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Azul's (AZUL) Traffic in May Increases From April Levels

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Azul S.A. (AZUL - Free Report) posted impressive traffic numbers for the month of May, as air-travel demand picks up on increased vaccination programs.

Consolidated traffic, measured in revenue passenger kilometers, increased 12.4% month over month. With rising travel demand, the company expanded capacity significantly. Capacity measured in available seat kilometers moved up 14.8% in May from April levels. Since traffic surge was less than capacity expansion, load factor (% of seats filled by passengers) dips to 75.8% in May from 77.5% in April.

On a year-over-year basis (as the current year situation is somewhat better with the coming of vaccines), the scenario was rosier with consolidated traffic surging 361.9%.  In the same time frame, capacity expanded 337.8%. Consequently, with traffic surge outweighing capacity expansion, load factor increased 3.9 percentage points (p.p).

In the domestic front, traffic and capacity increased 435.5% and 406.7%, respectively, from the year-ago period’s levels. Consequently, load factor increased 4.2 p.p to 78.1% in May.

Internationally, in the same time frame, traffic and capacity surged 14% and 56.9%, respectively.

Compared with May 2019 (pre-COVID) levels, both traffic and capacity plunged 34.8% and 27.5%, respectively. Moreover, the load factor also tanked 8.5 p.p to 84.3 as decline in traffic was more than capacity contraction.

Zacks Rank & Stocks to Consider

Azul currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Zacks Transportation sector are Landstar System, Inc. (LSTR - Free Report) , Triton International Limited (TRTN - Free Report) and Herc Holdings Inc. (HRI - Free Report) . Herc Holdings and Landstar sport a Zacks Rank #1 (Strong Buy), while Triton carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term (three to five years) expected earnings per share growth rate for Landstar, Triton and Herc Holdings is projected at 12%, 10% and 42.9%, respectively.

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