Azul’s Narrow Earnings Escape

Good morning from Skift. It’s Tuesday, March 7. Here’s what you need to know about the business of travel today.

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Episode Notes

Author and geopolitical scientist Parag Khanna believes that globalization is alive and well despite some thinking it was contracting. So what’s the significance of that for travel? Khanna addresses that topic and more in a special edition of the Skift Podcast with Skift founder and CEO Rafat Ali.

Khanna, who has spoken at Skift events, described globalization during his interview with Ali as a deep and intimate part of almost every transaction worldwide. He said that globalization isn’t based solely on trade, noting that labor shortages and geopolitical tensions are driving migration and relocation around the world. He added that countries and corporations are seeking even more globalization in an increasingly competitive global marketplace.

Khanna also addressed travel’s significant rebound since the start of the pandemic, citing in particular the enormous jump in countries offering digital nomad visas. He also said the travel industry is in the early phase of a five to 10-year process where travelers’ passports are becoming less important than their credentials. Khanna stated nations have realized their economies would suffer if they didn’t encourage more circulation of people and travel.

Next, Brazilian airline Azul has escaped the fate that struck several of its rivals. The company has reached agreements with many of its aircraft lessors to avoid bankruptcy, reports Edward Russell, editor of Airline Weekly, a Skift brand.

Russell writes the importance of the deals cannot be overstated. The agreements, which cover 90 percent of Azul’s lease obligations, will eliminate nearly $600 million in negative cash flow this year. Azul leased 87 percent of its aircraft at the end of 2022. The company’s lease obligations represented the lion’s share of its gross debt, difficulties compounded by the weak Brazilian real. Russell adds the struggling currency increased the cost of everything for Azul from fuel to aircraft lease payments.

Meanwhile, Azul founder David Neeleman, who also founded JetBlue Airways, said 2022 was a strong year for the Brazilian carrier. Azul saw its revenues jump 40 percent in the fourth quarter to the same period in 2019.

Finally, Uber is tripling the length of its reservation period as part of its strategy to boost bookings from business travelers, reports Corporate Travel Editor Matthew Parsons.

The ride-hailing giant is extending the window for pre-booking rides from 30 to 90 days, which Parsons writes was made in response to the growing lead time for airline bookings. He adds that business travelers are encouraged to book travel as early as possible to reduce costs, noting it will be easier for Uber to target those planning their flights.

Uber is also unveiling a new upscale ride category named Business Comfort later this year. While Uber didn’t provide any specifics about the category, the company described the product as a unique business class experience.