AZUL's Q1 Earnings and Revenues Fall Short of Expectations

Azul S.A. (AZUL) incurred a loss of $2.18 per share in the first quarter of 2025,in contrast to the Zacks Consensus Estimate of earnings of 4 cents per share. Loss per share was 57 cents in the first quarter of 2024.

Total revenues of $920 million lagged the Zacks Consensus Estimate of $925 million. AZUL’s first-quarter 2025 revenues benefit from a healthy demand environment, robust ancillary revenues and the outstanding performance of its business units. With more people taking to the skies, Azul’s passenger revenues, contributing 93% to the top line, grew 15.2% year over year.

Cargo revenues and other grew 17.3% year over year, driven by improved performance and the recovery of AZUL’s international operations. In first-quarter 2025, international cargo revenues reported a solid 62% year-over-year growth, with a healthy EBITDA that more than doubled year over year.

AZUL’s Other Q1 Details

Consolidated traffic, measured in revenue passenger kilometers (RPKs), rose 19.4% (up 14.7% domestic and 38.3% on the international front) year over year. Consolidated available seat kilometers (ASK), measuring an airline's passenger-carrying capacity, increased 15.6% from the year-ago quarter, with a 10.2% rise in domestic capacity and a 39.2% surge in international capacity. Since traffic outpaced the capacity expansion, load factor (percentage of seats filled with passengers) grew 2.6 percentage points to 81.5%.

Azul’s total revenues per ASK or RASK were R$42.14 cents, down 0.2% year over year. Passenger revenues per ASK or PRASK decreased 0.4% year over year. 

Fuel cost per liter grew 3% year over year.

Cost per ASK (CASK) grew 7.6% from the first-quarter 2024 reported figure. The upside was due to the 18% average depreciation of the Brazilian real against the US dollar, 5.5% inflation over the last 12 months, an increase in AZUL’s international operations (which have higher airport fees and distribution costs) and growth of AZUL’s fleet (which increased depreciation). These were partially offset by several cost-reduction initiatives related to productivity, as well as lower fuel burn from the next-generation aircraft in AZUL’s fleet.

CASK, excluding fuel, grew 11.5% year over year. Average fare grew 4.9% from the year-ago quarter figure.

Operating expenses of R$4.82 billion grew 24.4% year over year, due to the 15.6% increase in total capacity, an 18% depreciation of the Brazilian real against the US dollar and a 3% increase in fuel price. These were offset by higher productivity and cost-reduction initiatives.

Azul exited the first quarter with total liquidity of R$6.66 billion compared with R$7.49 billion at the end of the prior quarter. Gross debt increased to R$34.6 billion from R$33.6 billion at the end of the prior quarter.

AZUL’s Zacks Rank

Currently, AZUL carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Key Sectoral Player to Report Q1 results

We note that another player from the broader Zacks Transportation sector, ZIM Integrated Shipping Services Ltd. (ZIM), will report its first-quarter earnings numbers later this month. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

ZIM is scheduled to report first-quarter 2025 earnings on May 19. ZIM’s quarterly performance is likely to have been aided by continued fleet expansion initiatives. Reduced container availability due to tensions in the Red Sea is expected to increase freight costs. This is anticipated to have aided ZIM, which provides services to East Mediterranean and Israeli ports. Revenues and carried volumes are expected to have surged due to the disruptions. Lower capacity is anticipated to have boosted earnings.

ZIM’s bottom-line performance is likely to have been hit by escalated voyage operating costs. High labor costs are also likely to have been a spoilsport. Geopolitical risks pose operational challenges and might hurt results.

ZIM has outpaced the Zacks Consensus Estimate for earnings in three of the last four quarters (missing the mark in the remaining quarter). The average beat is 19.32%.

Q1 Performances of Other Transportation Companies

United Airlines

United Airlines’ UAL first-quarter 2025 earnings per share (excluding 25 cents from non-recurring items) of 91 cents surpassed the Zacks Consensus Estimate of 75 cents. In the year-ago quarter, the Chicago-based airline reported a loss of 15 cents per share. 

Operating revenues of $13.21 billion fell marginally short of the Zacks Consensus Estimate of $13.22 billion. The top line increased 5.4% year over year despite the tariff-induced slowdown in domestic air travel demand. Passenger revenues (which accounted for 89.7% of the top line) rose 4.8% year over year to $11.9 billion. UAL flights transported 40,806 passengers in the first quarter, up 3.8% year over year.

Delta Air Lines

Delta Air LinesDAL reported first-quarter 2025 earnings (excluding 9 cents from non-recurring items) of 46 cents per share, which surpassed the Zacks Consensus Estimate of 40 cents. Earnings increased 2.2% on a year-over-year basis due to low fuel costs.

Revenues in the March-end quarter were $14.04 billion, surpassing the Zacks Consensus Estimate of $13.81 billion and increasing 2.1% on a year-over-year basis. Adjusted operating revenues (excluding third-party refinery sales) rose 3.3% year over year to $13 billion.

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