November 7, 2019 / 12:21 PM / 5 days ago

Airline Azul's third-quarter hit by Brazil's weak currency

SAO PAULO (Reuters) - Brazil airline Azul SA (AZUL.N) reported a third-quarter net loss of 438 million reais, taking a hit from the depreciation of the Brazilian real, the company said on Thursday.

Azul, Brazil’s third biggest airline, is expanding rapidly and, like other airlines in the country, has felt the impact of currency fluctuations because much of their expenses — especially aircraft rent, airport fees and fuel — are denominated in U.S. dollars.

Azul said it lost 879 million reais ($216.87 million) during the quarter because of exchange rate losses, compared to a loss of 329 million reais a year ago.

The carrier updated its operating margin forecast to 18%, from a previous range between 18% and 20% for the year.

Azul also reduced its forecast for growth in available seats to the bottom of its previous guidance range to 23% growth for domestic flights and 20% growth for international flights.

Azul is growing significantly in part because rival airline Avianca Brasil folded in May after an unsuccessful bankruptcy restructuring that led to the reduction in the number of carriers in Brazil’s domestic market to three.

Azul was able to win many of Avianca Brasil’s landing and departure rights in the coveted route between Sao Paulo and Rio de Janeiro, which is the country’s busiest.

Reporting by Marcelo Rochabrun; Editing by Jon Boyle and Jane Merriman

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