2018 Outlook

We expect a gradual recovery of the regional market with improved macroeconomic conditions towards the end of 2017 and during 2018. Along with this, active efforts by the company in terms of cost controls and efficiencies will continue to materialize, thus we expect continued progress in margin recovery, while being attentive to variations in fuel prices.
During 1H17, a significant reduction in capacity was observed in the Brazilian and Cargo markets, however, we expect a recovery in yields by 4Q17 and in 2018.
Tough competition in addition to weak regional macro conditions would continue to pressure industry margins, thus a strategy focused on increasing operational efficiency becomes particularly relevant. We estimate revenues would show gradual growth during the year. Internal strategies, including a thorough restructuring plan, strategic asset sales and capacity adjustments, will set the tone in terms of performance in 2018.

Risks

Exposure to BRL remains one of the most relevant sources of risk, affecting both operational and bottom line performance, thus greater than expected depreciation could generate significant distortions against initial projections.
Strong competition from entry of new low cost players.
Fluctuations in Oil and Fuel prices.
Bleak macroeconomic conditions, especially in Brazil.

Peers