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LAN and TAM drop, GOL gains

Analysis

Latin American airline stocks were mixed yesterday, led lower by LAN and TAM (both down 1.8%).

Summary
  • Latin American airline stocks were mixed, with LAN and TAM experiencing a decline of 1.8%.
  • LAN's stock fell after announcing the suspension of its Santiago-Toronto service due to rising crude oil prices.
  • LAN also plans to increase ticket prices for its international routes by 8% to 12%.
  • Banco Santander SA warns that jet fuel costs could significantly impact the profitability of Latin American airlines.
  • GOL's shares remained virtually flat, with Zacks Equity Research reiterating its neutral recommendation.
  • US airline shares had mixed performance, with Hawaiian and Southwest declining by 0.8% and American Airlines increasing by 2.6%.

LAN's stock has fallen since it announced at the start of the week that it would suspend non-stop Santiago-Toronto service in early-Apr-2011 due to rising crude oil prices. In Feb-2011, the company stated it will increase ticket prices for its international routes between 8% and 12%.

Banco Santander SA stated jet fuel costs have the potential to "significantly impact" the profitability of Latin American airlines. Zacks Equity Research reiterated (28-Mar-2011) its neutral recommendation on GOL. Its shares were virtually flat.

US airline shares were mixed, led lower by Hawaiian and Southwest (both down 0.8%) and higher by American Airlines (+2.6%).

Selected American airlines daily share price movements (% change): 28-Mar-2011

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