Region: Poor earnings likely to spur airline mergers

Latin America’s leading airlines have announced a 2nd quarter plagued by losses and missed targets, sparking talks of future mergers. Copa Holdings SA, based in Panama, announced a 20% drop on this quarter, their fourth consecutive quarter in the red. Likewise, Latin America’s largest airline by market share, Latam Airlines Group, is expected to announce a seventh consecutive quarter of losses.

Despite their efforts to reduce costs, and operating in one of the fastest-growing markets in the world, Latin America’s airlines have faced persistent losses over 3 years. Latam, Gol and Avianca Holdings are all trading near historic lows, while Copa’s stock in the United States fell by 42% this year.

Both Latam and Gol may be looking into merging operations with Copa, whose market share is valued at $3.2 bn. Merging with Copa would offer savings in operating costs, while diminishing the risks of currency drops- especially for Gol, which has been buffeted by a shaky economy, a weakened currency and Brazil’s political turmoil.

José Efrómovich, CEO for Avianca Brasil, has predicted that in time “there will only be half a dozen airlines in the region”.

Source: La Estrella

Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.


Please sign in or join us
to access premium content!