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Sustainability
Report 2020
manual de utilização da marca
Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
manual de utilização da marca
Contents
Introduction Focus on people
How to navigate this Report........................05 Crewmembers............................................47
Sustainable Development Goals map..........07 Customers..................................................67
Welcome aboard.........................................08 Business Partners.......................................71
Our value generation Going Above and Beyond
About Azul.................................................. 12 Connectivity................................................ 74
Outlook.......................................................16 Social responsibility....................................75
2020 Overview............................................ 17 Innovation...................................................79
Initiatives and Targets..................................18
Performance...............................................22 To learn more
GRI Standards Content Index......................83
Business conduct SASB index.................................................89
Corporate Governance................................28 Capitals Map...............................................90
Risk Management.......................................32 Credits........................................................91
Connection that transforms.........................33 We enthusiastically present Azul's Sustainability Report!
Responsible and efficient operation We are thrilled to present this report to you, which
describes our results, current initiatives, our values
Safety.........................................................35
and our purpose. We are passionate about what we do
Eco-efficiency ............................................37
and are pleased to share it publicly, reinforcing Azul’s
Ethical Performance....................................44
pledge to transparency and sustainable growth.
Welcome and have a nice trip!
2020 Sustainability Report • Azul 2
Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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INTRODUCTION
3
Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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GRI 102-50
Welcome to Azul’s All photos of Crewmembers without mask were taken before the pandemic.
Sustainability Here we share our main highlights of 2020, in line with our commitment to transparency
and sustainable growth of our business. On the following pages, you will find more
Report! information about our performance during the year, and also about Azul’s values, culture,
contributions to society and vision of the future.
2020 Sustainability Report • Azul 4
Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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How to Navigate this Report
GRI 102-54
This report adheres to the best international Integrated Reporting (Capitals) SASB indicators
reporting practices: Throughout this report, we will indicate where the This report also presents relevant indicators on
content relating to each of the capitals supporting sustainability in the aviation industry according to
Global Reporting Initiative (GRI) – GRI Azul’s business model is addressed. You can search the SASB. To quickly access this content, search
Standards Core Option; for them through the capitals map on page 90, the index on page 89 or look for the TR-AL-XX
which shows where they are located, or through acronym throughout the publication.
Integrated Reporting Framework (IR or IIRC); the icons at the beginning of each chapter:
For more information visit:
Sustainability Accounting Standards Board www.sasb.org
(SASB) aviation industry indicators; Environmental
United Nations (UN) Sustainable
Financial Sustainable Development Goals (SDGs)
Development Goals.
At the beginning of each chapter, you will find the
priority SDGs icons that relate to the content of Azul’s
Manufactured
Report. A map indicating where and how the SDGs
GRI Standards are addressed is also available on page 7.
Throughout the content, you will see the GRI
Human
XXX-X acronym next to the chapters’ title or For more information visit:
subtitle with the number of the indicator reported. https://sustainabledevelopment.un.org/sdgs
The GRI content index on page 83 helps you find Social and Relationship
these indicators, explaining each one of them
and the pages on which they are located.
Intellectual
For more information visit:
www.globalreporting.org
For more information visit:
https://integratedreporting.org/
2020 Sustainability Report • Azul 5
Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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IMPORTANT NOTE!
Throughout this report, we will refer to Azul by the terms “Azul” or
“Company”. Also, whenever we use the term “Crewmembers”, please
note that we are referring to all employees and "Business Partners"
to our suppliers.
Innovation
Innovation is one of the pillars of our sustainability strategy and
is present across several of our initiatives and projects. This icon
appears throughout the report to highlight the content that addresses
important innovations!
Covid-19
Enjoy
your
Throughout this report, you will also find this icon, which indicates the
contents related to the measures taken by Azul to face the Covid-19
pandemic in 2020 on all fronts that we operate, in order to ensure
health and safety of all our publics, contribute to the fight against the
disease and care for those in need, keep attending the market and act
responsibly, to make sure that Brazil remains connected, even during
the most difficult times.
reading!
2020 Sustainability Report • Azul 6
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Sustainable Development Goals Map
SDG goal
Ensure healthy Achieve gender Promote sustained, Build resilient Make cities Take urgent Strengthen the means
lives and promote equality and inclusive and continuous infrastructure, inclusive, safe, action to combat of implementation
well-being for all empower all economic growth, promote sustainable resilient and climate change and revitalize the
women and girls full and productive industrialization and sustainable and its impacts global partnership
employment besides foster innovation for sustainable
decent work for all development
Azul's commitments
Promote safety as Ensure women’s Establish trainee Support Promote local Maintain the Establish
Azul’s #1 value; full and effective and scholarship infrastructure economic youngest fleet in partnerships
participation and programs; development in development Brazil with fuel- with government
Provide a proactive
equal opportunities local airports; by connecting efficient aircraft; authorities,
employee wellness Protect human rights
for leadership at all underserved (or not regulators,
program; in our operations and Encourage Monitor, relate
levels; served) cities; manufacturers and
supply chain; innovation amongst and manage
Promote medical care suppliers on issues
Fight all forms of Crewmembers. Ensure that services Greenhouse Gas
through our network Create direct and involving actions
discrimination against are not limited to Emissions.
(Pink October, organ indirect jobs through to promote health
women. high-density urban
transport, Barretos our sustainable and safety (people
destinations, but
Hospital). growth. and operations) and
also remote areas.
climate protection.
Relationship with content/pages:
Safety, page 35 Crewmembers, Crewmembers, page 47 Performance, page 22 Connectivity, page 74 Eco-efficiency, page 37 Eco-efficiency, page 37
Crewmembers, page 47 page 47 Business Partners, Innovation, page 79 Social Responsibility, Innovation, page 79 Social Responsibility,
Social Responsibility, page 71 page 75 page 75
page 75 Connectivity, page 74
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Welcome aboard
GRI 102-12 • 102-14
of initiatives focused around the health and safety We had to make difficut decisions in order to
We make of our Customers and Crewmembers. At the same
time, we worked to mitigate the negative impact
guarantee Azul's liquidity position. Our leadership
gave up their bonus and wages voluntarily; we
dreams fly! on our financial results and liquidity. These actions
were conducted in open communication with all
of our stakeholders (learn more on pages 52, 68
negotiated union agreements to reduce working
hours and fixed costs — which lasted only five
months, instead of the 18 initially planned. We
and 72). Many of these initiatives will serve us well launched voluntary programs for unpaid leave
into the future. and retirement incentives, which more than
We ended 2020 more confident than ever on our 11,000 Crewmembers — roughly 75% of our
ability to overcome any challenge. Azul is made In April, we shrunk. From a level of 1,000 daily total — joined. We negotiated payment deferrals,
up of people who are passionate about what flights, we went down to 70, a 95% decrease. Our discounts and contractual changes with our
they do and eager to go above and beyond. operating priority was to help maintain Brazil’s lessors, banks and suppliers. Through their
I would like to begin by thanking each one of Essential Air Network. 122 Azul aircraft were partnership and trust, we gained the support to
our Crewmembers for their dedication and grounded, following strict procedures designed go through this unprecedented crisis.
commitment through a difficult year. Together, we to preserve them and later return them to the
fly higher! operation. Our new hangar in Campinas (SP) was We have readjusted our operations to strengthen
essential in providing us the flexibility to respond Azul on a sustainable path towards full recovery
We started 2020 with great expectations for Azul, quickly to the demand recovery. We ended the year and anticipated future growth. Azul was one of
but the year turned out to be the most challenging flying to more than 110 destinations and connecting the few airlines in the world to maintain its cash
one in our history due to the global crisis caused Brazil with more than 700 daily flights. Azul had the position in the toughest year in the history of
by the pandemic. Once again, our business model strongest recovery of all airlines in the region! aviation. With this, we were able to access the
and management approach proved to be efficient, capital markets to increase our liquidity with a
resilient and sustainable. Beginning in March, we To face the financial impact of the pandemic, we successful offer of R$ 1.7 billion in convertible
quickly adjusted our network and our operation. developed a Crisis Management Plan. We adjusted debentures. Adding the proceeds of this offer
We also negotiated with all of our stakeholders in our network to the new demand levels, reduced to our end-of-quarter cash balance, our cash is
order to adapt to a new reality. fixed costs, and engaged all stakeholders to sufficient for more than five years at current cash
protect our liquidity. With this plan we were able burn levels.
Our response to the events related to the spread of to preserve over R$ 8 billion in cash.
the pandemic in Brazil was to implement a range
2020 Sustainability Report • Azul 8
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In 2020, we had to reinvent ourselves. Safety Our diversified fleet gives us unique flexibility to Our fleet transformation plan has been paused
and health are always our first priority, and this adapt capacity to demand. With Azul Conecta, our due to the pandemic. However, it remains one of
was even more relevant this year. We are proud newest business unit, we will reach more than 200 our strategic pillars for growth and sustainability,
of the initiatives we introduced to protect our cities in the coming years. and we will transform our fleet as quickly as
Customers, our Crewmembers and our country. feasible. At the same time, we are increasing our
We reimagined the boarding process with our We have successfully concluded the environmental management.
“Tapete Azul” and intensified the cleaning of implementation of our Crisis Management Plan.
our aircraft with the use of UV-Ray disinfectant Our capacity is adjusted to the new demand levels, We carry Brazil in our souls and make Brazilians'
equipment, the first South American airline to use we have lowered our costs, and have increased dreams fly! Despite the adversity of 2020, our
this technology. our liquidity position. work in social development, which is the result
of the connectivity we provide to people across
We remained true to our strategy Azul ended 2020 with total liquidity of R$ 7.9 billion the country, remained essential. Throughout
and R$ 5.8 billion in operating revenue. Now we the year, we provided 2,177 tickets for health
by being the only carrier
are focused on ramping up our capacity during the professionals, 2,195 for repatriated people,
in 76% of our routes. recovery and to resume our prepandemic pace of and carried out flights to transport 4.8 million
growth. quick tests and 133 respirators, in addition to
2020 Sustainability Report • Azul 9
Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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thousands of masks and other medical supplies. The pandemic demonstrated we have a resilient
In 2021, Azul is also transporting Covid-19 business model and will be even stronger after
vaccines. the crisis. Surmounting overcoming challenges,
we were able to adapt quickly, protecting our
Moreover, we reached 1,533 refugees transported, people, strengthening our values and continuing to
due to “Operação Acolhida” (learn more on page connect Brazil.
76), and we transported 1,856 organs since 2018.
Our volunteer teams carried out more than 150 We are proud of what we have built
social initiatives throughout Brazil, always following
and are even more excited about the
health and safety protocols.
future. We stand together, working with
Serving is in our DNA, and this was again passion and integrity, committed to
evident in 2020. Even in this challenging year,
generating value and positive impact
we maintained the excellence and empathy that
are inherent to Azul's customer experience. In for our whole society. Azul is flying
the middle of these challenges we received great towards a promising and successful
news: Azul was chosen Best Airline in the World
future. Let’s keep making dreams fly!
by the Travelers' Choice ranking of Tripadvisor, the
world’s largest travel platform. It is the first time
that a Brazilian airline has achieved this position.
We are now signatories of the United Nations (UN) Join us on this journey!
Global Compact, another step that reinforces
our commitment to being a Company guided by
social and environmental responsibility and the
Sustainable Development Goals (SDG).
John Rodgerson
CEO
2020 Sustainability Report • Azul 10Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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OUR VALUE
GENERATION
11Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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About Azul
GRI 102-1 • 102-2 • 102-3 • 102-5 • 102-6 • 102-7
Founded in 2008 by David Neeleman, Azul S.A. is the largest airline in Brazil in terms Our Crewmembers follow and apply Azul's culture. Our culture is
of departures and cities served, and since its beginning, the fastest growing airline in the basis of who we are, our identity and each of our Crewmembers
the country. Headquartered in Sao Paulo (SP), the Company has the largest network play a leading role in it. To strengthen this engagement, we created
in the country, taking Brazilians to over 110 domestic and international destinations. Sou Azul, or “I am Azul”, the motto we use to talk about our vision,
mission and values, which briefly explains what it is to be one of our
Crewmembers.
Vision Values
Safety - Nothing is more
important
Together, build the
best airline in the Consideration - Treat others
world. as they would like to be
treated. Observe, Perceive
and Attend
Integrity - Be a good
Mission example
“I am Azul. Together with other Crewmembers, we will build the best airline
in the world. I will make this the best job of my life and the best flight for our
Passion - Love what you do
Customers. Nothing is more important than safety. I treat people the way they
Innovation - Be open-minded would like to be treated and use my abilities to observe, perceive and attend,
Make Azul the best and do better each day
be considerate and meet their needs. I am a good person and that defines my
job of my life and the
Excellence - Be great in what integrity. I am driven by passion and love what I do. I am open-minded and
best flight for our
you do
Customers. want to do better each day. This is innovation. I am great in what I do in order to
achieve excellence.”
2020 Sustainability Report • Azul 12Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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Operating Structure
GRI 102-4 • 102-7
Network Route Map Customers
Lisbon
More than 700 daily flights 14 million passengers in 2020
to, 110 domestic destinations
12.6 million TudoAzul members
and 2 international destinations
90 thousand tons of cargo
Leader in 82 cities served
flown, representing a 2% growth
vs. 2019 even with fewer flights
due to the pandemic
Due to the pandemic and consequent
isolation, at the beginning of the year 300 Azul Cargo stores and 36
our daily flights were reduced by 95%, Azul Viagens agencies
reaching 70 in April. With the Recovery
Plan, we finished 2020 flying over 90%
of our previous domestic network.
Fleet
162 passenger aircraft
5,556
Business
35.8% are new generation aircraft Partners
Average age of 6.9 years. Including 11,848
Crewmembers
Cessna aircraft, the average age is 8.3
years.
The largest hangar in Latin America,
in Campinas (SP)
Results
Three hangars in Belo Horizonte (MG)
R$ 5.8 billion in revenue
R$ 297.4 million in net investment
Azul Conecta
342,290,968 equivalent preferred
9 new summer destinations shares with a market value of
in all regions of Brazil R$ 13.5 billion
Caption
17 new aircraft and more flexibility Domestic 38.4% growth in terms of Cargo
International gross revenues, reaching
55 exclusive routes in the country
R$764 million
2020 Sustainability Report • Azul 13Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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In 2020, we started the operation of our new The potential of the diversified fleet Our diversified fleet gives us unique flexibility
hangar in Campinas (SP). The hangar will to quickly adapt capacity to demand, a major
We have always invested in the diversity of our
allow us to reduce fuel consumption and competitive advantage for Azul. In 2020, even
fleet. Today, we rely on ATR, E-Jet, A320neo, A330,
emissions by avoiding ferry flights to third party with reduced demand due to the pandemic, we
Boeing 737 and, with the arrival of Azul Conecta,
maintenance centers. During the pandemic, adapted our operations to ensure connectivity and
Cessna Grand Caravan aircraft. While the larger
it also enabled us to preserve our fleet and maximize the number of destinations served, both for
aircraft enable greater efficiency and higher seat
prepare it for the recovery. Additionally, we passengers and cargo.
availability, the smaller ones provide connectivity
certified our Pampulha hangars to maintain our to low demand regions, where only Azul operates.
Boeing freighters. Therefore, Azul's business model enabled
The acquisition of TwoFlex, now renamed Azul us to survive the crisis and keep doing
Conecta, strengthened our ability to fly to smaller,
what we do best: connecting Brazil!
underserved cities.
2020 Sustainability Report • Azul 14Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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Business Units
Our operations are based on
a synergistic relationship
among the corporation's
business units. Azul Conecta's
TudoAzul is Azul's loyalty program. It keeps Azul Cargo Express is the Company’s logistics robust regional presence
Customers engaged with the Company by offering solutions unit, with 293 stores and serving more strengthens our service in
different ways of accumulating and redeeming than 3,700 municipalities. It grew 38.4% in cities farthest from major
points. Currently, the program has about 12.6 million revenue terms in 2020 compared to the previous centers, while TudoAzul
members. year, with expansion in all segments especially and Azul Viagens provide
e-commerce. We are the only air logistics provider additional channels for us to
with a network of more than 110 domestic offer surplus seats. In addition,
destinations, and we held a 27.8% share of the the airline's extensive network
air cargo market in Brazil during this year. enables Azul Cargo’s unique
reach. All our business units
contribute to making Azul more
sustainable and efficient, as
they maximize our capacity
utilization, be it in terms of
seats or cargo volume.
Azul Conecta is our regional airline,
strengthening Azul's presence in brand new
destinations. Its fleet is composed of 17 Completing the synergy cycle among the
Cessna Grand Caravan aircraft, a single-engine Company’s business units, Azul Viagens is
turboprop with capacity for nine passengers. our tour operator. It offers Customers the
Our Customers now have access to passenger ability to customize their experience by
and cargo flights to destinations such as selecting different flights, hotel, transfers
Búzios (RJ), Angra dos Reis (RJ), Jericoacoara and tour options – and thereby generating
(CE), Ubatuba (SP) and many others. additional revenue for the Company.
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Outlook
GRI 102-7
Macroeconomic Aviation market AZUL'S PARTICIPATION IN THE DOMESTIC MARKET RPK (%)
Outlook The aviation sector was one of the most 0.3% 27.7
impacted by the Covid-19 pandemic in Other
We started the year with an optimistic 27.7% 23.6
2020. In the second quarter, demand,
outlook for economic growth. However, Azul
measured in Revenue Passenger Kilometer 33.7% 17.0 17.8
due to the coronavirus pandemic, Brazil
(RPK), fell sharply with traffic restrictions, LATAM 13.2
ended 2020 with a 4.1% retraction in its
reaching a year-over-year reduction of 85% 8.6
Gross Domestic Product (GDP). Over
in June, according to Brazilian National Civil 3.7
the period, the Brazilian real strongly
Aviation Agency (ANAC). 38.1%
devalued, losing 28.9% against
Gol 2009 2011 2013 2015 2017 2019 2020
the dollar since December 2019.
Also according to the agency, load factor Data from ANAC's Demand and Supply Report regarding December 2020.
in the domestic market in April decreased
The price of crude oil (WTI) decreased
20.5% over the previous year, reaching from 82% in 2019 to 65% in 2020. In the How did Azul remain resilient?
same period, Azul reduced daily flights from
$48.52 per barrel at the end of the year. Since our foundation, we have been building a solid business model that
1,000 to 70, seeking to adapt the supply
The expectation is that the Brazilian has sustained us in adverse scenarios. Resilience is in our DNA, and in
to the new level of demand. However, this
economy will recover in 2021, with 2020, we have recreated ourselves.
figure indicator has grown progressively
an increase in GDP and controlled
since then, indicating a return to normality
inflation, according to a report by Our differentiating factors ensured that we ended the year stronger than
in terms of passenger demand.
the Organization for Economic we started it and growing again. Among these factors are the synergy
Cooperation and Development (OECD). among our business units, our exclusive network, our diversified fleet, our
We closed the year with a reduction of
culture focused on people and trust. These factors have been developed
45.5% in RPKs and 43.1% in available seat
throughout the Company's history, and they were key to how quickly
kilometers (ASK), resulting in a load factor
we reacted to adapt to the new environment. Always keeping safety
of 80%, 3.5 percentage points lower than in
first, we matched the supply of seats with demand while guaranteeing
2019. In 2020, Azul’s domestic RPK share
service to our customers and preparing for the demand recovery. We
reached 27.7%.
also negotiated new agreements and payments schedules with all of our
stakeholders, which enabled us to maintain a strong cash position.
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2020 Overview
GRI 102-7
Stakeholders
Crewmembers Customers Business Partners Investors Society
Generated Value
» R$ 1.4 billion in compensation; » On-time Performance Index of » R$ 5.7 billion in business » 75.4% increase in price of » Dedicated flights and space
87% and NPS Score of 52.8; contracted with suppliers in preferred shares since IPO in scheduled flights to
» Average of 63.18 hours of
the year; (6.1% increase in price of fight Covid-19: repatriation
training per person; » 112 of Azul's previous 116
ADRs); of stranded customers,
destinations operating at the » R$ 3.3 billion spent on local
» R$ 199.5 million invested
transportation of medical
end of 2020. Maintained fleet Business Partners (58% of » Cash and working capital
in training and professional
equipment, respirators and
flexibility to continue serving total expenditures with our savings of R$ 8.4 billion
development;
parts for Campinas field
the market; supply chain); between March 2020 and
» Crewmember favorability hospital;
December, through the
» Best Airline in the World » We operate with 4,772
rate of 79%.
implementation of the Crisis » Transportation of Covid-19
according to TripAdvisor's national Business Partners,
Management Plan; vaccines in 2021;
Travelers' Choice Award 2020; who total 539,419 employees
in their operations; » Total liquidity of R$ 7.9 billion. » 2,177 free tickets granted to
» First airline in Brazil to offer,
health professionals;
at no cost, medical assistance » We operate with 784
to Customers in international international Business » Over 8,700 people benefited
travel in case of a positive Partners. by Azul’s social projects;
diagnosis of Covid-19;
» R$ 339 million generated
» Implementation of check-in in taxes;
and boarding technologies
» Flights to Macapá (AP) to
to maintain social distancing.
transport water during the
state's energy crisis.
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Initiatives and targets
Azul's commitment towards sustainable growth
Azul is committed to growing sustainably as
the best airline in the world. To this end, it has
expanded its calculations to compose the socio- 2016 2017 2018 2019 2020
environmental and climate management targets.
In 2021, we will have a climate and environmental gCO2e/RPK 122.17 114.62 108.40 101.63 101.8
risk survey, based on the Task Force On Climate-
Related Financial Disclosures (TCFD), which gCO2e/ASK 97.4 94.1 89.2 84.8 81.4
will also guide us in climate management.
Starting in the second semester, we will
also have a Sustainability Roadmap, which
will be reviewed every five years.
Azul is committed to achieving NetZero by 2045.
We will have an emissions inventory by fleet type,
so that our Scope 1 emission data is comparable The calculations for the emission reduction targets are in progress, so that
with similar fleets. We will also monitor the absolute Azul complies with the Paris Agreement and sectoral standards, ICAO and IATA
number per ATK. We will continue to measure our agreements. The targets will be established as early as 2021, the year in which we will
emissions intensity in gCO2/ASK and gCO2/RPK. begin our participation in the Brazilian carbon market.
We are currently formalizing our adherence to the
Science Based Targets initiative (SBTi), whose
criteria will define our emission reduction targets.
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Social initiatives, commitments and targets
Associação Voar
was born in 2020
with a purpose:
Humanitarian missions: to make people
In 2020, 1.4 million customers were
• Sending food and water to Amapá able to fulfill their
impacted by Pink October with more than
during the energy crisis; professional
90 thousand tons of cargo transported.
dreams and
• 196 refugees transported by change their life
Operação Acolhida; trajectories.
• 121 tickets granted for organ
transportation; We will continue creating jobs in line with
our Company's expansion and generating
• Azul will continue to support Azul counts with more than 1,800
socioeconomic and environmental
humanitarian missions whenever registered volunteers and more
development for these destinations
demanded and our services are than 8,700 people are impacted
through connectivity with the entire
essential. by the volunteering actions done
country.
by Azul Crewmembers.
Support in fighting the pandemic
OUR TARGETS
• 2,177 health professionals transported;
• Availability of dedicated flights and space Increase the percentage of Company Volunteers
on regular flights to carry face masks, face to 20% by 2025;
shields, medical equipment, medicines, hand
Increase the transport of organs for transplantation
sanitizer, infrastructure for the field hospital;
to medical centers in the same proportion as Azul's
• Transportation of vaccines against Covid-19.
network grows.
To know more, go to page 75.
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Governance initiatives, commitments and targets
Peter Seligmann
We have become signatories to the Global
Compact and are committed to the ten principles
for responsible action in the socio-environmental
field. We are committed to protecting Human
Rights in our operations and in our supply chain.
We have started a Board of Directors' evaluation process.
A successful evaluation, which identifies improvement
areas and carries out an action plan, can contribute to
improving processes, information and communication flows,
as well as the relationship of the board of directors with
the executive management and the internal control bodies;
improve directors' and officers' attraction and renewal
processes; improve the board's and committees' structure
In 2021, Peter Allan Otto Seligmann has accepted and composition; and increase the board's credibility.
the invitation to join the Board of Directors at Azul.
He will support us with the Company's sustainable
development guidelines. His broad experience
and leadership in caring for the environment and Azul is also structuring its new ESG (Environmental,
the well-being of people in a sustainable way Social and Governance) Committee, a body that will
be paramount for us to continue being the best be responsible for the governance of these topics within
airline in the world and the best for the world. the company.
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Climate and environmental initiatives, commitments and targets
All onboard Azul snack packages will be fully
offset by the EuReciclo seal in 2021.
Emission Intensity:
• 101.8 gCO² e/RPK;
• 81.4 gCO² e/ASK.
We continue on our mission to transform our fleet,
which guarantees us ever-increasing efficiency.
Emission reduction: Since 2015, Azul has maintained a fuel efficiency
• – 16.7% CO2 emitted per RPK since 2016; program aimed at the best use of this input
aligned with global best practices.
• – 16.5% CO2 emitted per ASK since 2016.
Azul supports the use of biofuels and is willing
In 2021, Azul will inaugurate the Sustainability
to foster this market, because it understands
College, with Corporate Sustainability training, such
its extreme relevance in reaching environmental
as the Global Compact web classes, Workplace Safety
targets.
and Environment (SMA) and Social Responsibility and
Health & Well-being training.
We are members of the European Emissions
Trading System (EU ETS) and the Carbon
Offsetting and Reduction Scheme for
International Aviation (CORSIA). Therefore, we
are NetZero in our intra-European flights and will
continue to be so.
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Performance
Despite the unusual challenges that marked 2020, we In the third quarter of the year, we further grew 35% compared to 2019. Our diversified
made remarkable progress since the beginning of the improved our liquidity by the successful issue network and the unique flexibility of our fleet,
pandemic thanks to the support of all our stakeholders. of R$ 1.7 billion in convertible debentures. including our dedicated aircraft, provide us a
Together, we have successfully implemented our Crisis This fundraising demonstrates the market's peerless competitive advantage in the industry,
Management Plan and guaranteed the liquidity to confidence in Azul and our capabilities. being a great distinguishing feature for Brazil's
weather the crisis. We also rebuilt our network to take logistics. We have also sped up the internalization
advantage of the demand recovery. With the capital raised in this offer and of activities and the certification of our hangars in
considering our current levels of cash burn, Campinas and Belo Horizonte, aiming to preserve
We started the year with preferred shares and ADRs we are able to support our operation for more aircraft at the peak of the pandemic and prepare
at the highest price since IPO, quoted at R$62.41 than five years. This robust liquidity position them for the resumption in the next phase.
and US$43.7, respectively, reaching 197.2% increase therefore ensures our sustainability and enables
in the price of preferred shares since IPO (101.5% our future growth. Azul ended the year of 2020 In a year of uncertainty and change, our
increase in price of ADRs). The Covid-19 pandemic with total liquidity of R$ 7.9 billion compared business model allowed us to adapt our network
impacted the shares price and in March 2020 our to an operating revenue of R$ 5.8 billion. and fleet to demand. We signed a historical
shares reached the lowest price since IPO quoted domestic codeshare, with one of the largest
at R$10.35 and US$5.64, respectively. With the We remain committed to our strategy, being domestic operators in Brazil, bringing even
gradual return of our flights and the management the only airline on 76% of the routes we fly and more connectivity to our Customers with more
plan implemented, we ended 2020 with preferred maintaining the flexibility of our diversified fleet. We than 140 combined and non-stop routes.
shares quoted at R$39.30 (US$22.64 for ADRs). As closed the year operating above 90% of last year's
of December 2020, the preferred shares appreciated domestic capacity and flying to 112 destinations, All of this only became possible thanks to
301% compared to the lowest price during the an almost complete recovery compared to the the commitment of our people, passionate
pandemic (208% increase in price of ADRs). 116 destinations served before the crisis. As a about what they do, always willing to exceed
result, we kept expanding our logistics activities expectations and believe in Azul. Trust is
This impressive recovery of our market value reflects and exploring other strategic opportunities. the result of transparent conduct, mutual
the market's confidence in Azul's strategy. We have respect, and a leadership that understands
faced the crisis in a prominent position, with the Azul Cargo Express, our logistics business, has the urgencies and needs of the sector.
fastest recovery among airlines in our region. broken revenue records throughout the year,
growing at a fast pace. Azul Cargo's net income
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In 2020, we launched Azul Conecta,
our new sub-regional airline, the result
of the acquisition of TwoFlex in 2019.
With the help of this new business unit,
we intend to reach 200 destinations
over the next few years. In addition to
17 new passenger and cargo aircraft,
Azul Conecta also increased our
number of slots at Congonhas airport.
Now our Customers have access to
unique destinations such as Búzios,
Angra dos Reis, Jericoacoara,
Ubatuba and many others.
Discover all destinations
served by Azul Conecta in every region
of the country by clicking here.
2020 Sustainability Report • Azul 23Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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Operating
RPK (million) ASK (million) REVENUE PASSENGERS (thousands)
29.9 35.9
27.7
24.2 29.3
23.1
23.7% 23.4%
24.7%
26.1% 20.4
16.3 14.8
15.9%
15.5%
76.3% 75.3% 76.6%
73.9% 84.5% 84.1%
2018 2019 2020 2018 2019 2020 2018 2019 2020
LOAD FACTOR (%) AVERAGE FARE (R$)
RPK (Revenue Passenger Kilometer):
calculated by multiplying the number of revenue
passengers by the number of kilometers flown. Total 82.3 83.5* 80.0
394.2
375.0
ASK (Available Seat Kilometer): number
69.4% 68.7% 343.9
of aircraft seats multiplied by the number of
kilometers flown.
86.9 82.8 85.7 80.4
80.8 % 77.9
We can establish a relationship between both % % % % %
indicators considering ASK as supply and RPK
as demand in aviation. The ratio of RPKs to
ASKs results in the load factor.
2018 2019 2020 2018 2019 2020
* In our last report, the total load factor informed for 2019 was
Domestic International Break-even load factor
82.5. The correct number is 83.5.
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Financial
GRI 201-1
OPERATING REVENUE (R$ Billion) RASK1 (R$ Cents) CASK2 (R$ Cents)
11.4 30.86 31.90 35.57
28.41
9.1 26.02 26.24
5.8
2018 2019 2020 2018 2019 2020 2018 2019 2020
ADJUSTED EBITDA MARGIN (%) ADJUSTED EBITDA (R$ Billion)
1
RASK (Revenue per Available Seat Kilometers): 31.7 3.6
29.9
operating revenue divided by available seat kilometers.
2.7
2
CASK (Cost per Available Seat Kilometers):
operating expenses divided by available seat kilometers.
4.6
0.3
2020 results were affected by the Covid-19
2018 2019 2020 2018 2019 2020
pandemic, which significantly reduced
demand and consequently revenues and
profitabilty. More detailed data is available
in the Management Report.
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ADDED VALUE DISTRIBUTION GRI 201-1
In 2020, the distribution of added value had a large
stake in third party capital, mainly reflecting losses
accounted for in the valuations of assets and
liabilities resulting from the currency devaluation 86.8%
that occurred due to the Covid-19 pandemic. Third parties
R$ 10.5 11.5%
billion in Crewmembers
2020
1.7%
Government
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BUSINESS
CONDUCT
27Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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Corporate Governance
Best Practices
The Company’s Board of Directors (BD) is composed
Guidelines of ten members, mostly independent (90%), including one non-
executive chairman, who are elected and removed by resolution
We conduct corporate governance with
of the General Shareholders’ Meeting, for two-year terms.
transparency and in accordance with the most
According to our statute the Board must have between five and
updated market guidelines.
14 members, and the independence of the directors is defined in Management
We were the first Brazilian company to accordance with B3's Level 2 regulations.
become signatory to the Committee of
The Board of Executive Officers is composed of four members
Mergers and Acquisitions (CAF), a private
who are responsible for representing the Company, elected by the
non-profit organization promoting the highest
Board of Directors for a term of two years.
level of governance. CAF ensures fairness
between shareholders in Initial Public Offerings The Company has three permanently installed committees: the
(IPOs), takeovers, incorporation of shares, audit committee, the compensation committee and the corporate
mergers and spin-offs involving Brazilian governance committee. In addition to these, the ethics and
publicly-held companies. conduct committee reports directly to the governance committee.
Our dual-listed Initial Public Offering (IPO) In 2020, the Company registered the attendance of 100% of
was conducted in 2017, with shares listed directors at meetings throughout the year.
on the Bovespa B3 and the New York Stock
Exchange (NYSE) under the Level III ADR
program. We also adhere to B3’s Corporate
Governance Level 2 listing regulation, a
special listing segment of the stock market.
In addition to the minimum requirements Policies and In order to formalize our commitments, we rely
established by the Level 2 listing regulation, Commitments on several corporate documents, such as our
we adopt the main practices in the Brazilian Bylaws, the Code of Ethics and Conduct and
Corporate Governance Code (CBGC) and our Sustainability Policy. We are also committed
the Code of Best Practice of Corporate to the United Nations Global Compact and
Governance of the Brazilian Institute of regarding its ten principles for responsible
Corporate Governance (IBGC). and sustainable action.
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Shareholder
Structure
TOTAL SHARES ECONOMIC INTEREST
3.5% 0.1%
Treasury
David Neeleman
6.5%
26.3% Trip
Azul’s shareholder structure is 7.8%
331,644,724
United
composed of common and preferred (Calfinco)
shares. Each preferred share is 344,030,925
equivalent to 75 common shares and is 1,260,609,782 equivalent preferred
entitled to receive 75 times the amount shares
of dividends distributed to holders
of common shares, who have voting
control over Azul. In addition, preferred 73.7% 82.1%
shareholders have 100% tag along 928,965,058 Others
rights and can vote on strategic matters
Common Preferred
such as agreements with related
parties, transformation, incorporation,
merger or spin-off of the Company,
among other topics established in
paragraph 9 in Article 5 of our Bylaws.
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Governance
GRI 102-18
Average term of office of the
Shareholders’ Board Of
Structure Meeting
Board Of Directors members of the Board of
Executive Officers
Directors: eight years
The Chairman of the Board of David Gary Neeleman Compensation Committee John Rodgerson
Directors was the Company's Chief Chairman of the Board of Directors Aligns compensation with Chief Executive Officer
Executive Officer until 2017, when the corporate strategy. Responsible
Chief Executive Officer took over. Carolyn Luther Trabuco for performance evaluations and
Independent Director Alex Malfitani
implementation of long-term incentive
Chief Financial Officer and Investor
plans for senior leadership.
Decio Luiz Chieppe Relations Officer
Independent Director
Corporate Governance Committee
AGE GROUP Gelson Pizzirani Responsible for advising and supervising Abhi Shah
GRI 405-1 Independent Director the implementation of corporate Chief Revenue Officer
governance guidelines to the Board of
Gilberto Peralta Directors, supporting the preparation
Independent Director of the Code of Ethics, proposing the Flavio Costa
Related-Party Transactions Policy, Chief Operational Technical Officer
Patrick Quale
30 to 50 and reviewing situations of potential
Independent Director
conflict of interest and expressing an
36% José Mario Caprioli dos Santos
Independent Director
opinion on the sale or transfer of the
Company’s fixed assets in amounts
exceeding 3% of net revenue. Ethics And Conduct Committee
Michael Lazarus The Ethics and Conduct Committee
over 50 Independent Director Audit Committee reports directly to the Corporate
64% Renan Chieppe
Independent Director
Responsible for supervising internal
controls and auditing areas, as well as
Governance Committee and is
responsible for disclosing and proposing
monitoring the quality and integrity of amendments to the Code of Ethics and
Sergio Eraldo de Salles Pinto the Company’s mechanisms, information Conduct and for evaluating issues related
Independent Director disclosure and risk exposures. to liability and reports of non-compliance
More information about our
management structure and the arising from the Whistleblower Channel,
composition of the committees as well as proposing sanctions and
is available on our website. disciplinary measures provided for in
the Company‘s internal policies.
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Performance
Development
Our Board of Executive Officers has an annual and individual
performance assessment, carried out internally, in which
leaders are evaluated based on their competencies and
functions within the Company, with the 360º methodology.
Based on the results, we elaborate individual development
plans for each of the leadership.
Compensation
The compensation model for Azul’s senior management
considers various inputs, providing the maximum alignment
between individual compensation and company results.
Compensation strategy is aligned to corporate strategy. Fixed
compensation takes into account the responsibilities of each
function, market practices, as well as the qualification and
professional skills of each individual. Variable compensation
is defined based on individual and overall performance
indicators aligned with the strategic plan. The established
targets are set every year. The Company’s overall results
are measured through financial and operational indicators,
such as EBITDA, operating margin, on-time performance and
internal and external Customer satisfaction surveys.
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Risk Management
GRI 102-15
The Company risk management policy was Furthermore, our unique network and the fact
created in 2011 and reviewed by the Board of that we are the only airline operating on 76% of
Directors in 2019. The document establishes our routes allow us to quickly respond to any
guidelines for the continuous management significant fluctuation in interest rates, exchange
of market risks, seeking to reduce volatility, rates and fuel prices to better absorb near term
providing protection against adverse scenarios disruptions while remaining focused on our
while preserving Azul’s results and assets. commitment to serve these destinations for the
long term.
In order to identify market risks we analyze
historical variations and future projections
of indicators such as the U.S. dollar, interest
rate and fuel prices, and compare them with
Interest rate risk management
the values used in our annual budget. Risks The Company may contract hedge instruments for
considered critical for the Company’s operations interest rate fluctuations as follows: between 0%
are variations in interest rates, foreign exchange and 100% of the exposure to interest rates in the
rates and jet fuel prices. international market (Libor, Euribor, etc.) and between Fuel price risk management
0% and 50% of the exposure to interest rates in the Fuel price risk is mitigated through derivative
The Risk Management Policy establishes domestic market (CDI, TJLP, etc.). instruments offered by banks and future purchases
guidelines, scopes, deadlines and limits for the
made directly with our fuel Business Partners.
ongoing management of our risk exposure. Risks
The Company may purchase hedges within the
are continuously monitored by our management
team, as well as the effectiveness of the policies, Exchange rate risk management following limits: up to 40% of projected fuel
consumption over the next 12 months and up to
which are reviewed monthly We may enter into derivative contracts with banks 80% of projected fuel consumption over the same
or buy financial investments in U.S. dollars. Hedge period if the West Texas Intermediate (WTI) crude
instruments for these operations range between oil price per barrel is below $ 50 USD.
50% and 100% of the exposure related to non-
operating cash flow for the next 12 months.
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Connection that transforms
GRI 102-42 • 102-43 • 102-44 • 102-46 • 102-47
Sustainability Strategy AZUL'S MATERIALITY
We have reviewed our
In 2019, we concluded an analysis to define the 1. Flight safety 6. Innovation and technological
updating materiality study, as a result of
strategic priorities for the evolution of Azul's 2. Customer satisfaction
7. Good relationship with Business the transformations brought
continuous sustainability management. This 3. Ethics and fight against Partners
corruption
by the pandemic. We cast
process was carried out in four stages: 8. Social development through a critical eye and the lenses
4. Crewmember health and safety connectivity
of a Company that has been
Assessment of the Company’s internal and 5. Engaged and trained
professionals through the crisis, and we
external scenarios, in order to contextualize understand that our actions
the analysis; in the coming years should
go towards the same horizon.
Value chain mapping to identify priority Our material issues defined in
stakeholders to be consulted; Responsible and
efficient operations 2019 remain the most relevant
for the sustainability of the
Online survey with our stakeholders on their 1•3
business until 2021.
topics of interest;
Prioritization of the themes identified in the 4•5•7 6
scenario assessment and stakeholder survey
with Azul executives.
In the following
As shown in the diagram on the right, the Focus on
people Going chapters, you will find
themes prioritized in the study were combined
above and beyond detailed information on
into the pillars of the Company’s sustainability
2 8 each of these pillars
strategy. These pillars will guide our
and the work Azul
management and initiatives for the business'
is doing towards its
sustainable development over the years of 2021
development.
and 2022.
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RESPONSIBLE AND
EFFICIENT OPERATIONS
34Introduction Our value generation Business conduct Responsible and efficient operation Focus on people Going Above and Beyond To learn more
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Safety
GRI 103-1 • 103-2 • 103-3 • 416-1 • 418-1 | TR-AL 540a.1 • 540a.2 • 540a.3
Safety is non-negotiable. It is our first value. As an airline,
we follow strict safety standards to remain compliant with regulations.
Our Operational Safety Management System (OSMS) permeates decision
making in all areas and activities of Azul. Its targets are to identify dangerous
conditions, to qualify the risks inherent to the business, to mitigate these risks
and to guarantee quality and effectiveness of the implemented actions. OSMS
indicators monitor quality and safety performance in all operational areas of
the Company. We are certified by the Brazilian National Civil Aviation Agency
(ANAC), which performs annual inspections that evaluate all components and
structural elements of the system. We also maintain IATA Operational Safety
Audit (IOSA) certification, the most complete and internationally accepted
independent assessment program about operational safety.
We have a strong safety culture and continuously conduct educational activities
through our Safety Promotion Program that involve initial and periodic trainings
as well as safety awareness. Information is also disclosed in newsletters, alerts,
journals and electronic magazines, in order to reach the public through different
In 2020, once again we went beyond what was required by law to ensure
channels. Our Operational Safety Seminar is held annually in September, aiming
operational safety: Every pilot that was on leave had to retrain, even if their
to promote integration between Azul Crewmembers and stakeholders from licenses were still valid. That's because, in addition to checking the pilots'
the industry and the aviation community. In 2020, the Seminar was held 100% technical skills, we also wanted to ensure their emotional and psychological
online, due to social distancing. conditions to fly, in order to guarantee overall safety.
Operational safety culture is strengthened by our integrated system of voluntary Since its foundation in 2008, Azul has
reporting, the main tool for identifying hazardous conditions and consequently
managing operational risks. These reports go above and beyond that which
not registered any aviation accidents.
is required. By promoting and encouraging safety, continuously training our To know more about our Operational Safety Policy.
Crewmembers, and developing tools ensures that this remains the DNA of Azul. (Portuguese only)
2020 Sustainability Report • Azul 35You can also read
