But it hasn't happened, at least not to the degree I'd like to see. Late last week, in fact, the shares rallied a little bit.
It looks like GOL shares right now are pricing in more optimism than I really think is warranted in the short term. I've been optimistic about this company for a long time now, but I wish the market would take a bit more critical eye and trade the shares down so I could fill out my position with one more bargain purchase.
What's wrong with GOL? The Brazilian air traffic controllers have been in a bit of a work slowdown since being blamed (by some) for the recent crash of a Gol flight with an Embraer (NYSE:ERJ) business jet that killed everyone aboard the Gol plane. Gol is likely to get sued by someone, and it's certainly true that this tarnishes their brand a little bit and will cost them money (though they're insured) ... but there hasn't been any indication that the airline or its pilots did anything wrong.
So the problem isn't with Gol specifically, but with Brazilian air traffic in general -- TAM (NYSE:TAM) and Varig (what's left of it) are suffering too.
Air traffic control has gummed up the system by "working to rule" and causing delays for nearly every flight, which is cutting back on the appeal of air travel and on the efficiency of Gol's flight planning. That, in turn, is going to reduce results, at least until they bring the air traffic control system up to full capacity and expand it to meet the growing demand.
Now, I can live with this -- I've seen the reduced guidance that Gol gave when they realized the impact that the gummed up air traffic control system would have on their earnings, and I wouldn't be surprised to see them have to reduce guidance again if the problem lingers. I've got a multi-year time horizon on this investment, and in the long run I think the potential for growing South American air travel is spectacular.
But I was really hoping that this would drive down the share price. While I was looking into Brazilian stocks a week or so ago, when I made my initial purchase of shares in Sadia (SDA), I came very close to upping my Gol holdings as well ... but I've been greedy, hoping that this temporary problem would create a fire sale.
And as recently as Friday, GOL blipped up again -- presumably because the government has now charged the Embraer jet pilots in the crash, which perhaps could create a scapegoat that would take the pressure off the air traffic controllers and allow them to get back to work.
Still, I'll hope for further declines -- with the lack of investment in their aviation infrastructure over the last decade as traffic has steadily climbed, it's going to take more than just a return to normalcy for Gol's growth to continue. What is eventually needed is a significant investment in expanding air traffic control capacity, which may or may not mean moving control away from military control (I don't know enough about the situation to know whether or not that is important).
Hopefully, sometime in the next few months the sector will be hit hard with the results of a national air travel slowdown ... if so, I'll plan to be ready to buy.
GOL 1-yr chart: