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Azul (AZUL) Posts Increase in July Traffic and Load Factor

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Azul S.A. (AZUL - Free Report) delivered impressive traffic figures for July 2018. Consolidated traffic (measured in revenue passenger kilometers or RPKs) increased 22.6% to 2.4 billion owing to 44.2% rise on the international front and 16.2% rise on the domestic front.

On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) expanded 21.2% to 2.8 billion, owing to 40.7% growth in international capacity and 15.8% growth in domestic capacity.

Consolidated load factor (percentage of seats filled by passengers) was up 1 percentage points (pp) to 85.4% in July as traffic growth outpaced capacity expansion. Domestically, load factor increased to 83.5% from 83.2% a year ago. Load factor on the international front also increased to 91% from 88.8% in the year-ago period.

At the end of the first seven months of 2018, RPK was up 16.5% and ASK grew 16.2%. Also, load factor for the period increased to 81.9%, 0.2 pp higher than the tally in July 2017.

 

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The Brazilian carrier was also in the news for second-quarter 2018 earnings report released last week. The company incurred a loss of 11 cents (on an adjusted basis), as the results were affected by high fuel costs, devaluation of the Brazilian Real as well as the truckers’ strike. Meanwhile, operating revenues came in at $562.4 million on the back of high passenger revenues.

RPK and ASK rose 17.4% and 18.6% year over year during the quarter. The metrics expanded at the domestic and international levels.

Zacks Rank & Key Picks

Azul carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader Transportation Sector are Atlas Air Worldwide Holdings, Inc , GATX Corporation (GATX - Free Report) and Old Dominion Freight Line, Inc (ODFL - Free Report) . While GATX carries a Zacks Rank #2 (Buy), Atlas Air Worldwide and Old Dominion sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Atlas Air Worldwide, GATX and Old Dominion have gained 10.7%, 21.8% and 5.9%, respectively, in the past six months.

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