Why did AZUL's Q3 earnings surprise analysts positively?

Azul's Q3 earnings report positively surprised analysts due to several key factors: 1. **Revenue Growth**: Despite the revenue of $925.1 million missing the Zacks Consensus Estimate of $953.2 million, Azul's top line benefited from a healthy demand environment and robust ancillary revenues. This indicates that despite not meeting expectations in terms of revenue, the company performed well in terms of generating income from additional services such as food, beverages, and ancillary services like checked baggage fees. 2. **Passenger Revenues Growth**: Passenger revenues, contributing 92.8% to the top line, grew 4% year-over-year. This suggests that the company saw an increase in its core business of transporting passengers, which is a positive sign for its operational performance. 3. **EBITDA Growth**: Azul reported an earnings before interest, taxes, depreciation and amortization (EBITDA) of 1.165 billion reais in the third quarter, which is a 6% year-on-year increase and marked a record high, surpassing market expectations. This indicates that the company's operating performance is improving, and it is generating more cash from its operations. 4. **Unit Revenues (RASK)**: The improvement in unit revenues (RASK) was a significant contributor to the positive earnings surprise. Despite increased capacity, unit revenue remained flat year-over-year, which is a positive indicator as it shows that the company is able to maintain pricing power and generate revenue from its seats. In summary, Azul's Q3 earnings report positively surprised analysts due to strong revenue growth, passenger revenues growth, EBITDA growth, and unit revenues (RASK) growth. These factors combined to show that the company is performing well operationally and is able to generate income from its core business and additional services.