Shares of Azul SA (NYSE:AZUL) soared 12.4% on Friday after the Brazilian airline reported improved operating metrics for June. The results were a fresh indication that Brazil's domestic airlines are benefiting from a competitor's financial issues.
Azul, which is perhaps best known in the U.S. for being launched by JetBlue Airways founder David Neeleman, said that June traffic was up 21.6% year over year. Capacity was up 14.7% compared to a year prior, and the airline is succeeding in filling more of its seats.
The airline's June load factor -- the percentage of available seats that are sold -- was 83.6% for the month, an increase of 480 basis points over the same period last year, and international load factor hit 87.5%.
Azul is the second Brazilian airline to get a boost from strong June numbers. The entire domestic industry is benefiting from financial troubles at Avianca Holdings, which resulted in the Colombia-based company's Brazilian operations being suspended in late May.
"Changing competitive dynamics in the Brazilian airline sector combined with the organic growth of our network resulted in strong traffic results for the month of June," Azul CEO John Rodgerson in a statement.
Rodgerson said he expects the positive trends to continue in July, which is the high season for Azul. The company has a growing fleet of new, fuel-efficient Airbus A320neos to help it compete against older, more established rivals.
The results caused Raymond James to boost the bank's price target on Azul shares to $40 from $37, with the research team writing that, with the demise of Avianca's Brazilian arm, there are opportunities for Azul to grow margins.