Azul S A : 1Q21 Earnings Release

First Quarter

Results 2021

Azul generates adjusted EBITDA of R$ 129.7 million;

second consecutive quarter of positive EBITDA

São Paulo, May 6th, 2021 - Azul S.A., "Azul" (B3:AZUL4, NYSE:AZUL), the largest airline in Brazil by number of cities and departures, announces today its results for the first quarter of 2021 ("1Q21"). The following financial information, unless stated otherwise, is presented in Brazilian reais and in accordance with International Financial Reporting Standards (IFRS).

Financial and Operating Highlights

• In the first quarter, adjusted EBITDA totaled R$129.7 million, with a margin of 7.1%, the second consecutive quarter of positive EBITDA.

	1Q21	1Q20	% ∆	4Q20	% ∆
Adjusted Operating revenues (R$ million)¹	1,825.8	2,802.7	-34.9%	1,783.7	2.4%
Operating expenses (R$ million)²	(2,039.9)	(2,629.1)	-22.4%	(1,926.8)	5.9%
ASKs (million)	7,168.3	9,308.8	-23.0%	6,451.0	11.1%
RPKs (million)	5,480.3	7,544.5	-27.4%	5,210.5	5.2%
Load factor (%)	76.5%	81.0%	-4.6 p.p.	80.8%	-4.3 p.p.
CASK (cents)	28.5	28.2	0.8%	29.9	-4.7%
CASK ex fuel (cents)	20.1	20.0	0.4%	22.9	-12.1%
Adjusted EBITDA	129.7	654.2	-80.2%	192.9	-32.8%
EBITDA Margin	7.1%	23.3%	-16.2 p.p.	10.8%	-3.7 p.p.

1 Operating revenue was adjusted for non-recurring items related to the COVID-19 pandemic totaling R$49.1 million in 4Q20.

• Operating expenses were adjusted for non-recurring items totaling R$31.8 million in 1Q21, R$14.8 million in 1Q20 and R$94.1 million in 4Q20. For more information, see page 10.
• • Domestic ASKs increased 8.9% compared to 1Q19 and 15.7% compared to 4Q20. The connectivity of Azul's network, combined with our fleet flexibility and strong demand in our markets allowed us to recover more than 100% of our domestic capacity compared to the same period in 2019, one of the very few airlines in the world to do so.
  • Operating revenues totaled R$1.8 billion for the first quarter of the year, up 2.4% compared to 4Q20.
  • Azul Cargo recorded 62.8% growth in net revenue compared to the same period last year, driven by our unique network and our vast array of logistics solutions.
  • Operating expenses decreased 22.4% or R$589.2 million year over year, mainly driven by lower capacity- related expenses and by cost reduction initiatives implemented since last year to make Azul a more efficient airline post-crisis.
  • CASK in 1Q21 reached 28.5 cents, 4.7% lower quarter over quarter. Controlling for fuel and foreign exchange, CASK reduced 10.2%, demonstrating the operational leverage available to Azul as we recover our capacity.
  • Immediate liquidity, including cash and equivalents, short-term investments, and receivables, ended the quarter at R$3.3 billion, and at R$3.8 billion including our option to upsize our convertible debenture. During the quarter, Azul generated R$552 million in cash inflows minus operating expenses, offset by payments made to lessors and suppliers, deleveraging and capital expenses to prepare for the recovery.
  • Total liquidity, including long-term investments and receivables, maintenance reserves, and deposits, remained solid at R$6.3 billion, an increase of 10.9% compared to 1Q20.
  • Brazil has been clearly impacted by the second wave of the COVID-19 pandemic, but it continues to make progress on the vaccine rollout with more than 50 million doses applied. Several cities and states are exiting lockdowns, which has already positively affected recent booking trends. In the last four weeks alone, bookings are up more than 40%, and we expect this trend to accelerate with further vaccine progress.

1

First Quarter

Results 2021

Management Comments

We are one year into the pandemic, and I continue to be extremely proud of how our crewmembers are taking care of each other and of our customers. Our culture and our positive energy have never been stronger. So I want to start by thanking each one of our crewmembers for everything they do for Azul.

During the quarter, Brazil was clearly impacted by the second wave of the COVID-19 pandemic. Daily case counts showed a steady increase, resulting in restrictive measures around the country in March. As a result, demand dropped and we quickly managed our capacity and liquidity in response.

We ended the quarter with solid liquidity, with R$3.3 billion in cash and R$3.8 billion including our option to upsize our convertible debenture. During the quarter, we generated R$552 million in cash inflows minus operating expenses and made R$785 million in payments to reduce debt and pay back deferrals, as well as R$317 million in investments such as capex and parts to prepare the fleet for the recovery. Our total liquidity reached R$6.3 billion including reserves and deposits but not including spare parts or other unencumbered assets like TudoAzul and Azul Cargo.

Our commitment to Brazil and its response to the pandemic is more important than ever. Azul was the first airline to publicly commit to transporting vaccines free of charge, and to-date we have flown millions of vaccines to every part of the country. In addition, we have transported vaccine supplies from Puerto Rico to Brazil, delivered 14 tons of intubation kits and anesthetics and over 150 tons of medical supplies. With Brazil's largest domestic network, we will continue to do all we can to support Brazil in this effort.

We ended the first quarter with 109% of our domestic capacity compared to the first quarter of 2019, one of the few airlines in the world to surpass pre-pandemic levels. This is a direct result of our competitive advantages, which include our unique network, our fleet flexibility, and our strong exclusive markets. We continue to be the only airline flying in 80% of our routes, so our advantages are only getting stronger.

Our revenue performance was robust as well, with revenues increasing 2.4% compared to 4Q20. Compared to the first quarter of 2019, we recovered 72% of total revenue, one of the fastest revenue recoveries in the world.

I am especially excited about our cost performance. We have always said we would take this opportunity to completely review our cost structure. One example is maintenance, where most of our service checks are now performed in-house. As a result, even with 23% fewer ASKs, a 9.6% depreciation of the real and a fuel price increase of 6.3% year over year, our CASK remained at the same levels of 1Q20. Compared to 4Q20, CASK was down 5% quarter over quarter, again in spite of fuel price increases and the depreciation of the real.

Azul Cargo continues growing and outperforming every quarter, with another 62.8% increase in revenue year over year, in spite of 23% less capacity in our network. Our unique door-to-door logistics capabilities combined with the broadest network in the country gives us the ability to transform logistics in Brazil like no one else.

In addition to supporting Brazil in its pandemic response, we take our social responsibility very seriously. We witness every day how access to air service creates positive social impact to our destinations. Reinforcing our commitment to ESG, I am proud to say we have already recovered our network to more than 110 domestic destinations in Brazil, more than double any other airline in the country. This provides critical mobility to Brazilians, fostering regional development, creating jobs, stimulating trade and tourism and boosting economic recovery. Our Sustainability Report will be released in the upcoming weeks, and in it we will describe our efforts and commitments regarding all ESG matters.

While the pandemic challenges continue, Brazil has significantly ramped up its vaccine efforts, now averaging one million doses applied per day. In total, we now have more than 50 million doses applied, the fifth most in the world. Vaccines have been proven to reduce hospitalizations and deaths, and allow for the safe reopening of the economy. We know people want to travel, as we are seeing the results of pent-up demand in the United States and are confident the same will happen in Brazil. We are ready for the recovery and remain focused on delivering an experience worthy of the Best Airline in the World.

John Rodgerson, CEO of Azul S.A.

2

First Quarter

Results 2021

Consolidated Financial Results

The following revised income statement and operating data should be read in conjunction with the quarterly results comments presented below.

Income statement (R$ million)¹	1Q21	1Q20	% ∆	4Q20	% ∆
OPERATING REVENUES
Passenger	1,597.6	2,653.4	-39.8%	1,528.3	4.5%
Cargo and other revenues	228.2	149.3	52.9%	255.4	-10.6%
Total operating revenues	1,825.8	2,802.7	-34.9%	1,783.7	2.4%
OPERATING EXPENSES
Aircraft fuel	597.7	764.3	-21.8%	451.0	32.5%
Salaries, wages and benefits	414.5	478.1	-13.3%	419.0	-1.1%
Depreciation and amortization	343.7	480.7	-28.5%	336.0	2.3%
Landing fees	149.3	201.9	-26.0%	146.2	2.2%
Traffic and customer servicing	86.7	135.2	-35.9%	79.3	9.3%
Sales and marketing	86.1	109.4	-21.3%	103.8	-17.1%
Maintenance materials and repairs	93.9	125.9	-25.4%	119.3	-21.3%
Other operating revenue / expenses	268.0	333.6	-19.7%	272.2	-1.6%
Total operating expenses	2,039.9	2,629.1	-22.4%	1,926.8	5.9%
Adjusted operating income (loss)	(214.1)	173.6	n.a.	(143.2)	49.5%
Adjusted operating income (loss) Margin	-11.7%	6.2%	n.a.	-8.0%	-3.7 p.p.
Adjusted EBITDA	129.7	654.2	-80.2%	192.9	-32.8%
Adjusted EBITDA margin	7.1%	23.3%	-16.2 p.p.	10.8%	-3.7 p.p.
FINANCIAL RESULT²
Financial income	25.3	12.9	96.7%	14.4	76.2%
Financial expenses	(860.2)	(438.5)	96.2%	(852.8)	0.9%
Derivative financial instruments	24.1	(1,281.6)	n.a.	25.9	-6.9%
Foreign currency exchange, net	(1,626.4)	(4,233.8)	-61.6%	1,431.3	n.a.
Result from related party transactions, net	(1.3)	(618.5)	-99.8%	62.6	n.a.
Income (loss) before income taxes²	(2,652.5)	(6,385.9)	-58.5%	538.2	n.a.
Income (loss) tax and social contribution	-	(13.0)	n.a.	5.2	n.a.
Deferred income tax	-	263.1	n.a.	-	n.a.
Net income (loss)²	(2,652.5)	(6,135.9)	-56.8%	543.4	n.a.
Net margin	-145.3%	-218.9%	+73.7 p.p.	30.5%	n.a.
Adjusted net loss³	(1,123.0)	(975.3)	15.1%	(918.2)	22.3%
Adjusted net income (loss) margin³	-61.5%	-34.8%	-26.7 p.p.	-51.5%	-10.0 p.p.
Weighted avg. of PN equivalent shares	344.7	342.1	0.8%	342.3	0.7%
Adjusted EPS³	(3.26)	(2.85)	14.3%	(2.68)	21.5%
Adjusted EPADR³	(1.79)	(1.92)	-6.8%	(1.49)	20.1%

• Adjusted for non-recurring items totaling R$31.8 million in 1Q21, R$143.2 million in 4Q20 and R$14.8 million in 1Q20. For more information, see page 10. ² Financial results adjusted for convertible debentures expenses.
  ³ EPS and EPADR adjusted for unrealized derivatives results, foreign currency exchange. One ADR equals three preferred shares (PNs).

3

First Quarter

Results 2021

Operating Data	1Q21	1Q20	% ∆
ASKs (million)	7,168	9,309	-23.0%
Domestic	6,906	7,071	-2.3%
International	262	2,238	-88.3%
RPKs (million)	5,480	7,544	-27.4%
Domestic	5,306	5,727	-7.3%
International	174	1,818	-90.4%
Load factor (%)	76.5%	81.0%	-4.6 p.p.
Domestic	76.8%	81.0%	-4.1 p.p.
International	66.4%	81.2%	-14.9 p.p.
Average fare (R$)¹	304.3	403.3	-24.6%
Revenue passengers (thousands)	5,251	6,579	-20.2%
Block hours	96,318	118,074	-18.4%
Aircraft utilization (hours per day)	7.6	10.2	-25.8%
Departures	58,586	69,691	-15.9%
Average stage length (km)	1,033	1,116	-7.4%
End of period operating passenger aircraft	159	138	15.2%
Fuel consumption (thousands of liters)	220,614	299,797	-26.4%
Full-time-equivalent employees	12,435	13,698	-9.2%
End of period FTE per aircraft	78	99	-21.2%
Yield per passenger kilometer (cents)	29.15	35.17	-17.1%
RASK (cents)¹	25.47	30.11	-15.4%
PRASK (cents)¹	22.29	28.50	-21.8%
CASK (cents)¹	28.46	28.24	0.8%
CASK ex-fuel (cents)¹	20.12	20.03	0.4%
Fuel cost per liter	2.71	2.55	6.3%
Break-even load factor (%)	85.4%	76.0%	+9.4 p.p.
Average exchange rate	5.47	4.46	22.7%
End of period exchange rate	5.70	5.20	9.6%
Inflation (IPCA - LTM)	6.10%	3.30%	+2.8 p.p.
WTI (average per barrel, US$)	58.14	45.78	27.0%
Heating Oil (US$)	174.74	154.18	13.3%

¹ Adjusted for non-recurring items

4Q20	% ∆
6,451	11.1%
5,968	15.7%

483 -45.7%

5,2115.2%

4,879

8.8%

331 -47.5%

80.8%	-4.3 p.p.
81.7%	-4.9 p.p.
68.7%	-2.3 p.p.

307.0 -0.9%

4,9795.5%

86,930

10.8%

6.8 11.0%

52,355 11.9%

1,035

-0.1%

1580.6%

205,5897.3%

11,946	4.1%
76	3.4%

29.33 -0.6%

27.65 -7.9%

23.69 -5.9%

29.87 -4.7%

22.88 -12.1%

2.19 23.5%

87.3%

-1.8 p.p.

5.401.3%

5.209.6%

4.52%

+1.6 p.p.

1. 23.7%

1. 36.2%

Operating Revenue

In 1Q21, Azul recorded operating revenues of R$1.8 billion, compared to R$2.8 billion in 1Q20, representing a decrease of 34.9% year over year, due to the reduction in 23.0% in capacity and 15.4% in RASK driven by the COVID-19 pandemic. Passenger revenue increased 4.5% quarter over quarter, showing a clear demand recovery particularly in the beginning of 1Q21.

Cargo and other revenue increased 52.9% compared to 1Q20, totaling R$228.2 million in 1Q21, mainly due to the 62.8% increase in cargo revenue driven by gains in all of Azul Cargo's business segments, partially offset by lower demand for charters.

4

First Quarter

Results 2021

R$ cents		1Q21	1Q20	% ∆	4Q20	% ∆
Operating revenue per ASK	1
Passenger revenue		22.29	28.50	-21.8%	23.69	-5.9%
Cargo and other revenues		3.18	1.60	98.5%	3.96	-19.6%
Operating revenue (RASK)		25.47	30.11	-15.4%	27.65	-7.9%
Operating expenses per ASK²
Aircraft fuel		8.34	8.21	1.5%	6.99	19.3%
Salaries, wages and benefits	5.78	5.14	12.6%	6.50	-11.0%
Depreciation and amortization	4.80	5.16	-7.1%	5.21	-7.9%
Landing fees		2.08	2.17	-3.9%	2.27	-8.0%
Traffic and customer servicing	1.21	1.45	-16.8%	1.23	-1.7%
Sales and marketing		1.20	1.18	2.1%	1.61	-25.4%
Maintenance materials and repairs	1.31	1.35	-3.2%	1.85	-29.2%
Other operating expenses		3.74	3.58	4.3%	4.22	-11.4%
Total operating expenses (CASK)	28.46	28.24	0.8%	29.87	-4.7%
Operating income per ASK (RASK - CASK)	(2.99)	1.86	n.a.	(2.22)	34.6%

¹ Operating revenue adjusted for non-recurring items totaling R$49.1 million in 4Q20

• Operating expenses adjusted for non-recurring items totaling R$31.8 million in 1Q21, R$94.1 million in 4Q20 and R$14.8 million 1Q20. For more information, see page 10.

Operating Expenses

Total operating expenses decreased 22.4% or R$589.2 million year over year, mainly due to lower capacity- related expenses and cost reduction initiatives. The breakdown of our main operating expenses is as follows:

• Aircraft fuel decreased 21.8% year over year to R$597.7 million, mostly due to a 23.0% reduction in capacity and a 9.8% reduction in fuel burn per block hour as a result of our more efficient next- generation fleet, partially offset by a 6.3% increase in jet fuel prices.
• Salaries, wages and benefits decreased 13.3% year over year or R$63.6 million to R$414.5 million mainly due to our lower capacity and initiatives to increase productivity through process improvement, technology, and a leaner organization.
• Depreciation and amortization decreased 28.5% or R$136.9 million, driven by a reduction in the right- of-use asset as a result of lease contract modifications in 2020, which require us to recalculate the corresponding lease assets and liabilities.
• Landing fees decreased 26.0% or R$52.6 million in 1Q21 compared to the same period last year, mostly due to a 15.9% reduction in departures year over year, particularly in the international segment.
• Traffic and customer servicing expenses decreased 35.9% or R$48.5 million, mostly due to a 20.2% reduction in the number of passengers transported in 1Q21 compared to 1Q20, especially in the international segment, which has higher servicing costs per passenger.
• Sales and marketing decreased 21.3%, or R$23.3 million, mostly driven by a reduction of 39.8% in passenger revenue and fewer marketing campaigns, partly offset by an increase in cargo express shipments, which have higher commission fees.
• Maintenance materials and repairs decreased 25.4% or R$32.0 million, mostly driven by maintenance checks performed in-house and fewer maintenance events in the quarter.
• Other operating expenses decreased 19.7% year over year, mostly due to lower expenses as a result of capacity reduction, cost cutting initiatives and better negotiations with suppliers, partially offset by the depreciation of the Brazilian real.

5