GOL Linhas A (GOL - Analyst Report) is scheduled to report its second-quarter 2012 earnings on Monday, August 13, 2012, after the closing bell.

The current Zacks Consensus Estimate is pegged at a loss of 46 cents for the quarter, representing an annualized growth of 42.8%.

With respect to earnings surprises, GOL underperformed the Zacks Consensus Estimate in three of the last four quarters and was in line in the other. Average earnings surprise was a negative 286.72%, implying that the company has underperformed the Zacks Consensus Estimate by the same magnitude over the last four quarters.

First Quarter 2012 Highlights

On May 4, 2012, GOL Linhas Aéreas Inteligentes S.A. reported financial results for the first quarter of 2012 with a net loss of R$41.4 million (US$23.4 million). The reported results compare unfavorably with a net income of R$69.4 million (US$41.8 million) in the year-ago quarter.

The loss was due to rising operating costs, especially fuel, landing fees at Brazilian airports as well as currency depreciation and income tax.

Consolidated net revenue stood at R$2,166.1 million (US$1223.8 million), up 14.3% year over year, attributable to operating revenue of R$319.1 million (US$ 156.8 million) from Webjet during the quarter.

Agreement of Estimate Revisions

In the last 30 days, none of the six analysts increased the company’s earnings per share estimate while two decreased the same for the second quarter of 2012. None of the analysts, among a total of 6, revised the estimate for the third quarter of 2012 in the last 30 days. For 2012, three out of 9 analysts lowered their estimates. Out of 7 analysts, one analyst increased and one reduced the estimate for 2013 in the last 30 days.

Magnitude of Estimate Revisions

Over the last 30 days, estimates have decreased from a loss of 35 cents per share to the current estimate of a loss of 46 cents for the second quarter of 2012.

Estimate for 2012 dropped from a loss of 14 cents to a loss of 33 cents over the last 30 days while for 2013, it from rose from 34 cents to 38 cents. These estimates represented a year-over-year growth of 78.58% for 2012 and 216.80% for 2013.

Our Take

We are optimistic on the company’s second quarter of 2012 results. We believe the company’s focus on operational cost reduction and continued enhancement of fleet efficiency will increase profitability. Moreover, GOL’s long-term business strategy of route expansion and strategic acquisitions are likely to create significant operational synergies.

GOL Linhas, one of the most profitable low-cost airlines in the world, gives a tough competition to other industry players, such as Copa Holdings SA (CPA - Snapshot Report) and LAN Airlines S.A (LFL - Snapshot Report).

We currently maintain a long-term Neutral recommendation on the stock. Also, GOL has a Zacks #3 Rank, which translates into a short-term (1-3 months) Hold rating.