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AZUL's Q3 Loss Narrower Than Expected, Revenues Beat Mark

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Azul (AZUL - Free Report) incurred a loss (excluding $2.09 from non-recurring items) of $1.08 per share in the third quarter of 2021, narrower than the Zacks Consensus Estimate of a loss of $1.35. The amount of loss also narrowed year over year.

Total revenues of $520 million outperformed the Zacks Consensus Estimate of $457.9 million and increased year over year (up 59.6% sequentially) as air-travel demand improves, courtesy of widespread vaccination programs in Brazil. However, with travel demand continuing to be below the pre-pandemic levels, the top line declined 10.3% from the third quarter of 2019.

With more and more people taking to the skies, Azul’s passenger revenues, accounting for 88.3% of the top line, surged 69.3% from the second quarter of 2021 (down 16.9% from the third quarter of 2019). Cargo and other revenues rose 11.5% sequentially and more than 100% from the 2019 level, primarily driven by upbeat demand for Azul’s logistics solutions.

AZUL Price, Consensus and EPS Surprise

AZUL Price, Consensus and EPS Surprise

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

Operating Statistics

Below we compare all figures from the third quarter of 2019.

Consolidated traffic, measured in revenue passenger kilometers (RPKs), slipped 15.6% with 79.9% drop in international traffic. The metric increased 5.2% on the domestic front.
 
Consolidated available seat kilometers (ASK), measuring an airline's passenger-carrying capacity, decreased 10.8% with 74.9% plunge in international capacity. The same expanded 8.8% on the domestic front. Since traffic declined more than the amount of capacity contraction, load factor (percentage of seats filled with passengers) deteriorated 4.5 percentage points to 79.9%.

While Azul’s total revenues per ASK or RASK inched up 0.6%, passenger revenues per ASK or PRASK decreased 6.8%. Cost per ASK (CASK) ascended 16.8%. Jet fuel prices increased 28.6% from the third quarter of 2019 with oil prices moving north. CASK excluding fuel rose 14.4%. Average fare dipped 4.5% from the third quarter 2019’s figure.

Azul exited the third quarter with total passenger operating fleet of 160 aircraft. The average age of the fleet was 6.8 years. Contractual fleet size was 179.

Liquidity

Azul, carrying a Zacks Rank #4 (Sell), exited the September quarter with total liquidity of R$8.3 billion, flat with the June quarter. Gross debt increased 8.2% sequentially.

Performance of Other Airline Stocks

Gol Linhas Aereas Inteligentes (GOL - Free Report) , carrying a Zacks Rank #3 (Hold), incurred a loss (excluding $1.59 from non-recurring items) of 85 cents per share in the third quarter of 2021, in line with the Zacks Consensus Estimate. The amount of loss narrowed year over year.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gol Linhas’ net operating revenues of $366.4 million surpassed the Zacks Consensus Estimate of $334.2 million. The top line surged significantly year over year, with passenger revenues (accounting for 92.3% of total revenues) rising more than 100%, thanks to continued recovery in air-travel demand in Brazil as vaccination rates increase.

Ryanair Holdings (RYAAY - Free Report) , carrying a Zacks Rank #4, reported second-quarter fiscal 2022 (ended Sep 30, 2021) earnings of $1.16 per share, which fell short of the Zacks Consensus Estimate of $1.80. In the year-ago period, the company incurred adjusted loss of 12 cents per share due to coronavirus-led weakness in air-travel demand.

Ryanair’s quarterly revenues of $2,104 million also fell shy of the Zacks Consensus Estimate of $2,338.8 million. The top line increased significantly year over year with improvement in traffic, thanks to the rollout of the EU Digital Covid Certificates, which facilitate travel within the European Union during the pandemic. Easing of coronavirus-led travel restrictions also drove traffic.

Spirit Airlines (SAVE - Free Report) , carrying a Zacks Rank #4, reported third-quarter 2021 loss (excluding 83 cents from non-recurring items) of 69 cents per share, narrower than the Zacks Consensus Estimate of a loss of 95 cents and the year-ago loss of $2.32.

Spirit Airlines’ operating revenues of $922.6 million increased in excess of 100% year over year. This massive year-over-year jump reflects improving air-travel demand as COVID-19 cases fall and the threat of the Delta variant recedes in the United States. However, revenues were lower than the Zacks Consensus Estimate of $935.4 million.