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Azul (AZUL) Shares Up 18% Despite Wider-Than-Expected Q2 Loss

Zacks Equity Research
·4 min read

Azul S.A. 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.

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). Cargo and other revenues rose 28.6% year over year, primarily owing to upbeat demand for Azul’s logistics solutions.

AZUL Price, Consensus and EPS Surprise

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

Operating Statistics

Consolidated traffic, measured in revenue passenger kilometers (RPKs), surged 63.8% (up 50% in domestic & more than 100% on the international front) year over year. International traffic surged more than domestic traffic.

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Consolidated available seat kilometers (ASK), measuring an airline's passenger-carrying capacity, rose 59.6% from the same-period level last year with a 158.4% rise in international capacity. The same expanded 51.6% on the domestic front. Since traffic surge was more than the amount of capacity expansion, the load factor (percentage of seats filled with passengers) rose 2.1 percentage points to 78.7%.

While Azul’s total revenues per ASK or RASK soared 44.5%, passenger revenues per ASK or PRASK increased 57.3% year over year. Results were driven by a strong domestic demand environment in Azul’s markets. Cost per ASK (CASK) increased 12.9% from the second-quarter 2021 reported figure to 38.89 cents, mainly due to a rise in jet fuel prices. Jet fuel prices increased 80.9% from the second quarter of 2021, with oil prices moving north. CASK excluding fuel fell 12.3% to 21.46 cents. Average fare surged 64.2% from second-quarter 2021 figure.

Azul exited the second quarter of 2022 with a total passenger operating fleet of 167 aircraft. The average age of the fleet was 7.1 years. The contractual fleet size was 179.

Liquidity

Azul exited the June quarter with total liquidity of R$7 billion. Gross debt increased 8.2% sequentially.

Currently, Azul carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Transportation Companies

Delta AirLines’ DAL second-quarter 2022 earnings (excluding 29 cents from non-recurring items) of $1.44 per share fell short of the Zacks Consensus Estimate of $1.71. Escalated operating expenses induced the earnings miss. Multiple flight cancellations in May and June also hurt results. The earnings miss disappointed investors, resulting in the stock shedding value in early trading. In the year-ago quarter, Delta incurred a loss of $1.07 per share when air-travel demand was not as buoyant as in the current scenario.

DAL’s revenues came in at $13,824 million, which not only beat the Zacks Consensus Estimate of $13,608.9 million and soared 94% from the year-ago quarter’s figure as air-travel demand rebounded from the pandemic lows. The uptick in air-travel demand in the United States can be gauged from the fact that 75.9% of second-quarter 2022 passenger revenues came from the domestic markets.

J.B. Hunt Transport Services, Inc. JBHTreported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

JBHT’squarterly earnings of $2.42 per share surpassed the Zacks Consensus Estimate of $1.61 and improved 50.3% year over year.

JBHT’stotal operating revenues of $3,837.53 million also outperformed the Zacks Consensus Estimate of $2,908.37 million. The top line jumped 32% year over year on the back of strength across all segments. JBHT’s total operating revenues, excluding fuel surcharges, rose 21.2% year over year.

CSX Corporation (CSX)reported better-than-expected second-quarter 2022 results, wherein both earnings and revenues outperformed the Zacks Consensus Estimate.

CSX’s quarterly earnings of 50 cents per share (excluding 4 cents from non-recurring items) beat the Zacks Consensus Estimate of 47 cents and improved 25% year over year.

CSX’s total revenues of $3,815 million outperformed the Zacks Consensus Estimate of $2,990 million. The top line increased 28% year over year on the back of higher revenues in almost all markets, driven by pricing gains, fuel surcharge, and contribution from the acquisition of Quality Carriers. CSX’s overall revenues per unit increased 27%.


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