Thank you, Zack, and welcome all to Azul's fourth quarter earnings call. The results that we announced this morning, the audio of this call and the slides that we reference are available on our IR website.

Presented today will be David Neeleman, Azul's Founder and Chairman, and John Rodgerson, CEO. Alex Malfitani, our CFO, and Abhi Shah, the President of Azul, are also here for the Q&A session.

Before I turn the call over to David, I'd like to caution you regarding the forward-looking statements. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives, and expected performance constitute forward-looking statements.

These statements are based on a range of assumptions that the Company believes are reasonable, but I subject to uncertainties and risks that are discussed in detail in our CVM and SEC filings. Also, during the course of the call, we will discuss non-IFRS performance measures, which should not be considered in isolation.

With that, I will turn the call over to David. David?

Thank you, Thais. Welcome, everyone, and thank you for joining us for our fourth quarter 2023 earnings call.

I'm happy to report that Azul had a record 2023. As you can see on Slide 3, we reported record revenues of almost BRL19 billion for the year with BRL5 billion in a single quarter for the very first time.

Record yearly and quarterly RASK and an EBIT of BRL5.2 billion, BRL2 billion above our previous year. 2023 was also transformational, thanks to the conclusion of our capital optimization plan, where we partnered with all of our stakeholders to create a win-win solution that set up Azul for long-term success.

And finally, in 2023, we continue to deliver exceptional operational performance by being the second most on time airline in the world. For this, I have to thank our incredible crew members for what they are doing each and every day.

They are taking care of our customers and each other. On Slide 4, you can see that our network strength is foundational to our structural and long-term competitive advantages.

We continue to be the only carrier in 82% of our routes. This is a direct result of our unique network combined with our fleet flexibility where we put the right aircraft on the right market at the right time.

In fact, I remember when we went public, investors would say, as we grew, there would be more overlap. The opposite is the case.

We have more than doubled in size over the past several years. Always staying true to our business -- into our business model, we have gotten stronger and stronger.

The construction of this unique network strategy together with our fleet transformation, with the A320s and E2s is a critical ingredient to our continued sustainability and profitable growth. On Slide 5, we show a little more detail of how our network strength is so unique.

We have always said that our mission is to grow the Brazilian market to serve cities that have never been served before and to provide connectivity and convenience like never before. Let me give you an example.

Today, a customer can travel from [Sohizo]s a strong agribusiness market in the Midwest of Brazil. And with one convenient connection, our customer can be in Sao Paulo for a Monday morning meeting.

A journey that would otherwise take 26 hours by car, this has never existed before, and it only does because of Azul. This is how we grow the market, and this is how we continue to profitably grow.

On Slide 6, I want to show you another example, our Recife Hub. We have long identified Recife as a strong market in the northeast of Brazil.

A growing city that has elements of a strong leisure demand with a growing corporate demand in technology and automotive. In 2017, we started to build out our Recife Hub, connecting every major city via nonstop service and then onto the rest of our network.

Today, Recife is better served than ever, rivaling cities like Brasilia in terms of departures and even Sao Paulo in terms of destinations served. Today, our entire fleets from the caravans to the A330 fly in and out of Recife, bringing service and connectivity to Brazil and beyond.

Recife is also a great example of market discipline where we are focusing on where we are strong and the industry is focusing on where they are strong. This is the type of network development supported by our flexible fleet and allows us to continue growing within our network.

Finally, on Slide 7, I'm excited and proud of the partnership we have with the Brazilian Olympic Committee. Azul is unique and uniquely Brazilian.

The cities we serve, the warmth and attention you feel when you fly us, and it's all unique to us and reflect the best of Brazil and the best of Brazil. With that spirit, we are so happy to partner with the Brazilian team for the Paris 2024 games.

And with that, I'll turn the time over to John who will give you more details on our amazing results.

Thanks, David. I would also like to thank our amazing crew members for everything they do.

I've always said we are a people business, and our crew members are our greatest asset. We know that sometimes the operating environment can be challenging, but the fact that we continue to deliver exceptional service and performance is all credit to them.

On Slide 8, I want to highlight the big numbers for the fourth quarter. As David mentioned, 2023 was a record year and particularly the fourth quarter.

For the first time ever, we did $5 billion in revenue, 60% higher than 2019. We had a record RASK of $45.3, up 6% year-over-year on top of a very strong base and with 7% capacity growth.

Fourth quarter EBITDA of $1.5 billion with a 29% EBITDA margin. These are direct results of our competitive advantages and profitable growth strategy.

On Slide 9, I want to highlight a really important and strategic shift that has been happening at Azul over the past year. More than 25% of our RASK is now non ticket revenue.

This is because of our business units, vacations, loyalty, cargo, ancillary revenue and charter are all growing even faster than the based airline. This is a key diversification strategy that further extends our competitive advantages.

This strategy captures customers from all different segments and brings them into the Azul universe from where we can cross-sell across all of our products and services. Even better, business units like vacations and loyalty can grow faster by providing services such as hotels, experiences, shopping, travel on other airlines, products that do not depend exclusively on Azul's growth.

This diversification and contribution are a further example of why we are so confident in our profitable growth strategy going forward. It's hard to believe, but the $6 billion in revenue from these business units is almost the same as all of Azul's revenue we went public in 2017.

Turning to Slide 10, we show a bridge for 2022 EBITDA to 2023. You could see the BRL2 billion increase David mentioned in EBITDA, with contributions from RASK expansion, network growth, lower fuel and currency and offsetting effects from inflation, increased maintenance expenses and investments in the future that I will discuss shortly.

We significantly increased margins, improved revenue performance, grew the airline and therefore produced the best results in our history. On Slide 11, we bridge immediate liquidity from the third quarter to the fourth quarter.

You can clearly see the operation generated positive cash flow, which was used to pay down debt and deferrals. Cash flow from operations was significant enough that even after aircraft rent, CapEx, and interest payments, we generated BRL300 million in cash.

This clearly shows that our EBITDA directly results in cash flow generation and deleveraging. As a result, as we show on Slide 12, our leverage at the end of last year was down to 3.7, a full two turn improvement since 2022 and in line with our guidance.

Even more exciting is that thanks to the significant EBITDA generation in 2024 and the continued pay down in debt, our leverage at the end of this year will be a very solid 3x. This is lower than what we had in the fourth quarter of 2019, when using the same methodology.

We told you we would emerge as a stronger company, and we truly are, a remarkable achievement by our team. Transitioning now to the future, the exciting part of Azul.

I want to talk about how we're preparing and investing so that we can meet and exceed our updated EBITDA guidance of BRL6.5 billion for 2024 and even higher in the years to come. We realized late last year that we needed to invest in our operational capabilities prepare for this growth.

We invested in operational staffing, allowing us to reduce aircraft ground time and increase aircraft utilization. We invested in fleet and engine availability, ensuring we have adequate spare engines.

We invested in our maintenance facilities, bringing forward by three years additional heavy maintenance capabilities that we are not dependent on external MRO capacity. Finally, we invested in pilots and flight attendant hiring so we can have the crew trained and ready to go.

All of this combined with our next gen deliveries, especially the E2s, this year means that we are ahead of the curve and are more in control in terms of our fleet availability and capacity. On Slide 14, you can already see the results of some of these investments.

While aircraft utilization improved in 2023, there are still opportunities to grow it. Looking ahead at our planned network for 2024, reaping the rewards operational investments and reduction in ground time, we can take another significant step to increase aircraft utilization.

All fleet types will once again increase aircraft utilization in 2024. These are opportunities that we continue to develop, but we're extremely excited at the progress we're already making in 2024.

On Slide 15, we thought it would be important to give you a panorama of our OEM partnerships. For the A320neo fleet, we have the LEAP engine as well as the CFM34 for our Embraer E1 fleet.

For our E2s and ATRs, we have partnered with Pratt & Whitney. For our wide body fleet, we have partnered with Rolls-Royce.

With each of these partners, we have ongoing long-term maintenance agreements that support the operational reliability of our fleet. On the aircraft manufacturer side, the majority of our future deliveries over the next few years will come from Embraer, a relationship that we are very close to and in this OEM and is an OEM that we believe is better positioned than others to deliver aircraft on time.

While the situation is still volatile, we strongly believe that these are the best possible partnerships. And with our own internal capabilities, we are well positioned to continue our fleet transformation and growth plans.

As I draw to a close, I want to share that we released updated guidance this morning that we released updated guidance this morning. As you can see on Slide 17, we expect BRL6.5 billion of EBITDA this year on an overall capacity increase of 11%.

Leverage, as I mentioned earlier, will be around 3 below 2019 levels. Our fundamentals are strong, our business model is very unique, and I'm very excited to see all the great results Azul will deliver.

And thanks to our incredible and passionate crew members, I'm confident that Azul will deliver better than expected results on a going forward basis. With that, David, Alex, Abhi and I are here to answer any of your questions.

I have a few questions here. The first one, I mean, matter of fact talking about the audit figures or the audit financial statements.

But at the same time, I mean, when we take a look at the Brazilian [inaudible], we can see all almost the, I mean, the financial statements. So, my first question, I mean, if you can comment what exactly in -- if you can comment, right, I mean, what kind of change, we can expect for the other figures if there's something related to negotiations with our leasing companies?

And the second one talking about cash flow for 2024, you released the guidance for EBITDA, but if you start to think about, let's say, CapEx and working capital in the case of working capital, we can see a drop in Q4 in terms of account receivables. If you think about in terms of days, if this is a kind of a sustainable level for on the '24, and, if you can also comment about the CapEx, what we can expect for this year?

Thanks, Victor. It's Alex here.

So on the audit statement, no change. It's really more, our independent auditors kind of finishing up their work and documenting, formalizing.

We do not expect any changes to our financial statements, and that's why we put out, both the earnings release and the complete financial statements, but they are unaudited. We do not have the audit report yet, but we will have it in a few days and then we'll update the market accordingly.

So we do not expect any change. On the EBITDA, I mean, you're in Brazil, but I think it's good for us to highlight that in Brazil, flows and differences between your cash balance and the account receivable balance do not mean the same thing that they mean in other worlds.

That's why in other countries. That's why we look at cash plus receivables together.

Because, for example, in quarters where we have big capital raises, for example, like we did in Q3, we do not need to advance receivables, right, because it costs not a lot of money to advance receivables, but it does cost a little bit. So if we don't need to advance receivables because we have a lot of cash that we just raised, normally, that quarter is a quarter where, the receivable balance goes up.

Normally, if you're looking at a company and you see the receivable balance going up, you think that is a problem. In Brazil, that is a sign of strength showing that you just raised cash and you actually have a lot of cash from another source.

Then in normal terms, right, because selling in installments is a very unique Brazilian feature, and it's a powerful sales tool and very economical, very good way to motivate our customers to buy tickets and to be able to afford travel and other purchases. We sell in advance and then we sell in installments, and then we advance these cash flows forward.

And, again, it costs just a little bit of money more than the risk free rate in Brazil. So I encourage everyone to look at the cash flows receivable balance.

And fluctuations are more a question of whether, there was a capital raise in the quarter or not. And that's the case with Q3.

If you're comparing Q3 to Q4, you may think that the policy or the advancement of receivables changed, but it's really because they are fungible. So no change there.

For CapEx, we don't give guidance specifically on that, but I think that Q4 is a somewhat representative number. I don't think it was much higher or lower than what the average quarter will be going forward.

And, Victor, just to highlight a couple of things. We got the approved line with GE Celma, which is $200 million credit line for CapEx this year.

But I think as you look at cash generation, take a look at what we did in the fourth quarter. With that EBITDA, we paid the aircraft rent.

We paid CapEx. We actually paid the interest and still had money left over.

And so that is the plan going forward to continue to pay down more expensive debt, generate cash, operating the airline, and deleveraging company as quickly as possible.

You called out, for my first question, you called out strength in domestic and international in the release. I was kind of curious if you could provide a little bit more color on what you're seeing and your expectations, before the second quarter and beyond?

So first of all, even 4Q 6.1% RASK improvement on already a very high base, more than 35% RASK versus 2019. So the demand environment continues to be strong.

And what we thought way past back about pent up demand has continued and continues to be the case, first quarter and second quarter of this year. So we feel pretty good about the demand environment.

This year is going to be a little bit different, it feels to me, in terms of seasonality. I think second quarter is going to be stronger than we expect.

And one of the reasons is that last year, we had a lot of holidays throughout the year, especially in April. So we had a little bit of bunched up demand in March and then a weak April, May.

If I look ahead right now at April, May and June, which is seasonally the weakest quarter, all of the three months are actually running ahead of March right now in the domestic market. So that gives me a lot of confidence kind of going forward in the domestic market.

International is holding steady. We do have some capacity variations, especially now as we transition the A350 fleet, which was which stopped flying at the end of January, And we have some wide bodies coming in now to replace that service April, May, June, July, onwards.

So but overall, I'm not seeing anything different in terms of international. Appears to be very, very steady.

And just like last year, the European summer, I think, is going to be very, very strong, especially Paris with the Olympics and even Lisbon as well. And on the U.S.

side for us, you know, continues to be strong with Orlando and Fort Lauderdale and with our partnership with JetBlue and Tap and United. So I would say steady overall.

I think we're going to be pretty happy with second quarter seasonality this year. Honestly, last year, I think we were disappointed but I think this year, it's going to behave differently.

A lot more steady between 1Q and 2Q. You can expect positive unit revenue growth in 1Q and then higher unit revenue growth in 2Q, and then we get into strong second half seasonality.

Hey, Savi. If I could just add something to what Abhi said.

The demand remains very strong in Brazil and we wanted to highlight the OEM relationships and the problems that the world is seeing, because capacity is going to be in check for the foreseeable future with all the problems that the large OEMs are having in delivering aircraft with engine availability. And, you know, one of the unique strengths that all of our deals are on powered by the hour, and we have the spare engine capability in place.

And so we see a strong demand environment, and we see capacity very much in check for the foreseeable future.

And actually, it takes me to my second question, if I might ask. The incremental addition in capacity, I was wondering where that's coming from?

And maybe just generally, are you still you know, if your thoughts are changed at all on where the capacity is going to be allocated this year?

Yes. I mean, not really, Savi.

We still see a lot of opportunity in our network. In Belo Horizonte, for example, is doing very well for us.

Belem recently is a focus city for us. We added some flights there, which are doing really well, Campinas as well.

So again, you know, as David talked about the network and how foundational it is for us and just one factoid, we still had 77,000 departures in 2023 on the E1s. 77,000.

All of which we want to go to the E2s as soon as we possibly can. 18 more seats, 25% lower trip cost on each and every one of them.

So there's still a lot of opportunity to up gauging, in our own network.

Just following up on the last topic regarding the demand and overall, what you are foreseeing in terms of yields. If you could comment a little bit about competition as well.

You just mentioned that the capacity furnace industry remains somewhat capped given the supply chain bottlenecks we are seeing right now. But it would be great to hear, once again, how are you feeling that your competitors are behaving in terms of prices, at least in the first two months of the year and, the three months of the year and on the already booked flights as well?

And a second topic here, if you could also comment about the labor expenses we saw in the fourth quarter. You saw them increasing on both a year-on-year basis and a quarter-on-quarter basis, looking at the unit expenses.

You mentioned that that you need to increase your number of pilots as well as crew members. Just wondering if you already have seen a portion of this increase in the fourth quarter and the unit growth from here on should be more limited.

So, look, I think the industry overall is doing as good as it can. I think it is pretty disciplined on the capacity side as John said.

And I think the industry is doing all of the right things on the fair side as well. There have been several -- so the industry is moving fares, as fuel varies, as dollar varies and is doing a really good job of recapturing those costs.

So I think the industry is very motivated on maximizing results. Like I said, you can expect positive year-over-year RASK in 1Q, even higher positive year-over-year RASK in 2Q.

And, a big part of this is because the industry is doing the right things in my opinion on making sure that we maximize results. And if that's yields, that's fine.

And if that's load factor, that's fine as well. So I'm very comfortable right now with the overall industry environment.

And looking ahead, I don't really see that changing, whether it's overall capacity, whether it's yields and also sort of competitive dynamics. As we mentioned in the opening remarks, I see the industry focusing where each one is strong.

And I think that actually generates the best results for everybody and I don't see that changing in any meaningful way. So overall, I think we can be pretty satisfied with industry discipline.

And then on the labor side, I think we explained qualitatively what's going on in this quarter. But just to give you a little bit more color, I would separate it in two things.

One is we found opportunities inside Azul to reduce total cost, but that is increasing the salary line and it's reducing another line. But in that, it is providing a reduction in cost.

For example, we internalize a lot of maintenance services. And if we didn't have these maintenance services today with the supply chain issues and with the MRO restrictions that exist, we would never be flying as much as we're flying.

So that is an example of the salary line going up, but enabling the amazing revenue performance that we're seeing. But the net result is obviously very positive for Azul.

Same thing with in sourcing. We saw that there were situations where we had third-party providers and outside people where it would be much more efficient, much more affordable and we would have a better quality if we just used our own crew members for that work, right?

So that's an example. And then there's all the investment in the future that John and David mentioned.

We had to hire pilots. Sometimes, you have to hire pilots six months before they are actually going to fly.

We had to increase airport staffing. But in exchange, we got a decrease in minimum ground time, which, again, gives us more aircraft hours to fly, which more than pay for the incremental cost of staff.

So what that means is that the number that you saw for Q4 will not increase significantly. It's also, I think, pretty representative of what the average quarter will be in '24.

That means we're going to grow into the staffing that we have already brought into the company.

I have two on my side. The first one, it's about guidance.

If you take, the fourth quarter results and annualize it on a seasonal base that is a little bit stronger than the other quarters. We remain a little bit, adding the 11%, capacity expansion for 2024.

In my estimate, we will be lacking BRL300 million. I would like to know if you are expecting, as Abhi said up-gauging aircraft if you are expecting higher yields or higher margins for 2024?

This is my first question. And my second one is about the quarter-over-quarter results.

If there is some different mix on the quarters, we see a little bit lower RPKs, from third quarter for this fourth quarter, and as well the margins was a little bit below 2.5 percentage points. If this was just point off for the zero or if you, we can see a different trend for 2024 and afterwards on this seasonality during the year?

Yes. Let me just kind of address your second question first, and then we'll get I'll go back to your first question.

Keep in mind that, I think we did BRL1.6 billion or BRL1.7 billion of EBITDA in the third quarter, but fuel increased about 16%, 17% quarter-over-quarter. So the third quarter into the fourth quarter, fuel was up significantly.

And so, yes, we delivered almost the same amount of EBITDA with significantly higher fuel prices in the fourth quarter compared to the third quarter. So I think that shows the strength of the business.

As you're going into 2024 where we are today, keep in mind, we are significantly increasing our capacity to 11%, but that capacity is next gen capacity. And utilizing these existing aircraft we have even more and you should have a lower fuel price, an average lower fuel price in 2023 than you in 2024 than you had in '23.

So, yes, you will see margin expansion because of that and we should be getting more economies of scale as we grow this business.

So seasonality should keep the same. It was just more from one product to the other day the fuel, right?

It was just the fuel. Take a look at the average fuel price fourth quarter versus third quarter.

And then also, we use Bloomberg to forecast fuel going forward. We use HOA.

So you can also see that what we expect for Q2, Q3, Q4 is very different than what you saw in Q4. So multiplying by 4, like, is a very, I think, easy way to say that it doesn't take much for you to see that our exit rate of 2023 provides us great momentum into the BRL6.5 billion that we guided for 2024.

And then you add the capacity growth. And then you add the fact that we are already paying for staff in Q4 and Q1 that's going to produce EBITDA in the full year of '24, that there are maintenance lines that we installed in our hangar that did not work necessarily for all of Q4, but they will work for all of 2024.

So there's a lot that it's more about the run rate, than about the seasonality.

Yes. I think it's also important.

I want to really address this point on OEMs. There's a battle worldwide with the OEMs, right?

People are fighting over spare engines. They're fighting over slots at engine facilities.

And the fact that we have a long-term relationship with GE, CFM, with Pratt & Whitney, I think that's a competitive advantage that we locked it in going forward. And what you saw in the fourth quarter was us ensuring that we have the assets in place to grow.

I just have a follow-up on the outlook for this year. If we look at the fourth quarter results, if we adjust for what happened with fuel prices since then to your point, and if we account for the growth in capacity for the improvement in the competitive environment.

We can easily get you the margin that you are guiding for this year just by taking into account the jet fuel benefit. And on top of that, you have the capacity growth improving competitive environment.

Is it fair to say the guidance is conservative or am I missing something here?

We usually try to underpromise and overdeliver. So our guidance, I would not say, is our 50/50 number.

But it's the beginning of the year. It's Brazil, but you're right.

I mean, there is a lot that we talked about this when we finalized our capital optimization plan. We're very proud of that plan.

I think we're proud of the support that we got, but obviously it took a lot of work. It took a lot of energy and time from the senior management team.

Now we can just divert all that bandwidth to our Azul and to do what we'd like to do, which is to take care of the business, take care of our customers, look for opportunities. I'm not going to say that there's a lot of padding, but I think it is on us to absolutely work all year to deliver something better than the 6.5.

And, Bruno, rest assured, we're shooting higher.

Daniel is asking about the heating oil prices. So what is the capacity flexibility that we have and what is the willingness to put back on growth to help support loads and revenue?

Look. I mean, we want to be disciplined overall, right?

We want to grow within the network. We want to up-gauge.

So I think we'll do what maximize the result and what makes sense. In terms of delivery flexibility, I think we do have a little bit flexibility second half of the year on the E2 side.

Depends how Embraer delivers, but I think there is a couple of little bit of flexibility there to anticipate if we want. But we're going to focus on making sure we maximize margins, maximize the result and still stay disciplined to the overall market because we think that's healthy now, and we think that's healthy long-term.

So, I think we'll do what makes sense and we'll do what's kind of right for the market overall.

The second question is, about corporate volume and revenue trends. What are your expectations throughout the year?

The economic backdrop has surprised it to the upside. Is that driving an uptick in corporate travel?

Corporate travel has been strong. It was very strong second half of last year, especially kind of the September, October, November timeframe.

We actually had periods where we've crossed over a 100% in corporate volume recovery. Revenue, just to remind everybody is well ahead, more than 50% ahead because of the average fares and the yields are up so significantly.

So we're not seeing any resistance in terms of corporate revenue, in terms of corporate volumes. We think, Brazilians are flying, they're flying on leisure.

They're flying to meet their customers. They're flying to make new deals.

We're not really hearing any resistance from corporate customers at all. So I think now it's just kind of moving forward, update the network and continue to capitalize on the strong environment.

And the last one is regarding the government support to create funds to help the airlines. Is your sense that the fund would be competitive with the capital markets with respect to borrowing?

And is the fund something that Azul would want to tap?

Yes. So, what I would say is I think there's been a great dialogue with the Brazilian government.

I think the three airlines are working jointly to kind of show some of the main concerns that the Brazilian industry has faced over the last few years. One of which is having the highest fuel prices in the world which that holds growth in place because of that.

And so we've kind of showed that to the Brazilian government. I think they're very receptive to those concerns.

Also, there's a lot of lawsuits in Brazil and we represents 3% of the world's flights, 90% plus of the world's lawsuits. And so the Brazilian government is working jointly with the airlines.

And I think that it's a very open dialogue. But the credit is where we're getting the most traction overall.

And there's a significant burden on the airlines because the cost of capital has gone up significantly and because the Brazilian industry did not get any government aid at all. A lot of people are talking about a bailout package in Brazil.

Really, what you're talking about is access to credit at more competitive rates than the capital markets, right? And so if there's more competitive rates in the capital markets, then we would certainly would access that.

And that would help us continue our growth plans going forward, bring more capacity into the market. And I think that the Brazilian government would like to see more capacity because the demand environment is very strong.

But I think the dialogue with the Brazilian government has been very good. They've been very receptive.

And we have an agenda, and we're working through that agenda jointly. And so we're excited about what that can mean for the industry as a whole moving forward.

Mike Linenberg from Deutsche Bank also has some questions. The first one is a follow-up on the government's support.

He thinks it was going to be BRL1.2 billion credit line. He wants to know how it it's going to be divided among the airlines and what will be the terms of the credit line?

Yes. So I don't think it's fully defined yet.

But in our conversations with Brazilian government, they're talking about roughly BRL6 billion to RBL8 billion divided kind of equally between the major airlines in Brazil. And so that's what we're looking at.

Still ongoing conversations. We'll be in Brazilian next week to discuss this again.

And as I said, I think we're getting some great traction. And this is very positive overall, reminding everybody there was no help given previously.

And so this is an opportunity for the Brazilian government to help the industry grow. Helping the industry grow is helping Brazilians travel more, which is really good for the economy.

And just to add, what John said. I think sometimes in the press, this is portrayed as a negotiation or a rescue package.

And that's, like John said, that's not it. What I think both the government and the industry has seen is that Brazil has a huge potential and we want to unlock that potential.

So we're going after the root causes of why that potential has not been materialized yet, but we're confident that we can work together and work at a few of these structural issues that this is going to be great for Brazil, great for the consumer and great for the industry.

And one thing Alex always likes to remind us, none of this is in our forecast. And so if we can reduce judicial claims, that's upside.

If we can get a better cost of capital, that's upside. If we can get traction on fuel prices in Brazil, that's upside.

The second question is an update on the Embraer's deliveries. Are you seeing the same type of delays that Embraer that airlines are seeing from Airbus and Boeing?

Are you on track to get it 13 aircraft this year or could that be delayed?

We feel good about where we are with Embraer. Obviously, we're working very, very closely with them on making sure the deliveries flow.

We had three aircraft already enter service in January of this year. And now sort of June onwards, you will start to see a steady stream of aircraft between June and January for 2025.

So far, we're on track. Obviously, talking very close with them and with the engine manufacturer to make sure that the engines are in place as well for the deliveries.

So far seems good. So, yes, we have a little bit of upside potentially in our plan, but, we're on track for now.

I think, Mike, the only thing I would say on that is back end loaded like most OEMs. And so I think Azul's exit rate of 2024 is going to be a much larger company than I than certainly we enter 2024 just because a lot of those deliveries are second half of the year.

My question is on the liability management front and thinking about the equity efficiency that's coming up in the third quarter of this year going up until the 2027. Assuming that the stock won't be at BRL36, how do you guys think about the potential use of proceeds to compensate the resource, potentially additional equity dilution or using debt?

And if that is the case or cash flow or whatever, if it's included on the leverage guidance for this year?

So we have the option, right? When we finalized our plan, we communicated this as an equity structure that we had the option to pay in cash.

The option is solely on us. So you could also foresee -- you could also look at this as in a different way.

You can look at this as debt that matures over the course of 14 quarters all the way into 2027 with zero interest, where I have the option, if I want to give shares instead of cash. So if you look at it that way, I think it's a great facility, that's very comfortable, that fits within our cash flow generation.

And obviously, we're going to look at the stock and make a determination on whether we think the stock is fairly priced and decide whether we pay that in cash or we pay that in shares.

Thanks everybody for joining us today, and a special thanks and shout out to all of our great crew members who continue to deliver fantastic results. Feel free to reach out to any of us in our investor relations team.

We look forward to seeing you over the next over the coming weeks.