What happened
Shares of Brazilian airline Azul (AZUL -3.76%) were up more than 7% as of late afternoon trading. The move comes after the release of its July traffic figures. I've summarized the key numbers below; Azil's domestic traffic numbers are not only significantly ahead of the same period last year but also ahead of the last "normal" period, the pre-pandemic year of 2019.
However, the big news comes from the strength of the recovery in international travel, which stood at 69% of July 2019's level.
|
Azul Passenger Traffic (revenue passenger kilometers) |
July 2022 |
July 2021 |
July 2019 |
|---|---|---|---|
|
Domestic |
2,607 million |
2,205 million |
2,187 million |
|
International |
534 million |
139 million |
775 million |
|
Total |
3,141 million |
2,344 million |
2,962 million |
Data source: Azul presentations.
So what
It's excellent news for two reasons. First, the recovery in domestic air travel has led international due to the latter's being more exposed to the vagaries of travel restrictions between countries. Therefore, the fact that international traffic is coming through is a sign that conditions are finally starting to normalize across the industry.
Second, leading airlines like Delta Air Lines have confirmed that higher-margin business travel and premium products are returning strongly. Azul's strong international figures align with the general trend of improvement in premium-priced travel.
Now what
So far, the aviation industry has held up very well even as there are clear signs of weakness elsewhere in consumer spending. Hopefully, that trend will continue for Azul through the rest of 2022 and beyond.
