Please ensure Javascript is enabled for purposes of website accessibility

Why Azul Stock Is Flying High Today

By Lou Whiteman – Nov 11, 2021 at 2:07PM

Key Points

  • Azul, hit hard by the pandemic in 2020, reported significant progress in rebuilding its operations in the most recent quarter.
  • Management sees more upside ahead as Brazilian vaccination rates improve and businesses get back to normal patterns.
  • Azul is also reportedly considering acquiring a rival out of bankruptcy, which could be a chance to quickly gain market share in Latin America.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Earnings came in better than expected, and airline management sees positive signs ahead.

What happened

Shares of Brazilian airline Azul (AZUL -0.74%) got a lift on Thursday following the company's third-quarter earnings report. Results came in much better than expected, and Azul stock traded up as much as 14% as a result.

So what

Azul, like most airlines, has struggled through the pandemic. But the company has performed much better than a lot of its Latin American rivals, and appears well positioned to gain share as a recovery takes hold.

A plane soars high above the clouds.

Image source: Getty Images.

The airline's third-quarter results did little to change that thesis. Azul reported a quarterly loss of $1.08 per share on revenue of 2.72 billion Brazilian reals (about $503 million), better than the $1.19-per-share loss on R2.44 billion ($452 million) in sales that was expected.

The revenue figure was up 59.6% from the previous quarter, and 237% higher than the same three months of 2020.

"We delivered a very positive result with significant improvement in capacity, revenue, and earnings compared to the previous quarter," CEO John Rodgerson said in a statement. "In the quarter, we recovered our unit revenue to pre-pandemic levels, one of the few airlines worldwide to have achieved this milestone already and having done so a full quarter ahead of our expectations."

Now what

Looking ahead, Rodgerson said that although currency exchange rates and rising fuel prices are a concern, he sees positive signs Brazil is beginning to move past the pandemic.

"Vaccinations continue to increase, Brazilian cities have reopened, companies are coming back to the office and international border restrictions have been lifted," the CEO said. "These improvements along with our unique fleet and network advantages renew the confidence in our plans for 2022."

Azul has navigated through the pandemic better than most, and the company is reportedly closing in on a deal to acquire at least part of a bankrupt rival to gain market share. The recovery won't be straight up from here, and investors should keep their belts fastened in anticipation of further turbulence, but Azul continues to be the best stock to own for investors interested in buying into a Latin American travel recovery.

Lou Whiteman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.