SAO PAULO – UBS initiated its coverage of shares of Brazilian airline GOL Linhas Aereas Inteligentes with a buy recommendation, it said Tuesday in a research report for its clients.
“GOL concluded a financial turnaround plan and all the operational initiatives that started in 2009 are maturing in 2010. In this scenario, margins and free cash generation should continue to expand. Additionally, GOL is a high-leverage play on Brazilian economic growth,” said UBS.
In the meantime, UBS started the coverage of shares of GOL’s local rival TAM S/A, Brazil’s biggest airline, with a neutral rating “due to limited total returns.”
Earlier this month, TAM agreed to merge with Chile’s LAN Airlines SA. UBS also initiated the coverage of shares of LAN with a neutral recommendation.