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Copa Holdings, S.A. (CPA), Gol Linhas Aereas Inteligentes SA (ADR) (GOL), Delta Air Lines, Inc. (DAL): 3 Stocks in the Airline Market

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According to International Air Transport Association (IATA) international traffic was up 6% in March, while domestic traffic grew 5.7%. Airlines operate in a very competitive environment, where costs have been moving up while pricing power is limited and passenger traffic is very sensitive to tariff increases. This makes successful strategic decisions and special advantages a key to outperform competitors.

Three companies to take into account:

Based in Panama City, Copa Holdings, S.A. (NYSE:CPA) strategic location facilitates access to the entire region. With its operating margin of 17.6% in 2012, it ranked as one of the most profitable in the global airline industry.

Copa Holdings, S.A. (NYSE:CPA)’s CEO, Pedro Heilbron, said recently that he expected the carrier to retain its advantage transferringpassengers to and from Latin America because of the infrastructure and congestion constraints faced by rivals.

Brazil is hosting of the soccer World Cup next year and the summer Olympics in 2016, which has raised awareness about the poor airport infrastructure in the region. Panama’s state-controlled airport operator has, in contrast, invested heavily in Tocumen International Airport, which just over half of Copa’s passengers use to transit to and from parts of the Americas.

According to April’s statistics, its RPM (Revenue Passenger Miles) increased 18.3% year-over-year and its ASM (Available Seat Miles) increased 20%.

Copa Holdings, S.A. (NYSE:CPA) is growing its strategic alliance or code-sharing arrangement with Continental Airlines. This means that a lot of additional traffic is directed to Copa Holdings, S.A. (NYSE:CPA) without any effort. Copa invested in a Colombian airline to start international service from South America’s third most-populous country, but there are no immediate plans to replicate this elsewhere.

Based in Brazil, Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL), the largest low-cost and low-fare airline in Latin America, operates flights to South America, Caribbean and the US under the GOL and VARIG brands.

The company has been experiencing losses due to a rise in fuel costs and landing fees at Brazilian airports with currency depreciation. About 73% of its debt is denominated in dollars.

Gol Linhas Aereas Inteligentes SA (ADR) (NYSE:GOL) said it is studying the possibility of a new route between Brazil and Nigeria, in Africa. Inside Brazil, Gol recently doubled its number of flights in Campinas. The company targets to connect the southeastern region of Brazil with the rest of the country via Campinas.

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