Azul Airlines Faces Q4 Loss: A Turbulent Quarter Reflected in the Skies

Azul S.A. AZUL grappled with a loss of 47 cents per share in the fourth quarter of 2023, missing the Zacks Consensus Estimate of a 22 cents deficit. This red ink contrasts sharply with the 83 cents per share loss from the same period in 2022.

While Azul’s total revenues of $1,015.6 million fell slightly short of the Zacks Consensus Estimate of $1,016.8 million, a silver lining emerged in the year-over-year revenue growth. The boost was fueled by a robust surge in passenger revenues and solid contributions from ancillary businesses, notably the continuous ascent of domestic cargo revenues and Azul’s vacation arm, Azul Viagens.

As the skies filled with more travelers, Azul’s passenger revenues – making up 92.7% of the total revenue stream – soared by 13.2% year over year, owing to expanded total capacity. In tandem, cargo and other revenues climbed by 9.5% compared to the same period last year.

AZUL Price, Consensus and EPS Surprise

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

Operating Statistics

Measured in revenue passenger kilometers (RPKs), Azul’s consolidated traffic surged by 9.1% year over year (rising by 4.4% domestically and a staggering 28.2% internationally). Concurrently, consolidated available seat kilometers (ASK) – an index measuring an airline’s passenger-carrying capacity – expanded by 6.5% compared to the same period last year. This included a 2.5% growth in domestic capacity and an impressive 23.9% international expansion. Thanks to the surge in traffic outpacing capacity expansion, the load factor, indicating the percentage of seats filled with passengers, climbed by 1.9 percentage points to reach 80%.

The airline’s total revenues per ASK (RASK) and passenger revenues per ASK (PRASK) elevated by 6.1% and 6.3% respectively when compared to the previous year.

Cost per ASK (CASK) reduced marginally by 0.9% from the fourth quarter of 2022 to 37.35 cents. Notably, fuel cost per liter shrunk by 17.3% from the corresponding quarter of 2022. However, CASK, excluding fuel costs, witnessed a 14.7% surge, escalating to 23.72 cents.

The average fare ticket price witnessed a 9.3% upturn from the fourth quarter of the previous year.

Liquidity

For the last quarter, Azul closed with a total liquidity of R$6.11 billion, even as the gross debt amplified by 6.3% compared to the previous year.

2024 Guidance

Looking ahead to a clearer sky in 2024, Azul projects an almost 11% surge in capacity year over year. This projected growth stems from the sustained strong demand environment and the ongoing execution of AZUL’s fleet transformation strategy.

Moreover, the airline estimates the 2024 EBITDA to hover around R$6.5 billion, surpassing the preceding guidance of R$6.3 billion. This upward revision is backed by the flourishing demand landscape in both the domestic and international arenas, the favorable trend in fuel prices, the expected capacity expansion, and a higher influx of fuel-efficient aircraft into the fleet.

Presently perched at Zacks Rank #3 (Hold), Azul’s future trajectory is watched keenly by industry observers.

Performance Snapshot of Industry Players

J.B. Hunt Transport Services, Inc. JBHT saw its fourth-quarter 2023 earnings drop to $1.47 per share, missing the Zacks Consensus Estimate and slashing 23.4% from the previous year.

JBHT’s total operating revenues of $3,303.7 million outpaced the Zacks Consensus Estimate but plummeted by 9.5% year over year, with total operating revenues excluding fuel surcharge revenue dipping by 6% year over year.

Meanwhile, Delta Air Lines DAL outperformed earnings expectations in the fourth quarter of 2023, clocking in at $1.28 per share (excluding a $1.88 boost from non-recurring items). Although this figure surpassed the Zacks Consensus Estimate, earnings underwent a 13.51% downturn year over year, largely due to escalating labor costs.

The carrier’s revenues nudged upward to $14,223 million, topping the Zacks Consensus Estimate and marking a 5.87% year-over-year ascent, fueled by heightened holiday-air-travel demand. Adjusted operating revenues, excluding third-party refinery sales, reached $13,661 million, up by 11% year over year.

United Airlines Holdings, Inc. UAL delivered fourth-quarter 2023 earnings per share of $2.00 after excluding 19 cents from non-recurring items. This figure outmatched the Zacks Consensus Estimate but fell by 18.7% compared to the previous year.

UAL’s operating revenues of $13,626 million exceeded the Zacks Consensus Estimate and registered a 9.9% spike year over year, boosted by a robust demand for air travel. Notably, a 10.9% upsurge in passenger revenues, constituting 91.1% of the total revenue, swelled to $12,421 million. Almost 41,779 passengers buckled up and traveled on UAL flights during the fourth quarter.

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