GOL Launches Flights to Bauru - Analyst Blog

Latin America's largest low-cost and low-fare airline, GOL Linhas Aereas Inteligentes S.A. (GOL), has begun selling tickets for the city of Bauru, to the west of the Sao Paulo state. There will be five flights per week from Congonhas Airport in Sao Paulo city, beginning on February 1, 2010.

Bauru is the biggest city in western Sao Paulo and one of the leading economic centers in the state, with a GDP of R$ 5.3 billion. It is 345 km from Sao Paulo city and has a population of around 359,500 people. The new route to Congonghas will benefit clients from the entire surrounding region by connecting them immediately with the country's main business markets including Belo Horizonte (Confins), Brasilia, Curitiba, Florianopolis, Navegantes, Porto Alegre, Rio de Janeiro and Salvador.

GOL remains well positioned to capitalize on the discounted air travel in Brazil and the rest of Latin America given its strong market share and efficient operations. We expect GOL to experience growth in the short-to-medium term, given its continued investment in fleet renovation and international agreements. However, airlines all over the world are facing difficulties, primarily due to the collapse of the global economy. Declining business and leisure travel are affecting the airline’s business to a great extent.

Nevertheless, Latin American and Chinese airline stocks have performed well in 2009. We believe that 2010 may be another profitable year for the airlines industry in emerging markets, provided the overall economy continues to grow. Current estimates for 2010 suggest that the economic growth in emerging markets will be higher than in developed markets. Thus, we maintain an Outperform recommendation on the stock.

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