Azul’s Widebody Engine Groundings Create Q1 Cost Challenges

Brazilian operator Azul is seeing improvement in irregular operations after unscheduled engine removals in late 2024 created cost headwinds for the carrier during the 2025 first quarter (Q1).

During a six-week span in the last quarter of 2024, Azul faced eight widebody engine removals, Azul CEO John Rodgerson said during a May 14 earnings discussion. Rodgerson said that resulted in an inability to sell close-in revenue, “because we were just accommodating customers” with hotel rooms, food and transportation.

Rodgerson pointed to improvements in Azul’s irregular operations, noting from December to March the company reduced average hotel night customer accommodations by 75%. However, “even though we made significant improvements during the first quarter, we were still impacted by the irregular customer operations and the customer litigation caused by it,” he said. Rodgerson added Azul is seeking compensation “similar to what you’ve seen with other airlines around the world.”

The Aviation Week Network Fleet Discovery database shows Azul operates five Airbus A330-200s and three A330-900neos, with four -900neos listed as inactive. Azul’s A330-200s are powered by the Rolls-Royce Trent 772B-60; its A330-900neo engines are the 7000-72 model.

During the 2024 fourth quarter (Q4), Azul posted a B$330.2 million ($58.5 million) increase in its “other” expenses category, driven by the irregular operations and an 18% depreciation in Brazil’s currency against the U.S. dollar.

But now, Azul has “more spare aircraft available to us, more spare engines, and more engines leaving the shop, and so we expect a significant improvement going forward in this line item,” Rodgerson said.

Despite the headwinds from irregular operations, demand for Azul’s flights remains solid. The company’s President, Abhi Shah, said Azul has not seen oscillations in its U.S. business, and the company is seeing growth year-over-year for point of sale outside of Brazil, “which is revenue that’s coming in Euros and Dollars, both for our international network as well as our domestic network.”

Data from Aviation Week’s CAPA-Centre for Aviation show Azul operates to Fort Lauderdale from Campinas, Recife and Belem and to Orlando from Belo Horizonte and Campinas. The company also operates to Paris Orly and Lisbon from Campinas.

“Our international network is a high-end leisure network,” Shah said. “I think we are isolated in that sense.” U.S. carriers have cited weakness in domestic economy sales in their respective assessments of Q1, but stated trends were beginning to improve.

Overall, Azul sees industry capacity in Brazil’s domestic market growing 8% year-over-year, peaking in the second quarter (Q2), Shah said, followed by a lower increase in the back half of the year. Azul is planning roughly 8% domestic growth and around a 10% increase in its international supply. Its international growth should be higher in Q2 and Q4, with growth in the last three months of the year occurring off of a lower base due to OEM issues Azul contended with in Q4 2024.

Azul recorded a 15.3% year-over-year increase in operating revenue in Q1 to B$5.4 billion as expenses grew 24.4% to B$4.8 billion. The company’s Q1 net income swung to B$783 million compared with a loss of B$1.1 billion the year prior.