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Azul's (AZUL) July Traffic Soars 40.7% From June Reading

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With air-travel demand increasing gradually, Azul S.A. AZUL reported impressive June traffic numbers, backed by the double-digit rise in domestic traffic on a month-over-month basis. Moreover, consolidated load factor (% of seats filled by passengers) inched up as consolidated traffic demand was more than the capacity expansion.

Consolidated load factor increased 4.1 percentage points month over month to 79.6%. Apart from a 6.7 percentage point rise in international load factor to 81%, the metric increased 3.7 percentage points to 79.4% on the domestic front, thereby bumping up the overall figure.

Consolidated traffic (measured in revenue passenger kilometers or RPKs) surged 40.7% on a month-over-month basis. While international traffic declined 10.6%, the metric soared 50.1% on the domestic front. Consolidated capacity (measured in available seat kilometers/ASKs) jumped 33.3% owing to 43% domestic expansion from the June reading. International capacity, however, contracted 18% mainly to match the dismal air-travel demand scenario.

Management at Azul, which competes with the likes of Gol Linhas GOL and Copa Holdings CPA in the Latin American aviation space, also stated that it expects to operate 407 peak daily departures in September compared with 303 in August.

Moreover, Azul, which will release second-quarter 2020 results on Aug 13, expects total liquidity (including cash and cash equivalents, short-term investments and accounts receivables) to be R$2.3 billion at June-quarter end compared with R$2.2 billion at the end of the March quarter.

Zacks Rank & Key Pick

Azul currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the Zacks Transportation sector is Canadian Pacific Railway Limited CP, carrying a Zacks Rank #2 (Buy), presently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Canadian Pacific’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average being 6.5%.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
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