Avianca reported Q3 results today which included the first 11 days of the strike. The numbers were pretty healthy (source Valores/Bancolombia)
3Q17: Operating margin reached 9.2%, 60bp above our expectations. Yields present their second consecutive year-on-year increase reaching USD8.9. Leverage ratio net debt / EBITDAR closed at 5.6x.
Avianca Holdings reported results that we classified as extraordinary where the company, thanks to the good results in July, August and the first 20 days of September, managed to compensate for the effect of the 11-day strike in Q3. Thanks to a slight increase in year-on-year yields, along with an increase in passengers transported and high occupancy factors, Avianca reported a 158bp revenue growth higher than that of operating expenses leading operating income to reach the best margin for the year. 3T since 2013.
This week it was also known that during October the company transported 1.9mn passengers, decreasing 25%. The above is due to the pilots' strike that took place during the whole month, which affected the domestic market to a greater extent, which reduced the available seats by 37%. On the other hand, the international market decreased the available seats by 10.5%. The aforementioned was slightly offset by an overall increase in the load factor by 40 bps, however they also account for the difficult situation the company went through with the pilot strike, which we expect to have material repercussions on the results of the 4T.