After 80% devaluation, airlines have uncertain future

Covid-2019 coronavirus infected the financial market, but no industry has felt its lethality potential as much as airlines. Although the financial impacts are still immeasurable, the sector already suffers billions in losses on the stock exchanges. Since the beginning of the year, Delta Air Lines, one of the world's leading airlines, has seen its shares plummet 63 percent and its market value shrinks by $24 billion. With similar devaluation, its competitor American Airlines lost $7.9 billion in market capitalization. In the same period, the S&P 500, the u.S. market's leading benchmark index, fell 25.4 percent. With restricted travel and closed borders to combat the disease's advance, the sector is experiencing the worst crisis in recent years. Only since the beginning of March, the two publicly traded airlines in B3, GOL and Azul, had respective falls of 82.6% and 78.8%, while the Ibovespa fell 40.9%. At risk of not being able to pay all their expenses due to the sharp reduction in revenue, the sector has received special attention from governments. Here, provisional measure 925/2020 was published on Wednesday, 18, which increases the repayment period for cancelled trips from seven days to twelve months. Adriana Simões, a partner at the law firm Mattos Filho and an expert in Aeronautical Law, considers the MP positive for airlines, but far from being enough to save them from the crisis. "This gives a breath to the airlines. It's a first step, but they're going to need a lot more help." For the lawyer, one of the most urgent measures would be a credit line with special conditions. "This would help maintain working capital for them to operate during that time." If new stimuli do not come, it does not rule out the possibility of bankruptcies in the sector. "With the size of the crisis we are experiencing, anything is possible." Simões also does not disregard the chance of Azul and Gol being bought by a company from another country, since in 2019, ANAC allowed Brazilian airlines to be formed by up to 100% foreign capital. As if the coronavirus effect were not enough, Brazilian companies still need to deal with the appreciation of the dollar, which already enters the 5.10 reais. "The rise in the dollar always hinders the sector because fuel [which accounts for about 30% of the sector's expenditures] is dollarized," said Henrique Esteter, an analyst at Guide Investimentos. Since the beginning of the year, the dollar has accumulated appreciation of 27.2% against the real.