And we set five corporate all-time record fares records in September and October. Just a ton of events happening around the country. We had Formula One last week. I’m a Swifty. So Taylor Swift is here next week. And you know what she can do to the economy.
Q – Michael Linenberg: How do you get tickets
David Neeleman: No, no tickets. It’s too hard. Too difficult. But overall, international doing very well, especially Europe — and our — and on international metric that’s really interesting is that of our international unit revenue growth, which is up like 60% above 2019. Business class is up $0.20 versus economy is up only $0.10. And so we’re seeing some pretty good premium traffic as well. So — and combining this with capacity discipline and our network is different, right? Our network is more exposed to the Brazil that grows the Brazil stat still has a lot of growth ahead of it, whether it’s agro, whether it’s infrastructure, our network is significantly more exposed to the part of Brazil that’s not just Sao Paulo or Rio or Brazilian. So the trends have been accelerating through 2Q and into 3Q. So it feels pretty good from what we can see. December is ahead of last year. January is ahead of last year as well.
Q – Michael Linenberg: That’s great. That’s great. Thanks Abhi. That’s super helpful. And then just my second question. You fly the Airbus A320s, the neos, I believe you use the LEAP engine, so you don’t have to deal with the GTF. Although, John, you did mention that it seems like power plants are coming off wings sooner, no matter what the engine is. What about — just on your E2s, we know that the GTF is potentially an issue with E2s and A220s, a couple of carriers are saying they’re waiting to hear from Pratt. What has the manufacturer said to you about the E2s? Do you have any grounded right now, for example? Anything on kind of the engines, et cetera? Thanks.
John Rodgerson : Yes. Good news, Mike, is we’ve got no aircraft grounded on the E2 right now. I had a call with the President of Pratt over the weekend and we’re monitoring it very closely. Good news is there’s not as many E2 customers in the world. And so I think you just need to get in front of it. You need to make sure you have the proper spare ratio. We’re a very important customer to Embraer and Pratt & Whitney and our business model is based on the E2, right? And so I think that that’s kind of crucial. And it’s constant dialogue to make sure that the spares are there, the deliveries are coming. And so it’s not perfect. We understand that. Nobody wants to be where we are today. But I think we have a good relationship. And we’re working very closely with Pratt and Embraer to ensure that we keep that fleet flying. And we’re doubling that fleet in the next 12 months, right? And so that’s a kind of a key driver for us.
Q – Michael Linenberg: Great to hear. Thank you.
Operator: Thank you. The next question now will come from Savi Syth from Raymond James. Savi, we’re going to open your audio, so that you can ask your questions. You may proceed.
Unidentified Analyst: Hi. Good morning. This is Zara on behalf of Savi Syth. Our first question today is I know you provided early thoughts on 2024 capacity. How do you see that split between Domestic and International?
John Rodgerson: Yeah. Zara. It’s — so our International network is going to be — you can take what we flew in the last quarter, which is public, our public capacity data. And it’s just going to be year rounded. So there will be some growth, but it’s basically the network we’re flying today, year around. And the Domestic network is going to be just the deliveries of the E2s up-gauging from what we have today. So overall capacity growth around 10%, 11%, International is going to be kind of mid-single digits, if you will, just coming around and the rest of it domestic.
Unidentified Analyst: Okay, super helpful. Thank you. And how is demand evolving in the Brazil US and Brazil Europe markets?
John Rodgerson: Yeah. Europe has been strong for everybody. You heard that from the guys in the US as well. It’s been a very, very strong European summer. We flagged the two largest European markets, Portugal and Paris, so pretty resilient demand even through the un-seasonal sort of winter. US, is a little bit more up and down, but it’s looking very good right now for December, January. If you look at US Brazil capacity, it’s still only 85% of what it was in 2019 and so you still have capacity shortages in US, Brazil. US — Brazil, Europe is around 90%, 95% recovered, so — but good demand. But overall, we’re very happy with International and how it’s performing.
Alex Malfitani: Yeah. If I could just add, interesting about our network, we fly to the US from Manaus, Belen, Confins, Recife and Campinas. And many of those routes are relatively new and developing, and that kind of shows the strength of our network in the north of Brazil, the northeast of Brazil, at our second main hub in [indiscernible]. And so there’s — we have five different points of entry from Brazil into the United States.
Unidentified Analyst: Great. Thank you.
Operator: Thank you. Moving on to the next question now. The next question will come from Daniel McKenzie, sell-side analyst from Seaport Global. Daniel, we’re going to open your audio, so that you can ask your questions. You may proceed.
John Rodgerson: Yeah. He typed his question. So maybe he’s not on the phone. I’ll be able to read.
Alex Malfitani: Oh, Yeah. Hey Dan.
Daniel McKenzie: Yeah. Hey. Good morning. Sorry about that.
John Rodgerson: No problem.
Daniel McKenzie: Just a couple of questions here, just going back to the $6.3 billion in EBITDA for 2024 that outlook. What — first of all, just some expectations around that. First, is there any unusual working capital — considerations for next year that we should be aware of? Or will that EBITDA translate fairly accurately to cash from operations? And then just related to that, if you could help us unpack 2024 CapEx on a gross net cash basis? And then just kind of tying back to this idea of slower economic growth, what rate of slower economic growth might worry you with respect to the outlook that we see today?
John Rodgerson: Hey, Dan, I’m going to start and then Alex will give you the details. But I think what I want to highlight is this third quarter shows what Azul is capable of, right? You know, record revenue, record EBITDA, margins above 2019. We did $1.6 billion of EBITDA in the third quarter, right? Next year, we will have roughly 15 more E2s in the fleet because we’re getting some at the end of this year. And so that gives you an idea of what this airline is capable of producing in terms of EBITDA on a go-forward basis. This year, we didn’t have the full effect of Congolese. We didn’t have a full effect of the E2s. We didn’t have the full effect of kind of leveraging our loyalty program because of the crisis we were in. And so again, take a look at the third quarter and start to look at, wow, what is this little capable of as you roll this forward into 2024 with all the other good things that we’re working on.
