Send me real-time posts from this site at my email

Why Shares of Brazilian Airlines Azul and Gol Are Up Today

What happened

Brazilians returned to the skies in September, and that has the stocks of the country's airlines soaring higher on Tuesday. Shares of Gol Linhas Aereas Inteligentes (NYSE: GOL) were up 10% as of 1 p.m. EST today, while shares of Azul (NYSE: AZUL) were up 7.6%.

So what

Airlines worldwide have seen demand plummet due to the pandemic, but South American carriers have been hit particularly hard. Azul and Gol have both been able to avoid bankruptcy filings so far, and their latest monthly reports on travel demand would suggest that perhaps the worst is over.

Image source: Getty Images.

Gol said its planes were 80% full in September, with a key revenue metric up 36% from August. Azul saw passenger traffic increase 23.5% from August, also with 80% of seats filled. Gol did not fly any international flights during the month, while Azul operated a small international schedule and filled about 75% of its seats on those flights.

"Once again we continue to see an improvement in domestic passenger demand as we approach the strongest travel season in Brazil," Azul CEO John Rodgerson said in a statement. "September capacity was 42% of the same period last year, and in October we expect to reach approximately 55% of pre-COVID capacity."

Now what

It's getting more likely by the day that Azul and Gol will survive the COVID crisis, and that means the stocks are safe to own. Investors should be warned, though, that a recovery will take years, and Latin American airlines might take longer than others around the globe due to the importance of international travel in the region.

Shares of Gol and Azul are down 62% and 67% for the year, respectively. There's a case to be made to buy in now and wait out the crisis. But given how long a bounce back is likely to take, and the history of turbulence among Latin American airlines, I'd still prefer to watch this recovery from the sidelines.

10 stocks we like better than GOL Linhas Aereas Inteligentes
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and GOL Linhas Aereas Inteligentes wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 24, 2020

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.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue