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GOL surges on Brazilian air traffic recovery, Southwest gains on positive 2Q2010 outlook

Analysis

GOL's shares surged 8.7% yesterday as Brazil's National Civil Aviation Agency (ANAC) reported a 20.2% increase in domestic passenger traffic last month.

Summary
  • GOL's shares surged 8.7% following a 20.2% increase in domestic passenger traffic in Brazil.
  • TAM and GOL experienced year-on-year growth in domestic passenger traffic, with TAM at 9.4% and GOL at 14.9%.
  • WebJet and Azul saw significant growth in domestic passenger traffic, with WebJet at 88.3% and Azul at 71.3%.
  • International passenger traffic in Brazil increased by 21.0%.
  • TAM and GOL also experienced growth in international passenger traffic, with TAM at 22.5% and GOL at 11.5%.
  • Southwest Airlines gained 2.6% in share price following positive comments by its CFO regarding revenue improvement and cost-cutting measures.

ANAC reported the following traffic highlights in May-2010 (NB: This data is presented each month in CAPA's America Airline Daily report):

  • Passenger traffic (RPKs):
  • Load factor:
    • Domestic: 60.3%, +1.1 pt;
      • TAM: 57.1%, +0.4 ppt;
      • GOL: 58.8%, -0.8 ppt;
      • WebJet: 70.4%, +7.8 ppts;
      • Azul: 85.8%, +6.6 ppts;
      • Avianca: 76.2%, +7.6 ppts;
      • Trip: 64.4%, +7.5 ppts;
      • Passaredo: 59.8%, -6.5 ppts;
      • Pantanal: 63.0%, +8.6 ppts;
      • Puma Air: 24.1%, -22.4 ppts;
      • Total: 83.3%, +1.3 ppt;
      • Air Minas: 53.1%, -2.5 ppts;
      • NHT: 43.3%, -2.8 ppts;
      • SETE*: 63.0%, n/a;
      • Team: 38.1%, -2.6 ppts;
      • SOL**: 46.4%, n/a;
      • Abaete: 56.9%, -2.3 ppts;
    • International: 74.2%, +11.8 ppts;
      • TAM: 77.9%, +12.3 ppts;
      • GOL: 55.3%, +8.2 ppts.

*SETE started reporting their results in Jun-2009 **Commenced operations in Oct-2009

In the domestic market, TAM held a 40.9% share in May-2010, while GOL had a 40.2% share, according to ANAC. Webjet had a 6.3% share, Azul Linhas 5.9% and OceanAir 3.2%.

Southwest gains altitude

Elsewhere, Southwest gained 2.6% on fairly bullish comments by Chief Financial Officer Laura Wright, speaking at the Bank of America Merrill Lynch Global Transportation conference in New York yesterday. See related report: Southwest focusing on improving revenues and cutting costs in 2Q2010, but economic concerns persist

Selected LCCs daily share price movements (% change): 15-Jun-2010

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