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AZUL Rides on Improving Air-Travel Demand, Expenses Ail

Azul S.A. AZUL is benefiting from a steady recovery in air-travel demand, both on the domestic and international fronts.

Azul incurred a loss (excluding $2.49 from non-recurring items) of 94 cents per share in the second quarter of 2022, wider than the Zacks Consensus Estimate of a loss of 75 cents. However, the loss narrowed year over year.

Total revenues of $800 million missed the Zacks Consensus Estimate of $805.4 million but increased more than 100% year over year as air-travel demand improved, courtesy of widespread vaccination programs in Brazil.

AZUL Price, Consensus and EPS Surprise

AZUL Price, Consensus and EPS Surprise
AZUL Price, Consensus and EPS Surprise

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

How is Azul Doing?

Azul has been seeing a steady rebound in air-travel demand, particularly in its domestic markets. Mainly owing to this improvement in domestic demand, consolidated traffic and capacity increased 63.8% and 59.6%, respectively, in the second quarter of 2022 from the comparable year-ago period levels.  Azul’s domestic traffic and capacity increased 50% and 51.6%, in the June quarter on a year-over-year basis. Azul’s international traffic and capacity surged more than 100% in the June quarter on a year-over-year basis.

With more people taking to the skies, Azul’s passenger revenues, contributing 90.7% to the top line, surged 151% year over year (on higher total capacity) in second-quarter 2022. The surge was driven by 59.6% higher total capacity.

Robust growth in e-commerce is boosting revenues at Azul’s cargo business unit. With e-commerce growth continuing in second-quarter 2022, cargo and other revenues rose 28.6% year over year, primarily owing to upbeat demand for Azul’s logistics solutions.

On the flip side, the company’s total operating expenses surged 80.2% in second-quarter 2022 from its year-ago levels. Majorly, aircraft fuel rose 178.7% in this segment. Such escalating operating expenses might hurt the bottom-line results.

Zacks Rank and Other Stocks to Consider

Currently, Azul carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Transportation sector that investors can consider are GATX Corporation GATX, Triton International Limited TRTN and Teekay Tankers Ltd. TNK, each carrying a Zacks Rank #2.

GATX Corporation has an expected earnings growth rate of 17.8% for the current year. GATX delivered a trailing four-quarter earnings surprise of 28.9%, on average.

The Zacks Consensus Estimate for GATX’s current-year earnings has improved 2.1% over the past 90 days. Shares of GATX have gained 7.9% over the past year.

Triton has an expected earnings growth rate of 22.4% for the current year. TRTN delivered a trailing four-quarter earnings surprise of 7.5%, on average. TRTN has a long-term expected growth rate of 10%.

The Zacks Consensus Estimate for TRTN’s current-year earnings has improved 4.2% over the past 90 days. Shares of TRTN have increased 20.9% over the past year.

Teekay Tankers has an expected earnings growth rate of 140.1% for the current year. TNK delivered a trailing four-quarter earnings surprise of 46.1%, on average. TNK has a long-term expected growth rate of 3%.

The Zacks Consensus Estimate for TNK’s current-year earnings has improved more than 100% over the past 90 days. Shares of TNK have soared 120.3% over the past year.


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