Brazilian low-cost airline Gol Linhas (GOL) and American Airlines (AAL) have signed an exclusive codeshare agreement for the next three years. As per the agreement, American Airlines will make an equity investment of $200 million in Gol.
Headquartered in Rio de Janeiro, Gol offers air transportation services for passengers and cargo across Brazil and Latin America. The company’s shares gained 3.6% to close at $7.58 on Wednesday. (See Gol stock chart on TipRanks)
Texas-based American Airlines provides mail, freight and passenger transport services through its wholly-owned subsidiaries to various destinations in Asia, Europe, Latin America, North America and the Caribbean.
The airlines already have a codeshare partnership in place since 2020 that allows Gol’s customers to travel to over 30 destinations in the U.S. Flights under the current agreement operate in Gol’s hubs in Rio de Janeiro and Sao Paulo. (See American stock chart on TipRanks)
The new codeshare agreement expands beyond the terms of the existing partnership, thereby enhancing customer experience, travel opportunities for their passengers and Gol’s competitive position on routes connecting South and North America.
The CEO of Gol, Paulo Kakinoff, said, “We believe that this will bolster Gol’s presence in international markets, accelerate our long-term growth, and maximize value for our shareholders.”
The President of American Airlines, Robert Isom, said, “Our long-haul network marries seamlessly with Gol’s strong domestic network in Brazil.”
Last month, Credit Suisse analyst Alejandro Zamacona Urquiza assumed coverage on Gol with a Sell rating. The analyst did not provide a price target.
Urquiza said, “Gol may be the main beneficiary from the potential traffic recovery in the business segment in Brazil, given its strong network position in São Paulo, Rio de Janeiro and Brasília. However, lean FCF generation, increased competition from Azul, weak liquidity position, heavy cost structure, and unclear ESG focus make us less constructive for the time being.”
Overall, the stock has a Moderate Sell consensus rating based on 1 Hold and 2 Sells. The average Gol Linhas price target of $8.10 implies 6.9% upside potential. The company’s shares have lost 16.2% year-to-date.
Two months ago, Berenberg Bank analyst Adrian Yanoshik upgraded American Airlines to a Hold from Sell and raised the price target to $19 from $16 (2% downside potential).
In a research note to investors, Yanoshik said, “The valuations of the U.S. airlines look less stretched following the recent share weakness.”
Overall, the stock has a Hold consensus rating based on 3 Buys, 6 Holds and 2 Sells. The average American Airlines price target of $21.17 implies 9.2% upside potential. Shares of the company have gained 40.4% over the past year.
Related News:
Wells Fargo Gains 1.3% on New Digital Infrastructure Strategy
Roblox’s Daily Active Users Rise 32% in August
Pentair to Acquire Pleatco for $225M; Shares Rise 2.4%
