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With a gradual uptick in air-travel demand in the domestic markets, Latin American carrier Azul S.A. AZUL reported impressive January traffic numbers on the back of month-over-month double-digit rise in domestic traffic.
However, consolidated load factor (% of seats filled by passengers) declined month over month as consolidated traffic increase was less than the capacity expansion. Consolidated load factor slipped 1.3 percentage points month over month to 78.7%. On the international front, load factor increased 1 percentage point from the December levels while the same slid 1.5 percentage points month over month on the domestic front.
Consolidated traffic (measured in revenue passenger kilometers or RPKs) rose 13% on a month-over-month basis. Domestic traffic was up 14% while international traffic declined 3% on a month-over-month basis. Consolidated capacity (measured in available seat kilometers/ASKs) increased 14.8%. Domestic capacity at Azul, which competes with the likes of Gol Linhas GOL and Copa Holdings CPA in the Latin American aviation space, increased 16.3% while international capacity fell 4.4% from the December reading.
Despite the recent improvement, consolidated traffic at Azul lagged the year-ago levels by 10.9% in January 2021. This downside was due to weakness on the international front where traffic tanked 82% year over year. However domestic traffic increased 13.2% year over year. Per CEO John Rodgerson, “We began the year on a very positive note as one of the few airlines in the world, if not the only, with domestic recovery already above 2019.”
Zacks Rank & Key Pick
Azul carries a Zacks Rank #3 (Hold), currently. A better-ranked stock in the broader Zacks Transportation sector is Kansas City Southern KSU), carrying a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term expected earnings per share (three to five years) growth rate for Kansas City Southern is pegged at 15%
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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
Copa Holdings, S.A. (CPA) : Free Stock Analysis Report
AZUL SA (AZUL) : Free Stock Analysis Report
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