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Azul's (AZUL) April Traffic Declines From its March Levels

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With Brazil reeling under a second wave of the deadly coronavirus pandemic, it was obvious that Azul S.A.‘s AZUL April traffic report will be a disappointment compared with March numbers.

Notably, consolidated traffic, measured in revenue passenger kilometers, declined 9.1% month over month. With falling travel demand, the company reduced capacity significantly. Capacity measured in available seat kilometers contracted 16.5% in April from March levels. Since traffic decline was less than capacity contraction, load factor (% of seats filled by passengers) jumped to 77.5% in April from 71.2% in March.

However, on a year-over-year basis, with the coming of COVID-19 vaccine, the scenario was rosier with consolidated traffic surging 523.7%.  In the same time frame, capacity expanded 455.8%. Consequently, with traffic surge outweighing capacity expansion, load factor increased 8.5 percentage points (p.p).

In the domestic front, traffic and capacity increased 604% and 524.9%, respectively, from the year-ago period’s levels. Consequently, load factor increased 8.9 p.p to 79% in April.

Internationally, in the same time frame, traffic and capacity surged 105.5% and 126.8%, respectively, for Azul, which competes with the likes of Gol Linhas GOL, Copa Holdings CPA in the Latin American aviation space. However, with capacity surge outweighing traffic expansion, load factor plunged 6 p.p to 58%. Azul currently carry a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 (Strong-Buy) Rank stocks here.

Apart from April traffic results, Azul recently posted its first-quarter 2021 financials. The company had incurred a loss (excluded $2.44 from non-recurring items) of $1.78 per share, wider than the Zacks Consensus Estimate of a loss of $1.64. Total revenues of $334 million missed the Zacks Consensus Estimate of $341.3 million. The top line fell 47.2% on a year-over-year basis. Passenger revenues, contributing 87.5% to the top line, plunged 39.8% year over year owing to the second wave of coronavirus.  Notably, passenger revenue weakness was not unique to Azul. Other airline companies like Allegiant Travel Company ALGT also reported significant year-over-year decline in passenger revenues in the March quarter.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
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Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
AZUL SA (AZUL) : Free Stock Analysis Report
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