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Azul's August Traffic & Load Factor Up on Robust Travel Demand

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Azul (AZUL - Free Report) released impressive traffic numbers for August on the back of upbeat demand for air travel. Consolidated traffic (measured in revenue passenger kilometers or RPKs) increased 26.4% year over year to 2.67 billion owing to 32.3% growth on the domestic front and 11.2% rise internationally.

On a year-over-year basis, consolidated capacity (measured in available seat kilometers/ASKs) expanded 25.6% to 3.22 billion mainly due to a 30.1% rise in domestic capacity.

With traffic growth outpacing capacity expansion, load factor (percentage of seats filled by passengers) improved a 0.6 percentage points to 83%. While domestic load factor improved 1.4 percentage points to 82.6%, international load factor contracted 150 percentage points to 84.2%.

On a year-to-date basis, this Latin American carrier registered RPK of 19.31 billion (up 20.3%) and ASK of 23.12 billion (up 18%). As a result, load factor increased to 83.5% from 81.9% in the year-ago period.

Currently, Azul, which competes with the likes of Copa Holdings (CPA - Free Report) , LATAM Airlines (LTM - Free Report) and GOL Linhas (GOL - Free Report) in the Latin American aviation space, carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, shares of Azul have outperformed its industry, courtesy of upbeat travel demand. The stock has appreciated 30.5% compared with its industry’s 3.8% growth.

Notably, passenger revenues, which account for the bulk of the top line at Azul, increased 15.3% and 30.5% during the first and second quarters of 2019, respectively. The uptrend is likely to continue in the remainder of 2019 owing to upbeat travel demand.

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