What happened
Brazil's Azul (AZUL +0.00%) remains optimistic the airline's domestic market is in the early stages of a post-pandemic recovery, and the stock is flying higher as a result. Shares of Azul traded up as much as 5% on Monday.
So what
Azul and other airlines were hit hard in 2020, but Azul shares have bounced back in 2021 despite Brazil's continued trouble getting the pandemic under control. May, hopefully, marked a turning point, with cases beginning to fall. And the airline's monthly traffic report provided an indication the business is starting to improve.
Image source: Getty Images.
Azul said consolidated traffic increased 12.4% month over month. We still haven't reached pre-pandemic highs, with domestic passenger traffic in May representing 81.4% of 2019 levels, but the airline said it sees hopeful signs.
"In May, we focused our efforts to actively manage capacity according to the demand and we continue to see an improvement in domestic passenger traffic as the vaccination path moves forward," CEO John Rodgerson said. "The size and connectivity of our network combined with our fleet flexibility give us the unique ability to capture the maximum benefits of the demand recovery and optimize flight profitability."
Now what
Azul has proven itself to be among the airline winners of the pandemic, and the company appears poised to capitalize on its relatively good health. Last month Azul said it was looking at acquisition opportunities, and analysts expect the airline to make a bid on the Brazilian operations of bankrupt LATAM Airlines Group.
Rodgerson stressed the airline's size and scale as reasons it is benefiting from the nascent recovery. Presumably, more size and more scale via an acquisition would set the airline up well for the long term. There is still a lot of uncertainty to this recovery, and a merger out of bankruptcy would present its own near-term risks, but Azul investors have a lot to be excited about right now.
