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GOL Linhas Provides 2017 Forecast; Departures to Decline
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Shares of Latin American carrier GOL Linhas Areas Inteligentes have grossly underperformed the Zacks categorized Transportation-Airline industry over the last three months reflecting various headwinds such as macroeconomic issues in Brazil, market volatility and a strong U.S. dollar. Shares of the carrier have depreciated 41.41% in the period while the industry has advanced 25.52%.
The carrier unveiled a preliminary forecast for 2017 in line with the struggling Brazilian economy. The company expects earnings before interest and taxes (EBIT) margin – a measure of the company's earnings ability- in the band of 5% to 7% next year. Moreover, the company, which is projecting an average fleet size of 115, expects capacity (available seat kilometers) to either remain flat or decline up to 2% on a year-over-year basis.
With the volume of departures expected to decline in the band of 3% to 5%, given the sorry state of the economy, the carrier is trimming the number of seats to cope with the struggles. Total seats are also projected in the range of -3% to -5%. Another important metric, load factor (% of seats filled by passengers) is projected in the range of 77% to 79% in 2017.
Reflecting the struggles the company is facing, global rating agency – S&P Global – continues to rate GOL Linhas negatively. The company is currently under review by tax authorities in Brazil pertaining to payments made in 2012 and 2013. GOL Linhas, also faces tough competition from Copa Holdings (CPA - Free Report) , LATAM Airlines , and Avianca Holdings S.A. in Latin America . Copa Holdings sports a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GOL Linhas carries a Zacks Rank # 3 (Hold).
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GOL Linhas Provides 2017 Forecast; Departures to Decline
Shares of Latin American carrier GOL Linhas Areas Inteligentes have grossly underperformed the Zacks categorized Transportation-Airline industry over the last three months reflecting various headwinds such as macroeconomic issues in Brazil, market volatility and a strong U.S. dollar. Shares of the carrier have depreciated 41.41% in the period while the industry has advanced 25.52%.
The carrier unveiled a preliminary forecast for 2017 in line with the struggling Brazilian economy. The company expects earnings before interest and taxes (EBIT) margin – a measure of the company's earnings ability- in the band of 5% to 7% next year. Moreover, the company, which is projecting an average fleet size of 115, expects capacity (available seat kilometers) to either remain flat or decline up to 2% on a year-over-year basis.
With the volume of departures expected to decline in the band of 3% to 5%, given the sorry state of the economy, the carrier is trimming the number of seats to cope with the struggles. Total seats are also projected in the range of -3% to -5%. Another important metric, load factor (% of seats filled by passengers) is projected in the range of 77% to 79% in 2017.
Reflecting the struggles the company is facing, global rating agency – S&P Global – continues to rate GOL Linhas negatively. The company is currently under review by tax authorities in Brazil pertaining to payments made in 2012 and 2013. GOL Linhas, also faces tough competition from Copa Holdings (CPA - Free Report) , LATAM Airlines , and Avianca Holdings S.A. in Latin America . Copa Holdings sports a Zacks Rank # 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
GOL Linhas carries a Zacks Rank # 3 (Hold).
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>