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Azul's (AZUL) June Traffic Results Improve From May Levels

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

Consolidated traffic, measured in revenue passenger kilometers, increased 18.2% month over month. With travel demand rising, the company expanded capacity significantly. Capacity measured in available seat kilometers moved up 16.8% in June from May levels. Since traffic surge was more than capacity expansion, load factor (% of seats filled by passengers) rose to 76.8% in June from 75.8% in May.

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 280.4%.  In the same time frame, capacity expanded 273.4%. Consequently, with traffic surge outweighing capacity expansion, load factor increased 1.4 percentage points (p.p).

In the domestic front, traffic and capacity increased 328.2% and 310.9%, respectively, from the year-ago period’s levels. Consequently, load factor increased 3.2 p.p to 78.8% in June. Internationally, in the same time frame, traffic and capacity surged 21.2% and 73.4%, respectively. However, internationally load factor dropped 22.3 p.p to 52%.

Compared with June 2019 (pre-COVID) levels, both traffic and capacity plunged 24% and 17.3%, respectively. Moreover, the load factor also tanked 6.8 p.p to 83.6% as decline in traffic was more than capacity contraction.

Zacks Rank & Stocks to Consider

Azul currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the broader Zacks Transportation sector are Landstar System (LSTR - Free Report) , C.H. Robinson (CHRW - Free Report) and FedEx Corporation (FDX - Free Report) . Landstar and C.H. Robinson carry a Zacks Rank #2 (Buy), while FedEx sports a Zacks #1(Strong Buy) Rank. 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, C.H. Robinson and FedEx is projected at 12%, 9% and 12%, respectively.