Azul's October Traffic & Load Factor Up On Solid Demand

Azul S.A. (NYSE:AZUL) released strong traffic numbers for October, highlighting solid demand for its services. Consolidated traffic (measured in revenue passenger kilometers or RPKs) surged 36.3% year over year to 2.67 billion owing to 40.1% growth on the domestic front and a 23.3% rise, internationally. On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) expanded 33.3% to 3.17 billion, driven by 36.3% and 22.6% increase in domestic and international capacity, respectively.

With traffic growth outpacing capacity expansion, load factor (percentage of seats filled by passengers) improved a commendable 180 basis points (bps). While domestic load factor jumped 230 bps, international load factor climbed 50 bps. Following this impressive performance, shares of the company gained more than 2% in after-hours trading on Nov 6.

On a year-to-date basis, the carrier registered RPK of 24.53 billion (up 22.9%) and ASK of 29.35 billion (up 20.8%). Consequently, load factor inched up to 83.6% from 82.1% in the year-ago period.

Amid robust air travel demand in Latin America, Azul’s performance has been consistently impressive on the traffic front over the past several months. Owing to this passenger demand, the carrier’s top line has been benefiting from surging passenger revenues. Shares of the company have rallied 53.1% in a year’s time, significantly outperforming the industry’s 2.1% rise, primarily owing to the above-mentioned tailwind.

Zacks Rank & Key Picks

Azul carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are Allegiant Travel Company (NASDAQ:ALGT) , Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) and LATAM Airlines Group S.A. (NYSE:LTM) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Allegiant, Controladora Vuela and LATAM Airlines have rallied more than 39%, 73% and 17%, respectively, in a year’s time.

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