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AZUL's Q1 Loss Narrower Than Expected, Revenues Miss Mark

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Azul AZUL incurred a loss (excluding $4.89 from non-recurring items) of $1.14 per share in the first quarter of 2022, narrower than the Zacks Consensus Estimate of a loss of $1.21. The amount of loss narrowed year over year as well.

Total revenues of $610.9 million missed the Zacks Consensus Estimate of $638.5 million but increased 82.9% year over year as air-travel demand improved, courtesy of widespread vaccination programs in Brazil.

With more people taking to the skies, Azul’s passenger revenues, contributing 89% to the top line, surged 77.9% year over year (on higher total capacity). Cargo and other revenues rose 53.4% year over year, primarily owing to upbeat demand for Azul’s logistics solutions.

AZUL Price, Consensus and EPS Surprise

AZUL Price, Consensus and EPS Surprise
AZUL Price, Consensus and EPS Surprise

AZUL price-consensus-eps-surprise-chart | AZUL Quote

Operating Statistics

Consolidated traffic, measured in revenue passenger kilometers (RPKs), surged 32.9% (up 21.4% in domestic & more than 100% on the international front) year over year. International traffic surged more than domestic traffic.

Consolidated available seat kilometers (ASK), measuring an airline's passenger-carrying capacity, rose 26.4% from the same-period level last year with a 296.4% rise in international capacity. The same expanded 16.2% on the domestic front. Since traffic surge was more than the amount of capacity expansion, load factor (percentage of seats filled with passengers) rose 3.9 percentage points to 80.4%.

While Azul’s total revenues per ASK or RASK soared 38.3%, passenger revenues per ASK or PRASK increased 40.7% year over year. Results were driven by a strong domestic demand environment in Azul’s markets. Cost per ASK (CASK) increased 21.1% from the first-quarter 2021 reported figure to 34.45 cents, mainly due to a rise in jet fuel prices. Jet fuel prices increased 57% from the first-quarter 2021 level, with oil prices moving north. CASK excluding fuel rose 6% to 21.33 cents. Average fare surged 47.6% from first-quarter 2021 figure.

Azul exited the first quarter of 2022 with a total passenger operating fleet of 166 aircraft. The average age of the fleet was 6.9 years. The contractual fleet size was 178.

Liquidity

Azul, currently carrying a Zacks Rank #4 (Sell), exited the March quarter with total liquidity of R$6 billion. Gross debt decreased 12.9% sequentially. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

2022 Outlook

Azul expects its capacity to grow approximately 10% from its 2019 reported figure.

RASK is expected to increase more than 20% from its 2019 reported figure.
Current-year EBITDA (excluding non-recurrent items) is expected to be approximately $4 billion.

Earnings Snapshots

Within the broader Transportation sector, J.B. Hunt Transport Services JBHT, CSX Corporation CSX and United Airlines UAL recently reported first-quarter 2022 results.

J.B. Hunt reported better-than-expected first-quarter 2022 earnings. Quarterly earnings of $2.29 per share surpassed the Zacks Consensus Estimate of $1.91. The bottom line surged 67.2% year over year on the back of higher revenues across all segments.

Total operating revenues of $3,488.6 million also outperformed the Zacks Consensus Estimate of $3,260.5 million. The top line jumped 33.3% year over year. JBHT currently carries a Zacks Rank #3 (Hold).

CSX Corp’s first-quarter 2022 earnings of 39 cents per share beat the Zacks Consensus Estimate by a penny despite the decrease in overall volumes as supply-chain issues continue to dent results. The bottom line improved 25.81% year over year owing to higher revenues, aided by increased shipping rates.

Total revenues of $3,413 million outperformed the Zacks Consensus Estimate of $3291.2 million. The top line increased 21.33% year over year. CSX carries a Zacks Rank of 3 at present.

United Airlines incurred a loss of $4.24 per share in the first quarter of 2022, wider than the Zacks Consensus Estimate of a loss of $4.19. This is the ninth consecutive quarterly loss incurred by UAL as coronavirus concerns continue to weigh on air-travel demand.

Operating revenues of $7,566 million also fell short of the Zacks Consensus Estimate of $7,657.2 million. UAL is presently Zacks #3 Ranked.


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