Azul Increases Net Income by R$122 Million in 1Q17

Azul S.A., "Azul," (B3:AZUL4) AZUL the largest airline in Brazil by number of cities served, announces today its results for the first quarter of 2017 ("1Q17"). 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 for 1Q17

• Operating income was R$205.2 million, representing a margin of 11.0% compared with R$7.0 million and a margin of 0.4% in 1Q16. This is a record first quarter operating result for Azul.
• EBITDAR increased 36% to R$562.2 million, representing a margin of 30.0%.
• Net income totaled R$55.3 million compared to a net loss of R$66.9 million in 1Q16.
• Total revenue per ASK (RASK) and passenger revenue per ASK (PRASK) increased 9.4% and 5.5% year over year totaling 29.35 cents and 25.07 cents, respectively.
• Passenger traffic (RPKs) increased 7.0% over a capacity increase of 2.7% resulting in a higher load factor of 81% compared to a load factor of 78% in 1Q16.
• Operating cost per ASK excluding fuel (CASK ex-fuel) decreased 6.9% while CASK decreased 2.2% despite the 54% increase in WTI year over year.
• Financial expenses decreased 35.3% from R$215.3 million to R$139.3 million.
• At the end of 1Q17 our total cash¹ position totaled R$1.5 billion, representing 22% of the last twelve months' revenues. This position does not include the net proceeds of R$1,287.7 million from IPO concluded in April.
• In 1Q17 we paid down R$401.2 million of working capital debt.
• Azul's operating fleet totaled 122 aircraft at the end of the quarter, representing a net reduction of eight aircraft compared to 1Q16.
• TudoAzul recorded a 53% increase in gross billings (ex-Azul points) over 1Q16.
• Azul ranked as the most on-time airline in South America according to the Official Airline Guide ("OAG"), a leading provider of flight information, with an on-time performance of 87.6% during the twelve months ended March 31, 2017.

To retrieve the full version of this press release visit www.voeazul.com.br/IR

About Azul

Azul (((B3:AZUL4, NYSE:AZUL), the largest airline in Brazil by number of cities served, offers 792 daily flights to 104 destinations. With a fleet of 122 aircraft and more than 10,000 crewmembers, the Company has a network of 201 non-stop routes as of March 31, 2017. Among other awards, Azul was named the third best airline in the world by TripAdvisor Travelers' Choice in 2017, the best low cost carrier in South America for the sixth consecutive year by Skytrax in 2016, and the world's most on-time low-cost airline in 2015 by the Official Airline Guide (OAG). For more information visit www.voeazul.com.br/ir.

¹ Includes cash and cash equivalents, short-term and long-term investments, current and non-current restricted investments.

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