AZUL - Azul Is Still A Hold Despite The Lower Price And Gol's Bankruptcy
2024-04-03 23:10:42 ET
Summary
- Azul, one of the main Brazilian airlines, has posted strong Q4 and FY23 results, with revenues surpassing FY19 levels and achieving close to a 15% operating margin.
- The bankruptcy of competitor Gol is unlikely to lead to lower competition for Azul and better profitability. Instead, competition is expected to increase, leading to a decrease in Azul's current high margins.
- Azul's viability is questionable due to its high debt, lease payments, and the need to generate significant EBITDA to break even. The company's profitability and viability are fundamentally questioned by industry characteristics.
Azul ( AZUL ) is one of the three main Brazilian airlines.
I have been writing about Azul since December 2021 , when the stock traded at $14, always with a Hold rating, recommending not to buy. In my last article from November 2023 , I argued that despite Azul trading at an unjustified discount to Gol (a discount that later closed because the latter went bankrupt with its stock falling 90%), Azul was not an opportunity either....
Azul Is Still A Hold Despite The Lower Price And Gol's Bankruptcy