Opinion – Marcos de Vasconcellos: Good winds indicate that the aviation sector can take off on the Stock Exchange


The aviation industry has been brought to a hard landing in the pandemic. And it has found it difficult to take off. Shares such as Gol (GOLL4) and Azul (AZUL4) are currently sold at 21% and 26% of the price they had in January 2020, respectively. Now, the winds of the financial market announce good winds for companies to take new flights.

The fall in inflation measured in August —the biggest in 31 years—; the reduction of unemployment —which reached the lowest level since 2015—; and the growth of GDP (Gross Domestic Product) lead analysts to point to a return of consumption to pre-pandemic levels.

Of course, it’s not something overnight. The better scenario doesn’t mean you’re going to make the decision to fly to Guatemala next week. But it increases the chances that your family will discuss a travel package for their upcoming vacation.

For you to opt for an international tour instead of visiting a neighboring city, by car or bus, there is an essential point: the cost of the tickets. They have become more expensive like everything else in recent years of inflation. From August 2021 to August 2022 alone, the average ticket price rose 77%.

One of the main factors for this jump in prices is the costs of aviation kerosene (QAV). Responsible for a third of airline costs, this is the fuel for turbine-powered planes and helicopters. Not to be confused with aviation gasoline—used in small aircraft, such as those used in agriculture and private aviation.

From January to July this year, the price of the QAV rose 70.6%, according to a calculation by the Brazilian Association of Airlines (Abear), with data from Petrobras. Last year, fuel practically doubled in price, with a cumulative increase of 92%. And they forced companies to reduce their profit margins, to try to maintain some sales volume.

After this avalanche of price increases, finally some good news: just like regular gasoline, aviation kerosene is affected by international oil prices. The drop in the price of a barrel of Brent oil – which once cost US$ 123 (almost R$ 640) in June, and is now traded at close to US$ 93 (R$ 482) – brought relief to oil companies. air sector.

On the 26th, Petrobras announced a 10.4% reduction in the QAV price. This is precisely one of the main points to predict improvements in the stock price related to the sector in the short term, according to an analysis signed by BTG Pactual.

The bank, by the way, recommends the purchase of shares in both Gol and Azul, pointing out that both have the possibility of practically tripling in price.

Looking at last quarter’s figures, experts at JP Morgan said they expect a continued recovery in air travel globally.

This also influences (a lot) roles such as the travel agency CVC (CVCB3) and Embraer (EMBR3). Like airline stocks, these have accumulated a drop of more than 30% since the beginning of the year, while the Ibovespa rose almost 8%. Since July, however, they have all risen almost together, signaling a possible reversal after so many drops.

Like everything else in the stock market, betting on the resumption of the airline industry involves a series of risks for investors. A quick reading of the documents in which Azul and Gol list their “risk factors” show great concerns about the uncertainty generated by the presidential elections in Brazil, mainly due to the lack of clarity regarding the candidates’ proposals.

“If [Jair Bolsonaro] is reelected, we will not be able to predict which policies he will maintain”, says Azul. “If another candidate is elected, we will not be able to predict which policies may be modified or reversed”, he adds.

In short: it’s not that we’re under blue skies, but the fog that has prevented travel-related stocks from taking off so far seems to be dissipating.

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