It's coming from road logistics. The road addressable market that we think we can have access to is 15 times larger than Azul's Cargo, the industry revenue today. The industry revenue is about BRL 3 billion. Azul Cargo is about a third of that. That's our market share, so it kinda makes sense. But the addressable road logistics market is BRL 45 billion. We just have to fish a little bit in that market every year, and that's gonna drive a lot of growth going forward. We have all of the tools to do so. When you look at Azul Cargo, you look at the doubling of revenue from 2019 to 2021 and the future growth, it's gonna come from the fleet, right? Next generation, larger bellies. It's gonna come from our network. It's gonna come from building out our logistics, primarily in last mile and first mile. We've already partnered with different companies, so we can have flexible capacity. In the high seasons, we can flex up, in the low seasons, we can flex down. In fact, in two of our cities, and we're gonna expand this even further, our own crew members can sign up to deliver packages as well on their time off. We're using all of the assets that we have to expand our last mile capabilities, and we think the overall market is gonna grow, the air logistics market is gonna grow as it migrates from road to air. TudoAzul, our loyalty program, also is really growing. In fact, we've been surprised by the engagement of customers through the pandemic and even this year. Even without really having an international network, we just started Orlando five days ago, right? Orlando was one of the cities where our loyalty customers redeemed the most points for. We've actually been very happy with the growth of the program, how customers are accruing the points, with our other products, whether it's our club, whether it's our credit card, which is doing really, really well. We're very happy with the credit card or with just the banks. The customers have been very, very engaged. Now as the network is coming back, we're back in the U.S., we're back in Europe, we're back in Montevideo as well. Of course, the growing domestic network, you know, this is really going from strength to strength. TudoAzul is really diversifying away from the banks. Obviously, you have the banks, which is B2B, right? That continues to be an important source of revenue. B2C, which is our club, which is other different products like retail, is growing in relevance. Our credit card is really the one that we are the most proud of. You can ask Itaú, you know, how important that credit card is to them. We think that it is sort of non-retail, one of the most important credit cards in their portfolio. It set records now in Black Friday in terms of how much people have spent on it. It really is becoming the card of choice for customers to use this card in everything, not just when they fly Azul, but also at the grocery store, also at, you know, at the mall or whatever it is. This really, you know, B2B is a form of loyalty, but customers have choice. When we talk about credit card and the type of loyalty that that drives, that really is true loyalty. Once you have customers in that universe, they will not leave. We're very happy with how that's doing. We're expanding our portfolio, right? Whether it's retail, whether it's other airline partnerships. We're now finally starting to have a robust offering of other airlines. Frankly, we were weak in that. You know, other programs in Brazil have done a much better job. We are now finally catching up with United, with TAP, with other airline partners, with Copa. Our retail, you know, we have a very strong partnership with Apple, for example. One of our highest redeemed products is AirPods in Brazil. We did some really strong promotions with Ponto Frio as well this Black Friday, Accor hotels. Our shopping, one of the highest redeemed is Accor hotels gift cards. We're really rounding out the product portfolio. Of course, air is always gonna be more important. It's always gonna be more relevant. If you can redeem your points for a hotel gift card, Azul Viagens, our vacations business, or Apple AirPods, that really makes the program a lot more relevant. Finally, Azul Viagens, our vacations business, is also growing. It's also doubled in revenue. This is something that we've always struggled with, the leisure customer. We never had the fleet to do it before the A320s. We never had the network. It was never a focus for us. We were very, very corporate focused. Now, with Azul Viagens and our fleet, we are able to capture this segment of the market, right? It's opaque pricing. When we use our size, we negotiate directly with hotels, and we package it all together. This business is growing, doubling, in fact, from where we were in 2019. We're very, very excited. The best part about it is you can use airplanes on weekends, right? These customers wanna fly on Saturdays, they wanna fly on Sundays, where we don't have corporate demand like we do on a Monday or a Thursday. We fly from all sorts of different parts in the interior of Brazil to places like Porto Seguro, to Maceió, to Natal, to Recife, and that drives up our aircraft utilization, and it contributes to incremental revenue and incremental earnings for us. It really is an important way for us to capture this market that we have not been so good in over the years. Now with this product offering, we're really able to access this market, and it's growing significantly. I don't know. Is Alex or John next? Thanks, guys. Thanks, Abhi. You know, I think I was at a company orientation today, and when somebody new enters the company, they're met by myself, by Alex, by Abhi, by our entire senior management team, and we meet with them. We spend a couple hours with them in the morning. That's where I was early this morning. We're not an airline. We're a company that's led by founders. It's a people company. It's a service-oriented culture, and we continually win service awards. You can see these most recent ones that we won this month, so we're very proud of that. You know, we don't compete just with aircraft, city to city. We compete on service. People that fly Azul know that flying Azul is a different experience, and the culture of the company is really important. Those of you that have flown on our aircraft with the Wi-Fi, it's some of the fastest Wi-Fi in the world. My kids complain that our Wi-Fi at home is much worse than the Wi-Fi in an Azul aircraft, and it's free. It's free of charge. All of our customers get to enjoy that experience. In addition to the great Wi-Fi that we have, you can see the 95 megs. I guarantee you that's better than the Wi-Fi that we have here at the hangar today and many of you have at home. Let me just go back quickly. You know, you're allowed to use Wi-Fi on board the aircraft free of charge and watch television with over 100 channels, okay? Have free snacks on board the aircraft. It's an unbelievably great experience. Unfortunately, at this time, we can't give away snacks on board the aircraft, and so we have a little bit of cost savings because of that. It's an unbelievably great experience. A lot of people say you can fly on another airline, but flying on Azul is an experience, and we want it to be an experience. Azul charges higher fares because of the way that we serve our customers, right? People choose. If you're sitting today in Rio and wanna go to Brasília, and you can get on a brand-new E2 that has Wi-Fi and television, you'll pay more to do that. You'll pay more for that experience, and that's what we offer, especially in a country which is so focused on corporate travel. Our crew members are the most important asset that we have inside the company, and I think we've proven that through the years. Those of you that have traveled on Azul know our people. Stop them in the airport. Ask them about what it's like to work for Azul. I think you'll be very impressed with some of the responses that you get. We measure crew member satisfaction every single year. Our compensation is linked to crew member satisfaction because we believe if you treat your people right, your people will treat your customers right. I think that that's really important, and we focus an enormous amount of time. You know, why is that important? It's important because we just went through a worldwide pandemic when we shut the airline down. We had 11,716 of our crew members that voluntarily raised their hand and said, "I will take an unpaid leave of absence to help this company." That's a strong culture. In contrast, there's another airline in this same region that tried unsuccessfully five times to get a temporary and a long-term deal done with their pilots and their flight attendants, and failed five times in a row. Strong culture matters, and strong culture leads companies to be stronger over the medium and the long term. We're very happy that even during the most difficult times, when you're facing unprecedented inflation in Brazil, our crew member satisfaction has gone up. We spend a lot of time focusing on this. This was just last month, at the end of October. I bet you can imagine who Hulk is here. That's Alex. You know, Abhi is obvious Spider-Man. I was Captain America, and Flavio. Our entire leadership team, you know, we spend time with our people. When we fly on board the aircraft, it's a requirement for our senior officers to speak to every customer on board the aircraft and then spend time in the cockpit. I know this may seem a little strange at an investor day to talk about Halloween, but culture matters. Culture matters. As the saying goes, you know, "Culture eats strategy for lunch," right? If you have a strong culture, you'll get through the toughest of times. We're flying today 900 flights. Our competition is roughly 500 and 480. How do we do that? We have great, fantastic people inside of our organization. I encourage you that invest in Azul, sell-side analysts. Talk to our people. When you travel, grab an airport agent and say, "What is it like working for Azul? Have you ever met Abhi? Have you ever met Alex? Have you ever met John? You know, who they like to work with?" 'Cause that really, really matters as you're building a company. That's why every Monday morning, when we have new people entering the company, we take time and spend that with them. Alex, Abhi, myself, Jason, we spend an enormous amount of time with our pilots and tell them exactly what's happening. Have that open dialogue with your people, so that when we went through the tough pandemic and we had to park our aircraft, they understood, and it was truthful. When I said, "Look, we need your help," they stood up and helped. I think that really, really matters in our business. You know, we were very proud to be rated the best airline in the world by our customers. It really comes from our people, as I just talked about. In today's day and age, you can't just have a great company. You have to have a great company that's great for the world as well. We wanna be the best company in the world and the best company for the world. We're doing an enormous amount of things all throughout Brazil, serving all of Brazil, helping. We'll walk you through some of that stuff that we've done. You know, we transport organs every day on board our aircraft. When our flights take off, we save lives. We signed up and said, "We will transport vaccines for free." Went to the federal government. Shortly thereafter, GOL followed, LATAM followed. That's what we do. We have an obligation to help Brazil. We hire people all throughout Brazil, not just inside the triangle. I think that's really important to understand who we are. This is a bit of what we're doing on CO2 consumption. I'm gonna let Alex talk about this 'cause he's very passionate about this and what he's been able to do on the fleet side. Yeah, you know, many of you in the investor community, you know the topic, right, of aviation and how much, you know, carbon emissions come from the industry. Obviously, we wanna be a sustainable industry. We have a target to be carbon neutral by 2045. The industry has set a target for 2050. One of the way we're gonna do this is through our fleet transformation. The E2 and the A320neo and the all the other next-generation aircraft are very important for this because they can fly sustainably, right? That's really important. You know, we cannot have an industry that's gonna be flying, you know, in 2050 and beyond if you have other modes of transportation that are more environmentally friendly. It's important to make the comparison of an aircraft to other ways that people can move around, right? And sometimes you may think that, you know, for example, we compare very well on next-generation aircraft with small vehicles, especially small individual vehicles. This was not the case for old- generation aircraft, right? If we put the curve here for an E1, the E1 would be higher, for example, than a motorcycle, right? But how do we compare it to trains and buses? You know, trains and buses are more environmentally friendly, but they have other disadvantages, right? They have cost disadvantages. They have safety disadvantages. They have even availability disadvantages. In Brazil, you do not have a railroad network that can get you from one side of the continent to the other or the country to the other, right? You do have it in Europe, but even in Europe, it's hard for you. It takes you a very long time. There will be naturally areas where each mode of transportation is going to prevail. To cover a country like Brazil with the speed, with the availability, with the connectivity, and the affordability that we have, nothing beats a next-generation aircraft, right? You will not be able to serve the country the way we can serve with buses, and it's impossible for you to do it with rail. I mean, you know, nobody's gonna make the investment, and you're still gonna have, you know, long distances that can never be covered efficiently with rail. Yeah, and the same thing we showed you on the fuel burn per ASK, you know, applies to emissions, right? Obviously, as we burn less fuel, we generate fewer emissions. We have already dramatically reduced the amount of emissions with our fleet transformation, and we're gonna continue reducing that further as we get closer and closer to 100% capacity coming from next-gen. That's not enough, right? Even if we transform our whole fleet into next-gen, we're still gonna be carbon emitters. How do we get to carbon neutral? You're gonna have to do a lot of different things, right? Certainly, the fleet transformation is a big one. It's the one that we're probably most advanced, but we also need to fly better, right? If you go, for example, on Flightradar24, you will see that we do not fly as the crow flies, right? We do not take the shortest distance between two points. Obviously, if we can do it, if it's up to us, we will. There are other issues in terms of air traffic control, in terms of traffic itself, in terms of restricted areas, in terms of highways in the sky, that you do not take the shortest distance that you could. There's a lot of technology that's being developed. You know, for you to kinda wait in line, for example, at the gate instead of waiting in line to depart on the runway. Because once you start your engines and you depart from the gate and you go to the runway, you're burning fuel and you're issuing carbon, right? If you can have sort of a virtual line for takeoff, that's a lot more efficient. A lot of countries in the world are moving towards that, right? Brazil will. We need sustainable aviation fuel. That's not something viable today. It's certainly viable from a technological standpoint, but it's not viable financially. There's no supply, there's no capacity that can serve all of the industry right now, right? We need to offer carbon offsets. You saw our deal with Lilium that we're very excited about. Some of our capacity will be flown by zero- emission aircraft. Even when you do all of this, right, you get a long way, you get most of the way towards carbon neutrality by 2045, but not all the way there. The whole industry is gonna have to come together, and is already coming together to develop other ways for us to get to carbon neutral. We know that over the next, you know, 25, 30 years that we have ahead of us to get to that target, there will be other initiatives that will help us get there. You know, just before I turn the time over to Abhi, you know, there's a lot of great things happening inside of Azul today. We have, you know, almost 3,000 volunteers inside the company volunteering all throughout Brazil. This coming Friday, we're gonna have our first graduation for scholarship individuals at Azul, where all the money is donated by existing crew members to pay for flight school for pilots and flight attendants. We're taking somebody that's comes from a more humble background, and all of our crew members come together, donate with payroll deduction on a monthly basis to pay for flight hours. We'll have new pilots entering into the line flying that were previously inside of the company today. We're very, very proud of these things that we do. Azul every day is innovating and finding ways to help Brazil. You'll continue to see us do that. You'll probably see us hit you up as investors, you know, to donate to Associação Voar, to contribute to our volunteer efforts that we have at Azul. Thanks, John. Now, you know, talk a little bit more about what's happening right now, right? Probably the part, you know, how's demand right now, how's the recovery right now, and what are we seeing going forward? First, of course, vaccinations, especially as we think about Omicron and that kind of stuff. Brazil continues to do well on vaccinations. The third booster shot, the third shot has already started. In fact, there was an article that Alex sent around that Brazil is a leader in vaccinations right now, which is true. We are doing better than U.S. and better than Europe. This is obviously absolutely critical. This has to keep going to make sure that our progress doesn't stop, right? Important to remember that Brazil is doing well in terms of vaccinations. We've already started the third shot. The booster shots have already begun, and that's obviously very, very important. In terms of our- I think you can criticize Brazil for a lot of things, but we are a people that is vaccinated, right? There's not an anti-vax sentiment in Brazil. There were several days, Rio de Janeiro and São Paulo, no deaths. Pretty remarkable. Pretty remarkable for a country this size. I think that the international community and those investors that are watching today, you know, are unaware of how much progress has been made in Brazil in the last six months. Yeah. In terms of our capacity, you know, this is domestic capacity recovery. We are now going to be November, December, over 100%, right? We were close in 3Q. We're gonna be over 100% now, and then growing more into January as well. In terms of overall capacity, we'll be at 98%, because international is not yet fully recovered, but domestic is about 110%, 115% of 2019 levels. We're just about now getting close to full capacity recovery, as an airline overall. Of course, this is the slide that I was most proud of on the 3Q earnings call and what we are seeing right now on our most recent trends, right? Obviously in third quarter, our unit revenue, our RASK was above 2019 3Q. Just to remind you guys, second half of 2019 was a very strong period for the entire industry, mostly 'cause Avianca Brazil stopped flying April, May, June. Azul, GOL, LATAM, everybody benefited from actually a very high base in 2019. The fact that we're already above it in 3Q was obviously something that we were very happy about. As I mentioned on the call, we exited 3Q at a much higher rate than the average for the quarter. We had a very good October in terms of unit revenue. We had a very good November in terms of unit revenue, and December is also shaping up to be strong as well in terms of unit revenue. Can I be- Yeah. You know, some people use the ruler, you know, during the call to measure the 4Q. You can still use a ruler, and you'll notice that the size of the bar went up, right? From our third quarter call to today, the outlook has actually improved, right? We are feeling good about where things are, and things have improved since we last spoke to you. Yeah. This one here is flown unit revenue, right? This is the one that you see on the earnings calls, on the earnings report. Obviously, this is, you know, by far our most important metric in terms of results. This graph shows you bookings, right? This is going to translate into flown revenue at some point in the future, couple of months down the line or a quarter or two down the line. Those numbers are above 2019 as well. That difference between revenue and capacity gives you your improved unit revenue that you fly. Average fares, most importantly, are higher than 2019, especially when you look at fuel, dollar, all those kinds of things. What to remember is Brazil, we always had high load factors. Even in the pandemic, we always flew 75% load factors. The U.S. went down to like 35%, 40%. In Brazil, we were 75%, sometimes even 80%. Load factor is not our problem, never was our problem, and it's actually very, very easy to fly high load factors. It doesn't mean anything actually. It's average fares that's really driving the recovery. Azul definitely is booking higher average fares than 2019. I don't know what GOL and LATAM's numbers are, but I would suspect that they are as well. I hope they are, 'cause that's what the industry needs, to move forward and to continue this recovery. Our focus is absolutely on maintaining these higher average fares. I think the industry overall is as well. I don't think anybody has any choice, really. I do expect the industry to continue to be disciplined on capacity and on fare side because that is the only way that we're gonna be able to recover and get back to our profitability. Corporate revenue. The slide on the right is a little bit cryptic. I will explain it. On the left, you know, we are seeing our corporate revenue recover. I would say we're about 70%-75% recovered in corporate revenue, which is good. Certainly better than the U.S. Because our corporate revenue is so diverse, right? It's not just São Paulo, it's not just Rio, it's not just Brasília, we are able to recover that thanks to our network and thanks to our fleet. Places like the agro business, even the north of Brazil, and just the many small cities that we fly to, you know, bit by bit, little by little, they all help to recover our corporate revenue. The slide on the right is, it's not marked with numbers for a reason, because it is very strategic information. What this slide this line shows you is our average corporate discount, okay? Our average corporate discount. I talked about this a little bit on the earnings call, is we have worked very hard since July to reduce our corporate discount. Many of you here who fly from Congonhas or others or, you know, work for big companies or big banks, you're used to having big corporate discounts. Those are going away, right? Kinda sucks for you, it's great for me. It's good. There's a lot of revenue here. Our average corporate discounts today are half of what they were pre-pandemic. That is, in some ways, more powerful than increasing fares. 'Cause you can increase fares, maybe a week later, they go down. Corporate discounts are very powerful in terms of recovering average fares. This is just one more tool that we have deployed, and we have taken some risk in this. We are being uncompetitive with the industry. We're saying it's okay, we're gonna reduce the corporate discount, we're gonna see what happens. The market has responded, which is very, very good. You know, again, a very, very powerful tool to improve revenue, and it's worked for us. Non-ticket revenue is also growing mostly because of cargo, right? Volumes are coming back in the network, so things like change and cancel fees are also coming back. Because of the pandemic help that we got in terms of refunds, there were some fees that we were not allowed to charge this year. Those rules go away. Starting in January, we can go back to our full complement of change and cancel fees as well. That's gonna help drive up further our non-ticket revenue. This is mostly driven by cargo, charters, Azul Viagens, but a lot of this is baggage change, cancel. As those customers come back in volumes, you're gonna see absolute growth as well. I'll let Alex talk about cost structure. Thanks, Abhi. You know, we talked a lot about this, and we're proud to kinda show you the results already. You know, we had a second opportunity to set up our cost structure, right? As we were rebuilding the company, you know, with the network, we could focus on rebuilding it with higher productivity, right? You can see here, we talked a little bit about this, but just to give you one example, right? Passengers per airport. We used to serve about 700 passengers for each airport employee pre-pandemic. We're almost at 900 today, and we're going to deliver 1,000 next year, right? You know, obviously cherry-pick because airports is a good number to talk about, but this is happening all over the organization, right? On average, you're also going to see that we had about 93 employees per aircraft pre-pandemic, and we're gonna level off at about high 70s, right? We're gonna go up a little bit from where we are today because we already have the aircraft, but we don't have the full capacity. As we bring the capacity, we're obviously gonna need more employees. We will be, after all is said and done, at a much lower level than we were pre-pandemic. Remember, at a much lower level than our competitors are, right? That's one of the reasons that even with next-gen aircraft, whenever we're all at 100% capacity coming from next gen, we will have lower costs than our competitors because, you know, labor is our second- highest cost. If you can be more productive in labor, that makes a big difference. You're also going to see an improvement, again, because we already have the aircraft, but you know, even obviously this year, we're not fully utilizing them, but when we're back to full utilization of our aircraft, we will be flying them more hours per day than we were pre-pandemic, right? Obviously, more than what we are today, but also more than we were, you know, pre-pandemic. A lot of this is the fleet transformation. An added benefit of the fleet transformation, Abhi mentioned we didn't have the aircraft to fly leisure, and normally leisure is a longer route. By flying longer routes, you get more productivity, more utilization. You know, the you know, if you're only flying 45-minute flights, you're going to have low utilization. It's impossible to get to 14 hours of utilization a day if you're always flying 45-minute flights. If a lot of your flights are three hours, four hours, you can get a lot more productivity and a lot more efficiency. That's what's happening with the next gen. Plus all of the processes, right? Then, you know, we're probably here at our hangar for those of you that couldn't be here. You know, this is an impressive operation, right? What I'm most proud of, right, we're insourcing a lot of checks. What does that mean? First, we pay for our labor now in reais. We used to pay for that labor in dollars, right? We also used to fly these aircraft to Mexico, to the U.S., sometimes to Europe, all right? Even today, with the capacity of maintenance operators all over the world being full, right? Everybody's putting aircraft back to fly. Everybody's running out of capacity. We have our own dedicated capacity, and we can, you know, make sure that we will have the aircraft available. There are airlines out there that will have capacity constraints because they will not get maintenance slots to get their aircraft up and running again. We have this. This is the beauty, the last line here. Because of the dollar where it is, between 2021 and 2022, we're gonna save about BRL 200 million by operating at this hangar. The total cost of building and equipping this hangar, you know, setting everything up that you see here, was about BRL 180 million, right? The payback is a lot shorter, and a lot of it is because of the dollar. We talked about fleet transformation, right? You're gonna see a further reduction in unit costs as we, you know, replace all of these E1s over the next two, three years. That means that, you know, we have a good outlook for cash, right? Obviously, the pandemic took a big hit on our cash, on our debt. We could rely on our partners for a lot of support, a lot of working capital support for us to get through the pandemic. We committed, right, because we didn't file for Chapter 11 like many other airlines in the region did. We committed to paying everybody back, but that means that we have better credit today, right? We preserved our equity, and, you know, we're gonna have a lot of time to pay everybody back, right? We negotiated a very long time to pay for those deferrals. The strong generation of cash from operations will allow us over time to pay everybody back. We guided, you know, a few quarters ago, we guided to about BRL 3 billion of liquidity by the end of the year, right? A lot of that money is going again to pay for rent, to pay for deferrals, to pay for the loans and the deferrals that we got during the pandemic. We will end the year with more cash than we originally expected, right? Which is gonna be great for our cash position next year. It's also great for our deleveraging. Obviously, when we went through the pandemic, our EBITDA went to almost nothing, right? So when you divide anything by a number close to zero, the leverage goes up dramatically. We are confident that we can end next year with a leverage that starts with a five, and then the year after that, a leverage that starts with a four, and then the year after that, a leverage that starts with a three. That's all organically. That's just, you know, with the cash flow generation that we have from our own operation, rolling over some of our debt, but that's mainly bilateral debt, right? Rolling over bank debt, rolling over some of the supplier deferrals that we got. If we have the option, if the market is there, you know, obviously, we'll look at our cost of capital in the capital markets to see if we can accelerate this or if we can, you know, for example, prepay some of our debt that matures in 2024. We have one bond maturing in 2024, another bond maturing in 2026. You know, but the beauty and the comfort is that we don't have to do it, right? There's no pressure for us to do it. The way we restructure our agreements and the strong cash flow generation that we have from operations allows us to take our time and to be opportunistic about when we will access the capital markets. Then on top of that, we have a lot of assets, right, that we can use as collateral, right? Our loyalty program, this is important. You know, let everybody know is our loyalty program, the cash flow of our loyalty program is fully unburdened, right? We can use that for collateral for new deals. You know, some of you may think that TudoAzul has been pledged as part of our convertible debt. What was pledged is a non-operating subsidiary, just unfortunately is called TudoAzul, but it's not the program, right? The cash flows of the program flow through the airline, and those cash flows are unrestricted. We also have Azul Cargo that, as Abhi showed, you know, is more than BRL 1 billion in revenue. We also have the TAP bond, right, which is an asset that's fairly unique to us, and we would certainly be able or be willing to part at the right price. Hey, Alex, just quickly on this, and also you've seen GOL went out and did a spare parts deal. We have our spare parts that are available to us. You know, there's several assets. You're sitting in a hangar here today that has several assets around it. There's not a need to, but we have access to other things. When you look at that ending the year $3.5, that does not include deposits, maintenance reserves, and these other strategic assets that we have. Yeah. It's purely what we call immediate liquidity, which is cash plus receivables. Back to you. All right. Thanks. Yeah. I think, you know, just to finish up a little bit here, we think the market is gonna keep growing, right? You know, people ask all the time, "Is corporate gonna be back to 100%? When's it gonna be back to 100%?" The answer is gonna be over 100%, right? The market doubled from 2008 to 2021. There's no reason that it's gonna stop growing. When you look at this chart, this is just Azul's, you know, passenger numbers. You can clearly see we lost time, right? We lost about two years of growth. There's nothing that we are seeing that tells us the market's done growing. The answer is corporate's gonna be more than 100%. It's gonna be two years later, more than 100%. The recovery tells us that we're already seeing that. You know, we truly believe that this is still a growth opportunity in terms of how little Brazilians travel and in terms of the opportunities they will have. Our growth is gonna continue to be very disciplined. It's gonna be in our markets because our network, our connectivity still has a lot of growth in it. Azul is gonna grow next year, and the market's gonna grow actually next year. My estimate, you know, if 2019 was about 95 million passengers domestically, my estimate for 2022 is, like, 105 million. I think it's gonna be bigger, maybe 110. We'll see. I don't have any reason to believe that 2019, the market was done growing and we're done. That doesn't make any sense to me. You know, this is a chart we often show, and I've been very passionate about that this, and you've heard me in news media. You know, it's embarrassing how little Brazilians travel. It really is. It's embarrassing how many Brazilians make their money in Brazil and spend it abroad. You know, just getting to where Mexico is, to where Colombia is, you know, getting Brazil to where Colombia is, we need three more Azul inside of Brazil. It's pretty remarkable. You know, to get to where Chile is, you need seven more Azuls. Azul has more than 150 aircraft, you know, flying all throughout this country, and so there's an enormous opportunity. The growth has not stopped, and you will see us continue to grow. We shouldn't be ashamed of our growth. You know, we've stayed true to our business model, flying 80% of routes we fly. We're the only carrier in that. You are going to see the market continue to grow. We're already above 2019 levels in terms of total revenue, total PAX, and so now we need to get back to those levels. Go to the next slide, just to kind of finish here before we open it up for questions. You know, we're targeting, you know, BRL 4 billion+ of EBITDA next year. As we've seen the revenue come in, you know, this is another slight change from our earnings call where we said we would be above 2019, and now we're kind of back at around BRL 4 billion because that's where our current forecast is. We just finished the budget of the airline. Yeah, there are some bad guys. FX and oil are bad guys. You know, you cannot deny that at all. It's about BRL 3 billion of a bad guy that's coming from FX and oil. However, the capacity expansion that we're doing with the next-gen aircraft that Abhi and Alex talked about, the productivity gains, you know, when you're 39% more efficient at an airport, and now as every aircraft takes off and it's got more seats, more gauge, you know, so produces more revenue, you get productivity gains. Azul Cargo, right? We're targeting BRL 1.4 billion-BRL 1.5 billion of Azul Cargo in 2022. That's BRL 1 billion more than 2019. The growth does not stop, and certainly doesn't stop in our other business units. As you get into 2022, we're targeting about BRL 4 billion. We'll be one of the few airlines in the entire world that's projecting higher EBITDA in 2022 than they had in 2019. I think you can count on one hand or maybe in three fingers airlines that are projecting to have higher EBITDA. Then as you move forward, and Alex talked about, look at what that fleet, the contractual fleet looks like, right? Look at the opportunity we have to advance aircraft forward and look at the opportunity we have to continually invest in our cargo business and our other businesses. As you look into 2023, 2024, 2025 and beyond, we're very bullish. We're very, very, very bullish. You know, that one chart that shows that a third of our flights today are still on E1s. Just to be brutally honest, that's why we're all still here. 'Cause we look at what does the P&L look like in 2023, 2024 when we retire all of our first-gen aircraft and go to all next-gen aircraft. This becomes a very, very profitable enterprise. With that, I will open it up to your questions, those of you that are in the room here and those of you that are online could put them in through Thais, Bruno. Thank you, John. Bruno from Goldman Sachs. I have two questions. The first one for Abhi. Can you please let us know how does it work the process to develop the new destinations and the new routes? You know, in some cases, maybe people, they don't even know that they have the option to fly, right? Instead of taking the buses or simply not flying. How does it work? And usually, how long does it take to ramp up a new destination? And the second question for... Maybe for John, you have mentioned the growth opportunities, but as a matter of fact, just the currency depreciation makes all else equal the aircraft 40% more expensive now than before, which implies that under the rational environment, which will hopefully be the case, everybody has to generate more EBITDA per aircraft, which leads to the need to raise prices. How to balance the need to recover profitability with the growth outlook that you have presented? Thanks. The process for new routes, you know, new destinations is very much based on local knowledge, right? You know, we have a team that knows where, you know, the local connections between cities, right? Why would somebody from, you know, Curitiba wanna go to Campo Grande? Or why would somebody from Recife wanna go to Mossoró or stuff like that. We use obviously our own data. We know how customers are traveling within our network, if you already serve the destination, you know. For example, we started Porto Alegre to Recife. We had the only nonstop. We still have the only nonstop, one flight a day because we saw that a lot of customers were connecting on our own services. That went from one a day to two a day, now it's three times per day, right? Similar thing with Santos Dumont to Recife or whether you talk about the south of Brazil, Curitiba to Cuiabá and stuff like that. A lot of it is our own data that we have, how customers are traveling. A lot of it is just local knowledge, demographics, you know. What's the community of interest between two different cities and why would somebody wanna go? These days, routes and cities ramp up very quickly. You know, I remember when I was back at JetBlue, you know, we used to say, "Oh, it takes like 12, 18 months for a new route." It's much faster. You know very quickly if it's gonna work or it's not gonna work, right? Thanks to modern marketing, you know, social media, online marketing, digital marketing, it's very, very quick. Now, in smaller cities, maybe you need a local presence, and we use our own people to do that. You know pretty quickly if it's gonna work or not, you know, within six months. Our idea, of course, is we have a route P&L. We always have a route on top. We always have a route at the bottom, right? There's a route P&L. You always have a best, you always have a worst, and you're always making those adjustments. It never stops. Routes, they ramp up very, very quickly these days. Bruno, I'm gonna answer your question in a couple different ways. Abhi hates when I talk about specific cities 'cause he thinks our competitors are gonna look at it. Rio Verde, a city of 300,000 people, is a very profitable route. There's two golf courses in a city of 300,000 people, right? There's a massive Brazil, and a lot of people kinda say, "Well, how many Brazilians are truly flying today?" Okay, Abhi's talking about 100 million enplanements. Usually people go up and back, okay? That already cuts it in half to 50 million enplanements. Then you say, how many times did Bruno travel last year? Maybe it was five, six. There's probably only 10 million to 12 million CPFs or Social Security numbers that are actually flying in Brazil today. That's how Abhi's been able to get the fare up out of 200 million people in the country. It goes back to, yes, costs are higher, but we need to get efficiency across the entire airline, okay? I got BRL 1 billion more in revenue from cargo that I didn't have previously. Alex walked you through how our seat cost is going down with the E2s, the 320 NEOs and the 321s, right? You're talking about a seat cost reduction of 30%, right? That makes up for a lot of that increased cost that you have. You know, you need to be more efficient than your competitors, right? What we've seen is actually some of the new entrants in the market today are struggling, right? They're struggling to make payroll. They're struggling. You know, it's survival of the fittest in the market, right? As the market gets more challenging, the stronger balance sheets, the best business models, the strongest cultures will prevail. I think that it's a combination of all those things. Brazil is much bigger than you give it credit for, right? I'm not pointing this to you specifically, Bruno, but you know, all throughout this country. Why is Abhi serving more cities today than he was serving pre-pandemic? Because he's finding pockets of demand all throughout the country. You're seeing a lot of Brazilians rediscover Brazil. What would've thought with more leisure traffic, you have higher average fares, right? It's because that 12 million people that are traveling today have the capacity to pay more. Yeah. Just to add. You know, you mentioned the cost, and I think John touched upon this. Take our BRL 4 billion of EBITDA next year, right? I talked to many of you. Some of you have something less than four, some of you had, have actually something higher than four, right? But let's just use four. If I just go on my model and I put in the 2019 fuel price and the 2019 currency, the EBITDA goes to BRL 7 billion, right? Obviously, it wouldn't be BRL 7 billion, probably wouldn't have the fares that we have today if we didn't have the rise. But that is a way for you to see that if we hadn't done anything, our BRL 3.6 billion EBITDA of 2019 would be BRL 500 million. Yeah, how are we much higher? We're much higher than BRL 500 million even today. We can see that, you know, it is a more productive airline. Fares did go up. It's the flip side, you know, why is it only BRL 15 million or BRL 10 million or BRL 12 million CPFs? Because, you know, unfortunately, Brazil is an expensive place to operate, right? Fares are higher for Brazilian purchasing power. It's two sides of the same coin, right? The fact that Brazilians fly little means that the people that fly in Brazil can afford to fly when fuel is this expensive, right? The demand is there, and they can't afford to buy a new car. When you look at the price of a new car compared to pre-pandemic levels, it looks crazy. Cars are getting sold. iPhones are BRL 15,000, but they're getting sold because we're catering to a portion of Brazil that can afford to fly, wants to fly. If, you know, obviously, if the costs weren't that high here, if the real wasn't at 5.60, if fuel weren't where it is, you know, fares would be lower and a lot more people would be flying, for sure. Thank you. Victor from Bradesco BBI. I have two questions here. The first one, next year, we would like to have the auction for Santos Dumont and Congonhas Airport, and probably we'll talk about capacity expansion. My first question is how these, let's say, expansion of capacity in these airports can affect our network. The second question, if you can comment about, I mean, the potential takeover of LATAM. First of all, it's pretty exciting. I mean, look at the enormous effort we made to try to buy Avianca to get a small amount of slots. What Minister Tarcisio is doing is he's creating a third more at that airport. I'll let Abhi kind of talk about what he'll do with the network. It's very exciting. I think Brazilians should be very happy because the value of that asset goes up significantly as you increase the capacity of that airport. That airport capacity is lower than it was in 2008 when Azul started flying. We're very excited about that. Obviously, you know, we'll get some, we won't get all, but we're very excited about it, right? I mean, that's been an airport that we've been trying to get in and get more access to because there are high fares in that airport. It's obviously not one of our hubs, but we're very excited about what the minister is doing there. Yeah. I mean, we have a small presence in Congonhas, 21 departures a day, right? Which is, you know, very small compared to GOL and TAM over 130. Yeah, I mean, we're going to make the argument that the airport is very concentrated and that the airport should have more competition. One thing that we would like to avoid, and we made the same argument when Avianca Brasil slots came up, is don't fragment the competition, right? You give four slots to somebody, four to somebody else, and you end up with a bunch of fragmented competition that doesn't really create competition. Our argument is gonna be, you need to sort of have some real competition, to provide, to benefit the consumer. You know, it doesn't affect us that much 'cause our presence in São Paulo is small, and it's a long-term asset because Congonhas is going to be and continue, you know, will be in the future a valuable space to have takeoffs and landings, right? It's a longer-term play, of course. It doesn't affect us that much in the short term 'cause our presence is small. Again, the argument that we're gonna make is the airport is concentrated. It's concentrated and closed, right? I mean, people will say, "Well, Campinas is concentrated." Yes, but it's open, right? Anybody can enter right now. You know, even Santos Dumont, even Guarulhos is actually open. I can add a flight if I want. I just choose not to because I wanna be disciplined and I wanna get the best results. It's the only airport in Brazil that is full and closed, right? Every single other airport in Brazil has space that anybody can enter. We're gonna argue for more competition. We'll see what happens. You see that it's not here, right? It's not something we're counting on. It's not in the BRL 4 billion. It's not on that big bar that you have for 2025. It's pure upside. Whatever happens, it will benefit Azul beyond what we have in our business plan. Victor, as for the process with LATAM, we need to respect the court process. I'm very confident that our plan is substantially better than what they have today, and anybody that has a brain can do math, and we'll be able to look at it. I think as you look and do more research in more detail and look at it, you'll find out how much money actually is going into the company and then going right out the back door, you know, to kind of pay, you know, the money that's coming in, whether that be from the existing shareholders. I think you'll hear quite a bit of noise over the next couple of months. You know, we need to kind of step back. We're very confident in our own plan and, you know, we'll let it come to us at this point, right? I think the creditors need to say, "Holy shit, what happened?" Right? You know, like, "We could have had this as recovery and you're, we're going with this?" I think that, you know, there's also several forms and several ways to get there, and I think as more people see the way we manage our business, and I think it's really important to see how we manage our business in the third quarter compared to how, you know, they're managing their business. I think, you know, over time, this comes back to us. We're not gonna sit there and continue to pound the table, spend money because I think that's the creditor's job and not Azul's job. I think it's more likely that something happens than not, but even if it doesn't happen, it means it doesn't happen now, right? I think the value that if there's anything that you can take away from this presentation, is that we have a very different business from LATAM or GOL, but they're very complementary, right? At some point, someday in the future, economics is going to prevail, right? There's value that can be generated by us consolidating or, you know, by the industry consolidating, that cannot be generated anywhere, any other way, right? That, you know, somehow the market and, you know, the animal spirits are going to figure out a way to materialize this value. Because the only way that it can materialize is by putting together the very complementary networks that we have and the other guys have. Thanks. It's Gabriel Rezende from Itaú BBA. Just two quick questions here. I guess the trend for capacity and demand is quite clear for the fourth quarter this year. I just wonder if you guys could share with us how is forward bookings for the first quarter next year and how that might have changed in the past few weeks considering Omicron latest news, anything like that. Also a second question regarding your convertible debentures, just if you guys could share with us, remind us how can we expect the mechanism of this conversion to work, and when could we expect that to happen. Just thinking about the dilution for our shareholders. The trends going forward, you know, we haven't noticed anything different. January continues to look good. February, you have Carnival, there's always some noise, we'll have to see. You know, last week was the week after Black Friday. You know, Black Friday was okay overall. I think the week overall was actually much better than 2019. Actually, I think less customers waited less this year for Black Friday. It was a much more diluted Black Friday, which I always like. I like a much higher level of constant demand than having big peaks and valleys. That's exactly what we saw. We saw the Monday to Thursday of Black Friday was much better than 2019, and then the event itself was kind of equal, basically, which I like. I don't like customers waiting or, you know, pulling demand forward. You know, we're now into December. I think we have two good booking weeks left this year, before people start to go on holiday and then picks up again in January. Nothing we've seen so far about Omicron or anything like that. Very much well within what we would expect in terms of January, February, Carnival, stuff like that. Nothing that I can really point to substantially on anything different. Yeah Abhi. Just quickly on kind of Black Friday, and I think the industry was very disciplined. You know, the cheaper fares were kind of March and beyond. I think as an industry as a whole, you know, I think Abhi had 10, 15% discounts in there, kind of depending on where you were. Omicron, I find it fascinating. You know, the stock traded off 20% on the new variant. Fuel came down, and our bookings were better than ever. I'm sitting there thinking. I was telling Abhi an hour ago, I says, like, "Hey, maybe it's not a bad thing, right?" I mean, you know, no one's dying from Omicron, right? We have the most vaccinated population in the world, and, you know, we have everybody getting boosters in the fourth quarter of this year. I think, you know, a lot of noise. Obviously, we always need to be kind of worried about, you know, the health crisis in the world. The solution is vaccines, and there's not a better country in the world than Brazil in terms of vaccinations. I think that, you know, our responsibility as leaders in this industry is to continue telling everybody the truth about what's actually happening on the ground in Brazil, as opposed to kind of what the global markets think is happening on the ground in Brazil. On the convertible debenture, the way we do it, the way we look at it, you know, the strike price of that is BRL 32.26 per preferred, right? Most likely, it will get converted in 2023, October of 2023, which is when we have the ability to call the debt again and buy it at par. Assuming that the convertible debenture is in the money as it was a week after we issued the convertible debenture, right? We issued the convertible debenture, and it got in the money within a week, right? It's not there right now, but it got in the money within a week. We fully expect that it will be converted in October of 2023. You know, you can do the way we do it, where we take out the debt, and when we calculate the share price, we increase the number of shares, right? For the conversion. We calculate what we think the stock is worth, you know, by doing a discounted cash flow, you know, eliminating the debt and then dividing it by the increased number of shares. If you use our debt the way it is today, then you're already accounting for the debt, right? The debt on the balance sheet includes almost BRL 2.5 billion for the convertible debenture. We take that out, but we increase the number of shares. If you don't take it out, then you don't need to increase the number of shares. I think most likely in October 2023, that debenture gets converted into equity. You know, it's amazing the convertible was in the money one year ago today, right? You know, shortly after it was done. You know, just to remind everybody, one year ago today, there wasn't a single vaccinated person in the world. Right now, we have the entire country vaccinated. One year ago today, Abhi's unit revenue was probably 20% below what it was in 2019. Now we have an entire population vaccinated, unit revenue substantially above what it was in 2019, and some of our highest volumes ever in our other business units. Thanks. Hi, guys. Khalil from Reach Capital. I just have two quick questions on unit revenues. I saw that it is recovering well, but I'm just wondering when we are gonna see on the P&L, because I believe we still are seeing a lot of bad yields that are coming from airfare that were bought during the pandemic and are still being redeemed right now. So how much is that to clean out? And when we talk about cargo, what you guys are seeing forward with all the e-commerce dilemma? Is more volume or is unit revenue increasing as well on your projections? Thanks. Well, in terms of unit revenue, we already saw in the third quarter, right? We were up 1%, and you are seeing that flown revenue come in. There is some history to be cleaned up, but I think by the fourth quarter, certainly first quarter onwards, it's all new bookings. You will see more improvement in 4Q and then beyond. There's some history, but not that much anymore. We definitely are seeing in the flown revenue the effect of the higher fares. In terms of cargo, you know, I think it's the yields have actually held up pretty well. We also thought that in 2020 it was an artificial spike in the yields because of capacity, all that kind of stuff. They have not really come down that much, which is good. That's because what's happening is that more of our customers are shifting to premium products, right? We used to sell, you know, much more volume that was seven-day delivery. Now we sell a lot more that's one or two or three-day delivery. That's helping maintain the yields as well. On our dedicated services, we have not seen the yields come down. On our belly services, we're actually seeing more customers migrate to the left because they wanna deliver faster, right? We're selling the mix is much more towards the premium products. What's interesting in terms of profitability, when you think about Azul Cargo, the way it's been growing since we kind of started really focusing on it grows by increasing volume in the belly of the aircraft, which has normally, you know, low-ish yield with very, very low marginal cost, right? All that money that comes in is almost all pure contribution. During the pandemic, it changed a little bit because we dramatically reduced the capacity of the passenger operation, but demand for cargo, and especially e-commerce, skyrocketed, and we started using the aircraft on a more dedicated way, which has much higher yield but also has much higher cost per ton, right? Because then you're not getting a free ride on the belly of a passenger aircraft, you know, where you're flying, you know, an A330 to Bruxelas, to Brussels purely, you know, purely for cargo, you know, and you allocate that cost across the payload, it's higher than it is in terms of marginal cost for the belly of a passenger aircraft. It increased yield but also increased cost and maintained margin fairly the same way that it did before. A lot of the growth that happened in 2020, 2021 was from yield and not volume, right? The yield went up, unit cost went up, margin stayed roughly the same, but revenue went up a lot. Now we're gonna get back to sort of the pre-COVID growth. A lot of the growth for next year comes more from volume because we're increasing capacity. We're, you know, recovering the capacity on the passenger side. What's interesting is that we assumed that yield would come down. As Abhi said, we were not seeing that big of a reduction in yields, in spite of the fact that we're adding all this capacity from belly cargo back into the operation. Hey, guys. Thanks for the event and the reception. It's Lucas from BTG Pactual here. Two topics, I would like to hear you. Number one, the negotiation with pilots, we saw some rumors about strikes. I think starting last week, so if you guys could comment on that? And secondly, still on the cargo business question. Can you guys comment a little bit on the change or at least the differences between the FedEx contract and the Meli you guys and I know there are some information guys cannot share but at least I mean in the learning curve, you guys had in the meanwhile, it would be interesting to hear? Yes. So obviously, the strike was supposed to be last week. It didn't happen, we got to a conclusion with the pilots and the flight attendants, where we agreed to 75% of inflation and they were looking to go back two-years and we actually the 75% of the last 12 months. And so the Minister kind of intervened and we came to a negotiation and so it's done, right. And so there's no issue there. I think we're closing with along the same lines with all of our other work groups, right. So the airport agents, maintenance technicians, there's it's a normal course of business that happens every year. And so obviously, there's a little bit more noise around it this year because inflation was higher. But and just to remind everybody, that's standard for all airlines, right. And so if all airlines are paying 75% of inflation, right. So airlines have had higher base salaries go up by more than airlines that don't. And so, it's behind us. We're looking forward and so we're excited to kind of enter into 2022, kind of with our crew members on our side to start flying and producing more. Yeah. In terms of FedEx and Meli. Our deal with FedEx is right now about adding distribution points for FedEx and for us increasing our relevance with our customers. The idea is that the Azul stores become FedEx pickup and drop-off points for international courier service, right? For FedEx, it gives them access to 4,500, you know, ZIP codes in Brazil. All our representatives gain relevance, Azul Cargo gains relevance because now we can use FedEx's global network, and we can now ship courier obviously everywhere that FedEx flies, which is amazing. We hope it's the first step in hopefully an evolving partnership between us and FedEx. We're actually very, very happy to be working with them. The Mercado Libre deal is, well, so far, you know, obviously Mercado Libre is one of our largest customers. We have sort of two different pieces of business with them. One is our door-to-door deliveries. The other one is, we call line haul, but, warehouse to warehouse or airport to airport, and then they handle the first mile or the last mile. Based on their ambitions with their own logistics program and, you know, those numbers mix around. For Mercado Libre, we are a logistics provider. For FedEx, it's much more, pickup, drop off, and really increasing the relevance of Azul Cargo overall. Two different partnerships, but both of them important for us and for our partners, just making Azul Cargo more relevant. Lucas, one thing I think I've mentioned before is, you know, Abhi, Alex and I had the opportunity to spend an 1.5 hours With Fred Smith, the founder of FedEx, and he kind of taught us a lesson. It's like, "Don't put all your eggs in one basket," right? You know, be it, Meli, Megalu, Amazon, and you know, we learned. You know, we were kind of so focused on that, and he said, "You know, your logistics will be for that company and not for the market." We don't have a customer today that's over 10% of our total revenue, right? Yes, Mercado Libre is very strong. Yes, they're growing a lot, but they don't make up more than 10% of our total revenue, right? You know, Fiat, Samsung, Danone yogurts, Natura, these are all fantastic customers of ours. You know, I think the FedEx partnership is more strategic long-term as opposed to kind of more immediate. Yeah. What's fun to look is the, you know, for each of these customers, like John said, the first one is close to 10%, second one drops to, like, 3%, and then you have a really long tail of customers. Then when we look at what we represent of their spend in logistics, it's a very, very small fraction, right? If we can increase our share of wallet, it's the BRL 45 billion that Abhi talked about, right? The BRL 45 billion, when we look at all of our customers, is and when we add up everything that they spend on logistics, is the BRL 45 billion, right? When we look at what we represent, it's, you know, 1/45th of that amount. We're gonna go one more in here, and then we'll go to some online and then come back. Okay. Cool. Thanks. Guilherme Mendes with JPMorgan. Two questions. The first one to Abhi. It's a follow-up on yields. If you can comment, how can we think in terms of yield increase excluding fuel and FX effects? Because naturally, part of the increase on yield should be related to passing through higher fuel costs and FX effects as well. The second one, in terms of a fuel hedging strategy, how should we think about it for next year? Thanks. Yeah, I mean, our goal from a revenue perspective for next year is keep the yields that we have right now, right? If we can keep the yields that we have that we're gonna finish fourth quarter with, which are actually quite strong, if we can keep those for next year and grow the airline and get all of that margin benefit from unit cost, right? In terms of the scale, in terms of the dilution of the cost per ASK, I think that gets us to our numbers. You know, as Alex talked about the rule, you know, we are gonna have a 4Q with higher year-over-year RASK. Year-over-year RASK improvement in 2019, and my goal is to keep that going forward. Obviously there's some fuel in there's some currency. You know, the market is reacting to the higher cost in terms of average fares. You know, that's okay. You know, the customer is paying it. There is demand for that. Everything that we are seeing in terms of groups activity, in terms of conferences for next year, a lot of groups activity is returning. Obviously, you saw Formula One, you know, a couple of weeks ago in São Paulo. I, you know- Abhi, I think it's important to highlight, São Paulo didn't open till November 1st, right? You know, you weren't asked to go back to the bank until November 1st, right? That's what we're seeing. In terms of hedging policy for oil, you know, our policy is that we can hedge up to 40% of our next 12 months consumption if fuel is, you know, below a certain threshold and, you know, if it above a certain threshold. If it goes below, like, $40 a barrel, we can go above 40%. But, you know, so it would be about 40% is sort of our maximum hedging position. But, you know, we also take a look at what the industry is doing. The industry since the pandemic has become very light on oil hedges, right? I mean, the oil industry kind of suffered with it because, you know, normally you would say, "Hey, I can hedge a lot because if I lose on the hedge, that means I'm winning on the operation and vice versa." You saw a combination where you were losing on the hedge and you weren't winning on the operation because there was no operation, right? That at a point, there was a bigger, you know, impact on our cash than the actual revenue impact, right? We also have to be careful on how much to hedge. We fully expect to lose money hedging, right? I'm not gonna say that part of our competitive advantage is to guess whether oil is gonna go up or down. We tend to look a lot at what the industry is doing. Right now we're at about 10%-15% of our next 12 months consumption hedged, which is higher than the industry. The industry is close to 0%, right now, right? We don't expect to increase. If anything, we'll probably let, you know, the numbers go down a little bit more because what you don't wanna be is to be in an uncompetitive situation, right? Let's say I hedge 100% of my oil consumption at $80 a barrel, and the industry is at zero. Then all of a sudden oil drops to $40 a barrel, right? Which is not impossible, and then I'm hedged at $80, the whole industry is unhedged. The whole industry can reduce fares and I cannot, right? You have to kind of keep an eye on the competition to decide what you're gonna do in terms of implementing your hedging policy. We expect to be sort of where we are to lower than that. Thais, online. Mike Linenberg from Deutsche Bank has two questions regarding corporate demand. The first one is, what gives the confidence that we can maintain or grow our corporate revenue share while cutting our corporate discount? The second one is, with the Omicron, Google announced that they are delaying their return to office. Do you think other companies will also delay their return to office and in turn affect corporate travel? It's a good thing we don't fly to San Francisco, right? Let's. You know, we need to ask you all to think about as investors and not as corporate travelers here, right? For the answer. Well, San Francisco has been impacted. Look, obviously, the second part of the answer is what John talked about, which is vaccinations, right? Vaccinations, boosters, third shots, all those kinds of things. You know, how well Brazil has done and how well São Paulo has done and the country has done in terms of vaccinations. You know, I think in terms of the vaccination rates that we have so far, I have not heard of any delays in reopening. I have not heard about any customers not wanting to go back to the office. You know, nothing has changed. In terms of the corporate revenue, you know, I think it's the signs that we are seeing in the market. We are seeing really strong groups activity. We are seeing really strong conferences, training events, and, you know, it's from talking to our customers and seeing what they're experiencing. There's nothing again that gives us any indication. November was better than October. December has started better than November, so the progress has continued. We'll take a pause now because of summer break and probably come back, you know, in terms of corporate activity towards the end of January, because of summer vacations now. It's progressed very nicely throughout the year, especially since July, exactly timed with the second dose, and we're gonna have the third dose and the booster shots as well. Nothing indicates that that's going to change. Again, it's all linked to vaccinations and the progress that we're making in vaccinations. You know, I'll just add for Mike's benefit. You know, we're on the ground here, and I you know, end of the year is always a rush, but there's an enormous amount of events. You know, I have dinners almost every night, you know, between now and the end of the year. It took me an 1.5 hours To go to the other side of São Paulo. You know, I was talking with Victor, you know, on Tuesday, Wednesday and Thursday, Faria Lima is like, you know, completely gridlocked. Mondays and Fridays, it's not, right? The bankers are kinda getting a little bit of- It's funny how that works. It's funny how that works. It's funny how there's no COVID on Mondays and Fridays, but there's Tuesdays through Thursdays. I think being on the ground in Brazil and seeing restaurants full, seeing economic activity, seeing airplanes full, you know, it's very much a different vibe that we're seeing and, you know, we're seeing this kind of rush to finish 2021 on a very positive note, kind of across many sectors. Great. Alejandro Zamacona from Credit Suisse has three questions, actually. Should the program of reorganization of LATAM is approved as presented, do you expect a higher competitive environment? How could it affect yields and capacity plan for Azul? I will tell the other questions. You know, what I've seen so far is, you know, they're exiting, you know, Chapter 11, assuming their plan gets approved, probably, you know, more levered than when they entered, right? Yeah, they have some advantage on the fleet side, but they didn't get a labor deal done. They have 75% of their ASKs are international. You know, I think the market needs to make money, and I think the new shareholders of LATAM will be focused on that, as will the shareholders of GOL, as will be the shareholders of Azul. I think everybody wants to make money. You know, having a new competitor come out of Chapter 11 thinking that they're gonna destroy the market, I just don't think that that's very probable. You know, the other thing too is as we show, 80% of our network does not have overlap, right? We're alone in many of our markets. I think everybody wants to kind of play to make money, and I think that will be the focus. If there's new creditors coming into TAM, LATAM and putting, you know, $5 billion, $6 billion, whatever the amount of money is, they need to get a return on that capital, right? There's no way to get a return on that capital between you know, if you're destroying the market. You know, I'm very confident that the market will be healthy over the next couple of years. Historically, the best time to invest in an airline is in the backside of a crisis, 'cause everybody kinda comes to the brink, everybody gets religion, and everybody kind of prices for profitability. I think what Abhi is indicating here, what he's done with corporate discounts, I think is important. It's an important signal to the market overall that fares need to be going in the right direction. Thanks, John. The next question is for Alex. What would be the more stable long-term operating margin considering all these efficiencies and multiple sources of margin expansion? You know, the BRL 4 billion in EBITDA that we're talking about is in the mid-20s in terms of EBITDA margin, which still leaves a lot of upside for us to get back to our pre-COVID margin, which was, you know, 31.7%, right? You know, we believe that we will get to the low 30s in EBITDA, probably not even in 2023, most likely in 2024. Again, in terms of EBITDA generation, 2023 is gonna be a lot higher than 2024. 2023 is gonna be a lot higher than 2022, even though we still won't be at the low 30s in terms of EBITDA margin. You know, with all this productivity gain, you know, can we aspire for 40% EBITDA margins? I don't have that in my model, right? You know, I kinda level off my EBITDA margin at sort of historical highs. I don't put it at 40%. Are we gonna just throw in the towel when we get back to 32%? Of course not, right? It's just so in terms of profitability, in terms of modeling, you know, we kinda count on a little bit of a reversion to the mean, reversion to historical trends. Yeah, when you do the bottom-up calculation, you know, when you look at that chart we had with the growth in 2022 EBITDA to 2025 EBITDA, there is a lot of value here, right? That could get us to record levels, EBITDA margins, you know, much higher than what we had before. I mean, there's a lot of goodness, a lot of drivers that certainly can lead you to push for that. Thanks, Alex. Do you foresee the densification opportunities in any aircraft type? Fleet simplification? Densification. Oh, densification. Densification. You know, our aircraft are pretty dense, as it is, you know, 214 seats on a 321, 174 on a 320. You know, I think we like our product where it is. Where we're gonna gain efficiencies is on the mix. We have more larger aircraft coming in, so our seats per departure is going to increase. As an airline overall, we are definitely densifying, and we are via upgauging. The airline is densifying. I think each aircraft by itself is probably pretty okay right now. Overall, we are densifying as an airline. As Abhi showed, you know, the revenue that we get, the extra revenue we get per pax, part of it is the extra legroom. That product certainly pays for the real estate that it consumes, right? We believe that it's a better revenue mix for us to have a small portion of the cabin with more legroom and charge more for that and have, you know, a denser portion of the cabin, you know, for lower fares. As you guys all know, there's no first class cabin in domestic aircraft in Brazil, right? It's like Abhi said, it's already pretty high density. Talking about fleet, Josh Milberg from Morgan Stanley is asking us when we will likely receive the 50 E2s aircraft that last year were deferred until after 2023. I just gotta ask Josh, is he working on his Embraer model or is he working on his Azul model? You know. No, I mean, it's a negotiation, right? I think what we wanted to show today was what we're contractually obligated to take. We've advanced some E2s into 2022. I think in total, there's eight, six of which we have in the schedule. Another two will slip into 2023. We're negotiating with Embraer, you know, we couldn't be happier with that aircraft, right? It's a fantastic aircraft. The fuel burn is much better than they told us it would be, and I've never seen that with an OEM. We're very happy with that aircraft. The passengers love the aircraft. You know, I think it's highly probable we'll do something in 2023. It's a negotiation that's ongoing, that's why today we really don't wanna comment on that. I think for your modeling purposes, you can assume we take some aircraft in 2023 from Embraer. Thanks, John. Dan McKenzie from Seaport is mentioning that our recovery looks strong, but there are some economists that are calling for a recession in 2022. What's embedded in our outlook? From where we sit right now, what does the stress test look like? And what's the financial flexibility if things get worse? Yeah. We model demand much more based on what we're seeing of our demand, right? As opposed to sort of GDP. You know, GDP, I think is good for, you know, maybe if you're trying to look sort of at a 10-year trend or a multi-year trend. But on a year-by-year basis, there's really no correlation we see between GDP and demand growth. If you look at that chart that Abhi showed, with the growth since we started Azul, you know, average GDP over the ten-year period prior to the pandemic was less than 1.5%, right? Pretty depressing GDP for an emerging market. That's why we call it, you know, another lost decade and all that. The average growth for the aviation market, not for Azul, for the aviation market as a whole, was 7.5%, right? You would be looking at a 5x GDP multiplier if you try to look at GDP. The truth is that on a year-by-year basis, that correlation is not that strong. It's really about the demand that Abhi is seeing, the demand that we're seeing in the markets that we fly, the bottom-up calculation of the markets that we're going to start flying, and that gives us a lot more confidence on what our demand is going to be than the GDP projections. Again, think about not the impact of GDP or a recession for Brazil. Think about what's happening to the traveling public- Yeah. to the 15 million CPFs or social securities that we cater to. What's happening to them? Are they seeing a recession, right? From the number of Porsche Taycans that I see on the São Paulo roads every day, doesn't feel like it. Right. Yeah, I also think, too, you know, Dan, take into consideration what's happening in the Midwest of Brazil, what's happening in the north of Brazil. You know, what Abhi did in Recife is pretty incredible. We have 42 nonstop destinations to Recife today. It's where the economic activity is happening. There's, you know, the agribusiness in Brazil with the dollar at $5.60, $5.70, they're making more money than they've ever seen in their lives, right? That's where the network gets concentrated. You know, there's many different Brazils, and I think that needs to be, you know, put in perspective. I think there's opportunities. These are buying opportunities for people as they kinda look at the projections that come out. We're way more bullish because we're on the ground seeing what's actually happening. Hey, everyone. Thanks for taking my questions. This is Jorge from Morgan Stanley. Thanks for the presentation as well. I think this one is for Alex. Alex, you mentioned that you expect to, you know, repay all of your rent and supplier commitments or almost all of that with core operating cash flow generation. Just wanted to understand how much of that is already reflected when we look at your schedule of amortization of financial liabilities and how much of that could come eventually as an upside or an incremental benefit to those numbers the way that they look right now? It's a little bit of a circular reference, right? Because here's what's gonna happen, and here's how we managed the pandemic, which I think, you know, you know, gave us a lot of credibility of how we're managing, you know, since the pandemic started, right? In the end, this is all about reputation and credit. We told our suppliers and we told our, you know, lessors, and we told our banks, "Look, we can't pay you, because if we pay you know, we're gonna have to file for Chapter 11, or the company's not going to exist, and that's bad for everyone," right? And then we restructured all of our payments, and then we started honoring them. Then we started getting feedback from our suppliers and our lessors of, you know, how happy they were with the fact that we were honoring our payments, which was not the case throughout the industry, right? Again, we honored, and we promised to pay them a 100%. We said when we first negotiated the first wave, we said, "Look, we believe there's gonna be a gradual recovery, and that's what we're modeling, and that's where our payment capability is. But if there is a second wave, we're gonna have to come back to the table and get additional deferrals." The second wave came, we went back to the table, and it was a much easier conversation. First, because the ask was much smaller, and then because we had already kind of, you know. It was consistent with the whole negotiation approach that we had had. We continued to honor those payments, right? When I look at the sort of the next thre years as I get down from the double digit, you know, leverage back down to something that starts with a three, you know, I can pay for about half of everything that expires with my own cash, and I'm going to need to roll over about half. Does that mean I need to roll over half of everything? No. Right? Because if I roll over 100% of my bank debt, If I'm generating BRL 4 billion of EBITDA, you know, the banks are gonna be very keen on rolling over that bank debt. You know, that won't be a problem. I don't have to maybe roll over the 2024 bond, right? I can be opportunistic. What we're gonna do is we're gonna look at the cost of capital of each option. I'm gonna need to raise some capital, but it doesn't necessarily mean that it's going to be debt, right? Doesn't mean it's gonna be equity. Maybe it's bilateral. Maybe it's with our suppliers. Maybe it's, you know, certainly we're lowering our cash balance, because prior to the pandemic, we had less than BRL 2 billion of cash. You know, does that mean? Do I need BRL 3.5 billion of cash, which is what I'm gonna end the year with? No. Right? I can let that cash go back to something more similar to the pre-pandemic levels, right? That can be used to pay for those suppliers. The sort of summary is that we have options, right? It's very good to have options because then you can play one against each other. You can kinda choose when you're going to roll over your debt, which debt you're gonna roll over, at which condition, and that's where we like to be. You know, Alex, I would just add, we're always negotiating, right? That's kind of part of the game. I was joking with Josh's question on Embraer. Every operating lessor, it's always a negotiation. What are their needs, what are our needs, and how do we meet each other's needs, right? You know, bringing aircraft forward, who finances those aircraft? And do I get more time on a deferral if I take more aircraft earlier or later? You know, those are all things. We extend leases. You're constantly negotiating. The most important thing you need to do is have a business that makes money, right? I think that's what we're focused on in producing the $4 billion. I think our results in the third quarter compared to our industry, kind of in the U.S. and in Latin America, I think shows the great business model that we have. You know, financing is secondary, 'cause first you have to make money. Any other questions here? Anything else online? Nope. You already asked all the questions we have here online. All right. Great. Thanks, everybody. We apologize for the slight delay. As Thais said at the beginning, you know, that just reinforces that people need to get back together. You know, forget this online nonsense. Actually, the truth is we uploaded a virus on Microsoft Teams. We hope it never comes back. Thanks, everybody. We've got some food here and have the opportunity to talk to you all individually. Those of you online, thanks for your time and your patience, and feel free to reach out to Thais, Alex, Abhi, myself if you have any further questions. Thank you. Thanks, everyone.