Shares of Azul (NYSE:AZUL) are flying higher today, up by 10% as of 12:45 p.m. EST, after the Brazilian airline reported third-quarter earnings. The results missed expectations, but the company is optimistic about the travel industry's recovery.
Revenue in the third quarter doubled on a sequential basis to 805.3 million Brazilian reals ($148.3 million), which missed the consensus estimate of 937.3 million reals ($172.3 million). That resulted in a net loss of 1.2 billion reals, or 3.57 reals per share, which was worse than the 2.12 reals per share in red ink that analysts were expecting. That bottom-line result translates into a net loss of $1.99 per American depositary receipt (ADR).
Brazil has been among the countries hardest hit by the coronavirus pandemic, with nearly 6 million cases. Moderna announced this morning that its COVID-19 vaccine candidate has demonstrated 94.5% efficacy in early trials, sparking more hopes that the world will soon defeat the virus and slowly return to normal.
The regional airline operator, which provides both passenger and cargo transportation services, said that domestic demand has been recovering. Domestic capacity in September was 49% compared to a year ago, but Azul expects that figure to top 80% by December. The company said that the health and safety procedures it has put in place helped increase customer confidence.
"On the capacity side, we made significant progress during the quarter," CEO John Rodgerson commented. "The health and safety of our passengers is our number one priority, and this perception by the customers has been contributing to the recovery of domestic demand in Brazil, one of the fastest in the world."