Azul's (AZUL) Q4 Earnings Surpass Estimates, Increase Y/Y

Azul’s (NYSE:AZUL) fourth-quarter 2019 earnings (excluding 94 cents from non-recurring items) of 95 cents beat the Zacks Consensus Estimate of 90 cents. Moreover, the bottom line increased more than 100% on a year-over-year basis.

Additionally, the top line came in at $790.3 that surpassed the Zacks Consensus Estimate of $735.2 million. Moreover, revenue increased 21.3% year over year.. Passenger revenues, accounting for bulk (95.3%) of the top line, rallied 32.4% year over year. Also, cargo revenues surged 34.3% in the reported quarter, mainly owing to e-commerce growth.

AZUL SA Price, Consensus and EPS Surprise

AZUL SA Price, Consensus and EPS Surprise

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

Operational Statistics

Consolidated revenue passenger kilometers (RPK), measuring revenues generated per kilometer per passenger, increased 31.1% year over year. The metric rose 31.9% and 28.8% on the domestic and international front, respectively.

Consolidated available seat kilometers (ASK), measuring an airline's passenger carrying capacity, increased 30.5% year over year. While domestic capacity expanded 30.2%, international capacity was up 31.2%.

Moreover, since traffic growth outpaced capacity expansion consolidated load factor (percentage of seats filled with passengers) moved up 40 basis points to 83.4% on year-over-year basis.

In the quarter under review, total revenues per ASK and passenger revenues per ASK, both inched up 1.5%, respectively, year over year. Meanwhile, cost per ASK declined 6.6% as the company added more fuel-efficient planes to its fleet as a cost-control measure. Moreover, fuel price per liter declined 10.7% in the December quarter. Moreover, CASM excluding fuel dropped 0.4% owing to 7.4% fall in other operating expenses. Average fare for the company increased 6.1% from the year-ago quarter’s figure.

Azul exited 2019 with an operating fleet size of 142 jets. The average age of the fleet is 5.8 years. Contractual fleet size was 166 (19 under finance leases and 147 under operating leases).

Liquidity

Azul, flaunting a Zacks Rank # 1 (Strong Buy), exited 2019 with total liquidity (cash, cash equivalents, short-term and long-term investments plus receivables) of R$4,273.5 million, up 5.7% year over year. However, total debt increased 35.7% to R$15,023.5 million. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks to consider

Few top-ranked stocks to consider in the transportation sector are GATX Corporation (NYSE:GATX) , Ryanair Holdings plc (NASDAQ:RYAAY) and Spirit Airlines, Inc. (NYSE:SAVE) . GATX sports a Zacks Rank # 1, whereas Ryanair and Spirit Airlines carry a Zacks Rank # 2 (Buy).

Long-term expected EPS (three to five years) growth rate for GATX, Ryanair and Spirit Airlines are 15%, 16.6% and 12.5%, respectively.

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