UPDATE 2-Brazilian airline Azul's losses narrow in first quarter; shares jump

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SAO PAULO, May 13 (Reuters) - Brazilian airline Azul's net losses narrowed and operating figures hit all-time highs for the first quarter driven by healthy demand for air travel in the country, it said on Monday, sending its shares higher.

Azul reported an adjusted net loss of 324.2 million reais ($62.86 million) for the January-March period, smaller than the 727.6 million-real loss from a year earlier, mainly hit by financial expenses and foreign exchange swings.

Operationally, the carrier said that both revenue and core earnings reached record highs for the period, with traffic as measured by revenue passenger kilometers rising 1.7% from a year earlier. It painted a positive picture going forward.

Chief Executive John Rodgerson said in a call with analysts that the company is "back to the earnings growth trajectory" that had been interrupted by the pandemic.

"And still the best is yet to come," he added, noting that Azul's cash flow and leverage have been improving and operations last quarter generated enough cash to pay down aircraft debt, capital expenditures and interest.

Shares of Azul rose as much as 3.4% in the session, among the top gainers on Brazil's Bovespa stock index, which was up 0.5%.

The company had in March already bumped up its estimate for earnings before interest, taxes, depreciation and amortization (EBITDA) this year due to rising demand in Latin America's largest economy.

In the first quarter, Azul's EBITDA came in at 1.42 billion reais, up 37.4% year-on-year, while net revenue rose 4.5% to 4.68 billion reais. The top line landed slightly below the 4.88 billion reais expected by analysts polled by LSEG.

Analysts at Santander said the results were strong, highlighting solid recurring EBITDA backed by lower fuel costs, triggered by a decline in fuel prices and a more fuel-efficient fleet.

Azul reiterated it expects to add 13 Embraer E2 jets to its fleet this year, increasing capacity and reducing costs as they have more seats and burn less fuel then first generation E-Jets.

($1 = 5.1579 reais) (Reporting by Gabriel Araujo, Editing by Louise Heavens, Susan Fenton and Josie Kao)