After the Chamber of Deputies approved the return of free checked baggage on domestic and international flights last week, airline stocks are down today. The biggest drop is from Azul (AZUL4), with a drop of 7.97%, at R$ 20.22. Gol (GOLL4) lost 6.84%, quoted at R$ 14.17, around 2:45 pm.
Free baggage still needs to be voted on by the Senate, but the government wants to overturn the measure. Learn more below and see what to do with stocks.
The Minister of Infrastructure, Marcelo Sampaio, said in an interview with the newspaper Valor Econômico that President Jair Bolsonaro (PL) should veto an amendment that prohibits the charging of baggage by airlines, if the Senate approves the measure.
The amendment guarantees the right of passengers to check a suitcase weighing up to 23 kg on domestic trips and 30 kg on international flights. Today, passengers are entitled to a free carry-on bag of up to ten kilos, to take in the cabin. To check bags, companies may charge for the service.
The gratuity was included during the processing of the provisional measure of the Voo Simples program, launched in 2020 by the federal government to reduce bureaucracy in the air sector. Among the proposed changes are the elimination of the need for concession contracts for airlines, the end of the obligation to revalidate concessions every five years, and the end of the requirement for prior authorization for the construction of airfields.
Last week, during the conference call on Gol’s first quarter results, Paulo Kakinoff, the company’s president, said that about 60% of the company’s customers buy fares without luggage. Therefore, if the measure is approved, it could restrict consumers’ access to lower fares, as the costs of checking bags would be added to the tickets, he said.
“This occurs at a time when the sector is already facing cost pressures due to rising fuel prices and the devaluation of the real”, analyzed BTG, in a report.
And what to do with the shares?
Gol announced that it had a net profit of R$ 2.6 billion in the first quarter, reversing a loss of R$ 2.5 billion a year earlier.
Azul, which publishes results on the 9th, had total passenger traffic of 7.2 million in the first quarter of 2022, 32.9% more than in the same period of 2021.
BTG continues to recommend the shares of the two companies, as “the segment [de viagens domésticas] has been recovering faster than international travel.”
XP has a neutral recommendation for Blue and Goal.
