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GOL Linhas' Margin Outlook Impresses, Forex Woes Remain
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On Nov 22, 2016, we issued an updated report on GOL Linhas Aereas Inteligentes S.A. .
The company’s net profit in the third quarter of 2016 compared favorably with the loss incurred in the prior-year quarter. Revenues, however, declined on a year-over-basis. The company also saw a decline in traffic metricrevenue passenger kilometers (RPK) – the measure of revenues generated per kilometer per passenger. Available seat kilometers (ASK) – the measure of an airline's passenger carrying capacity – decreased on a year-over-year basis. However, the company’s load factor improved by 120 basis points (bps) in the reported quarter. Despite the decline in performance metrics, we are positive on the fact that the company’s long-term debt has decreased from year-end 2015. We are also optimistic about the changes in the company’s existing fleet with improved in-flight offerings.
October Metrics
The company reported a decline in traffic and capacity for the month of October. Passenger count declined too. However, load factor impressed with an improvement of 50 bps for the month of October.
The company continues to face challenges like the strong U.S. dollar and economic slowdown in Brazil and Latin America. However, we are positive on the company’s revised outlook for 2016. Operating margin is expected at 6%, which is at the higher end of the previous guidance of a range of 4% to 6%. Moreover, fleet size is anticipated to be reduced further in 2017, which in turn, should improve capacity utilization. Total supply is now expected to decline 8% instead of a range of 5–8%.
The company faces tough competition from peers like Copa Holdings (CPA - Free Report) , LATAM Airlines , and Delta Air Lines Inc. (DAL - Free Report) .
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GOL Linhas' Margin Outlook Impresses, Forex Woes Remain
On Nov 22, 2016, we issued an updated report on GOL Linhas Aereas Inteligentes S.A. .
The company’s net profit in the third quarter of 2016 compared favorably with the loss incurred in the prior-year quarter. Revenues, however, declined on a year-over-basis. The company also saw a decline in traffic metricrevenue passenger kilometers (RPK) – the measure of revenues generated per kilometer per passenger. Available seat kilometers (ASK) – the measure of an airline's passenger carrying capacity – decreased on a year-over-year basis. However, the company’s load factor improved by 120 basis points (bps) in the reported quarter. Despite the decline in performance metrics, we are positive on the fact that the company’s long-term debt has decreased from year-end 2015. We are also optimistic about the changes in the company’s existing fleet with improved in-flight offerings.
October Metrics
The company reported a decline in traffic and capacity for the month of October. Passenger count declined too. However, load factor impressed with an improvement of 50 bps for the month of October.
The company continues to face challenges like the strong U.S. dollar and economic slowdown in Brazil and Latin America. However, we are positive on the company’s revised outlook for 2016. Operating margin is expected at 6%, which is at the higher end of the previous guidance of a range of 4% to 6%. Moreover, fleet size is anticipated to be reduced further in 2017, which in turn, should improve capacity utilization. Total supply is now expected to decline 8% instead of a range of 5–8%.
The company faces tough competition from peers like Copa Holdings (CPA - Free Report) , LATAM Airlines , and Delta Air Lines Inc. (DAL - Free Report) .
Zacks Rank
GOL Linhas currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>