SAO PAULO, Aug 13 (Reuters) - Brazilian airline Azul ( AZUL )

expects to trim capacity again in the third quarter

after recent major cuts before returning to growth in the final

three months of the year, Chief Executive John Rodgerson said on

Thursday.

Azul ( AZUL ) slashed capacity by an unprecedented 10.6% year-on-year

in the second quarter, including a 24.9% reduction in

international operations, as the U.S.-Israeli war on Iran

disrupted oil flows and sent jet fuel prices sharply higher.

"The peak of the fuel crisis occurred in the second quarter,

and at the same time it is typically the weakest quarter of the

year," Rodgerson told Reuters. "We did what we believed was

right: cut capacity."

The carrier, Brazil's largest by number of cities served,

expects to reduce capacity by around 4% in the third quarter

before returning to growth from the fourth quarter as it

completes a transition to a widebody fleet.

Rodgerson said he remained optimistic about Brazil's

aviation market, citing resilient demand.

"The fundamentals in Brazil are very good at the moment, and

we believe we're well positioned," he said. "Wars and crises

don't last forever."

Azul ( AZUL ) on Thursday reported record second-quarter operating

revenue of 4.98 billion reais ($960 million), up 0.7% from a

year earlier, but core earnings slumped 55.4% to 510.1 million

reais as the cost of fuel per liter surged 61.8%.

The company, which emerged from a nine-month-long Chapter 11

process in February and has pledged to shift its focus from

expansion to profitability and operational execution, said

higher fares helped offset part of the cost increase.

"Was it the end result we wanted? Of course not. Fuel costs

increased by nearly 700 million reais during the quarter and we

cut capacity. But this was always going to be a transition

quarter anyway," Rodgerson said, highlighting operational

improvement and higher unit revenue.

($1 = 5.1840 reais)