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Azul's (AZUL) Traffic and Load Factor Increase in September

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Azul (AZUL - Free Report) released impressive traffic numbers for September on the back of upbeat demand for air travel. Consolidated traffic (measured in revenue passenger kilometers or RPKs) increased 31% year over year to 2.55 billion owing to 34.9% growth on the domestic front and 18.9% rise internationally.

On a year-over-year basis, consolidated capacity (measured in available seat kilometers/ASKs) expanded 30.8% to 3.06 billion mainly due to a 35.7% rise in domestic capacity.

The solid uptick in domestic traffic and capacity for September can be primarily attributed to Azul’s decision to operate flights on the busy Rio de Janeiro-São Paulo route from Aug 29, 2019.

With growth in consolidated traffic outpacing capacity expansion, consolidated load factor (percentage of seats filled by passengers) improved 0.1 percentage points to 83.3%. The increase in this key metric was due to the 2.7 percentage point increase in the international load factor to 87.7%.

In the first nine months of the year, this Latin American carrier registered RPK of 21.86 billion (up 21.5%) and ASK of 26.18 billion (up 19.4%). As a result, load factor increased to 83.5% from 82.1% in the comparable 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 32.4% compared with its industry’s 3.6% growth.

We expect Azul’s third-quarter 2019 results, scheduled to be released on Nov 7, 2019, to benefit from a solid uptick in passenger revenues, as was the case in the first two quarters. Notably, passenger revenues account for the bulk of the company’s top line.

 

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