Azul (AZUL) Posts A Rise In January Traffic, Load Factor Down

Azul S.A. (NYSE:AZUL) posted mixed traffic numbers for January 2019. In spite of traffic increasing on the back of strong demand for air travel, load factor (percentage of seats filled by passengers) declined as traffic growth was outweighed by capacity expansion.

Consolidated traffic (measured in revenue passenger kilometers or RPKs) improved 13.5% year over year to 2.6 billion on 11.2% rise on the international front and 14.3% growth on the domestic front. On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) expanded 15.9% to 3.1 billion, owing to 16.7% growth in international capacity and 15.7% rise in domestic capacity.

However, consolidated load factor contracted 1.9 percentage points (pp) to 83.5%. Load factor on the international front declined to 87.1% from 91.4% in the year-ago period. Domestically, load factor slipped to 82.4% from 83.4% in the prior-year period.

Apart from the traffic report, the Brazilian carrier was recently in the news, courtesy of its fleet renewal and modernization plan for 2019. To this end, the carrier intends to add 21 next-generation aircraft in its fleet this year. Apart from adding new planes, this carrier is replacing outdated ones as part of its fleet modernization efforts. Azul’s fleet modernization efforts are in sync with its goal of improved operational efficiency. Apart from boosting connectivity, the plan is likely to drive revenues and reduce cost per seat. (Read more: Azul Ramps up Fleet Renewal Process to Boost Efficiency)

Zacks Rank & Other Stocks to Consider

Azul currently sports a Zacks Rank #1 (Strong Buy).

Investors interested in the broader Transportation Sector may consider Air France-KLM SA (OTC:AFLYY) , Frontline Ltd. (NYSE:FRO) and Expeditors International of Washington, Inc. (NASDAQ:EXPD) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Air France have improved 18.7% in the past six months. Meanwhile, Frontline and Expeditors boast an impressive earnings history. Frontline outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average being 69%. Expeditors outpaced the consensus estimate in each of the trailing four quarters with an average of 12.2%.

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