Azores Airlines’ net results amounted to -25.6 million euros in the first quarter of 2024, representing a deterioration of 2.9 million euros compared to the same period in 2023.
These results reflect the increase in aircraft-related depreciation caused by adding two A320 NEO aircraft, which were part of the fleet renewal plan, with state-of-the-art technology and increased structural maintenance costs. The two aircraft represent “a significant leap forward in terms of operational efficiency and consequent reduction in environmental impact.”
Azores Airlines’ results were also due to an increase in impairments related to aircraft lessor reserves and intra-group loan interest expenses.
These Azores Airlines results still do not consider any remuneration for the operation of routes under Public Service Obligations (PSOs) between the Autonomous Region of the Azores and the mainland and Madeira, which have historically shown operating deficits. An international public tender is underway for these PSOs, and Azores Airlines has guaranteed the maintenance of these routes until October 2024 to “guarantee the continuity of the operation and the mobility of Azoreans.”

“Sustainable and consistent…”

In its press release, the SATA Group Board of Directors emphasizes that Azores Airlines’ “sustainable and consistent growth” trajectory “will continue in the first quarter of 2024, as it did in 2023.” It points out that even though, as a rule, the first quarter for airlines is the worst of the year, the airline’s revenues reached 47.1 million euros in the first quarter of 2024, which represents a growth of 31.5% (+11.3 million euros) compared to the same period last year, and 115.5% (+25.3 million euros) when compared to the pre-pandemic period (2019), “proving the trend of strong growth in the company’s activity, based on increased capacity on core routes, more connections and the introduction of new routes.” This revenue growth “is sustained by the very positive evolution” of passengers carried, which in the first quarter of 2024 grew by 29.1% compared to the first quarter of 2023, to 286,000 (+64,000 passengers carried), and by the improvement in yield.
The number of flights performed amounted to 2,095, which also represents an increase of +18 % and +65 % compared to 2023 and 2019, respectively.
The load factor improved by 7.7 percentage points compared to 2023, reaching 78.5% in the first quarter of 2024. Despite the significant revenue growth (+31.5%), operating costs grew by 24.6% to 55.6 million euros (+11 million euros year-on-year), strongly impacted by the increase in irregularity costs (+116.6%; +1.1 million euros); ACMI – aircraft rental (+112.3%; +0.4 million euros); commissions/GDS (+79%; 2.7 million euros); handling (+52.6%; 2.1 million euros); and maintenance (+45.2%; 1.2 million euros).
The increase in costs higher than the increase in revenue impacted EBITDA (operating earnings before interest, taxes, and depreciation), which amounted to -8.5 million euros, compared to -8.8 million euros in the first quarter of 2023.
Earnings before interest and taxes (EBIT) deteriorated by 1.9 million euros compared to the first quarter of 2023, impacted not only by EBITDA but also by the “increase in aircraft-related depreciation caused by the increase of two aircraft compared to 2023 and an increase in structural maintenance costs”.

SATA Air Açores improves net profit by €2.6 million

SATA Air Açores reported a net profit for the first quarter of this year that represented “an improvement of 2.3 million euros compared to the same period last year, mainly due to better operating results and a reduction in financing costs as a result of the early settlement of the 60 million euro bond loan in September 2023.” Overall, in the first quarter of 2024, SATA Air Açores showed “an improvement in its performance, maintaining the trend of growth and recovery of results, despite strong pressure on costs, particularly with aircraft maintenance, which will be reflected in the accounts throughout the year.”
In the first three months of 2024, SATA Air Açores operated 3,210 flights (+67 flights; +2.1% compared to 2023), with the number of passengers carried reaching 162,000, representing an increase of 8.9% compared to the same period last year, which translates into an increase in the load factor (occupancy rate) of 6 percentage points to 74.9%.
SATA Air Açores’ total revenue for the quarter amounted to 21.7 million euros, up 10.5% on the same period last year (+2.1 million euros), with EBITDA standing at -0.8 million euros in the first quarter of the year, an improvement of 0.4 million euros on the same period in 2023.
EBIT, although negative, also improved by 0.5 million euros to -3.4 million euros.
Regarding Operating Costs, compared to the same period in 2023, there was a more significant increase in commercial costs (+27%), maintenance costs (+9%), and staff costs (+8%). The Board of Directors notes that SATA Air Açores is carrying out a series of structural maintenance and engine repairs on the aircraft in its fleet for an estimated amount of around 25 million euros in 2024, the impact of which on depreciation will increase over the year and subsequent years. However, the financial implications and capital requirements will be immediate. To date, around 4.5 million euros have been paid for this maintenance.

João Paz, journalist for Correio dos Açores-Natalino Viveiros, director

Translated to English as a community outreach program from the Portuguese Beyond Borders Institute (PBBI) and the Modern and Classical Languages and Cultures Department (MCLL) as part of Bruma Publication and ADMA (Azores-Diaspora Media Alliance)  at California State University, Fresno–PBBI thanks the sponsorship of the Luso-American Development Foundation from Lisbon, Portugal (FLAD)