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Gol Linhas (GOL) Gross Revenues Rise in December From November

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Gol Linhas Aereas Inteligentes S.A. (GOL - Free Report) is seeing continued recovery in air-travel demand as economic activities ramp up. With uptick in demand, the airline increased capacity to an average of 476 flights per day (60% of 2019 levels) in December, indicating a rise of 29% from the November level.
The carrier’s consolidated gross revenues for the month totaled R$852 million, indicating a surge of 52% from November. Load factor (percentage of seats filled by passengers) was 81% in December. Having added flights to Jericoacoara (Ceara state), Caldas Novas (Goias state) and Cabo Frio (Rio de Janeiro state) in December, Gol Linhas is currently operating 100% of its domestic network.

In January, the airline plans to operate approximately 550 flights per day and nearly 620 daily flights on peak days, representing 65% of last January’s domestic flight schedule. During the period between Dec 18, 2020 and Jan 31, 2021, Gol Linhas will operate an average of 558 daily flights to meet the anticipated surge in demand.

Gol Linhas Aereas Inteligentes S.A. Price

Gol Linhas Aereas Inteligentes S.A. Price

Gol Linhas Aereas Inteligentes S.A. Quote

At the end of the first quarter of 2021, the carrier expects capacity and demand to be approximately 70% of what it was at the end of the first quarter of 2020. Load factor in the same period is estimated to be more than 80%.

Liquidity Update

With consistent efforts to preserve cash, Gol Linhas generated net cash (earn) of R$6 million/day in December for the second month in a row. This denotes a significant improvement from the carrier’s forecast of a net cash consumption of R$3 million/day for the same period.

At the end of Dec 31, 2020, the carrier had approximately R$2.5 billion in total liquidity. The company reduced its short-term debt by R$790 million in December. For the first quarter, Gol Linhas anticipates net cash consumption of R$2 million/day.

Q4 Guidance

For the fourth quarter of 2020, Gol Linhas estimates EBITDA Margin to be 30-32%. Meanwhile, EBIT margin is expected to be 18-20%. Average fuel price per liter is anticipated to be between R$2.31 and R$2.37. Further the company predicts passenger unit revenue (PRASK) to decline 15% year over year in the fourth quarter. Non-fuel unit cost (CASK ex-fuel) is forecast to increase 7% year over year. Total demand (RPK) and total capacity (ASK) is expected to be down 42% each in the quarter. Meanwhile, total seats are estimated to plunge 46% year over year.

Zacks Rank & Key Picks

Gol Linhas carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader Transportation sector are ArcBest Corp. (ARCB - Free Report) , GATX Corp. (GATX - Free Report) and Herc Holdings (HRI - Free Report) . While GATX carries a Zacks Rank #2 (Buy), ArcBest and Herc Holdings sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of ArcBest, GATX and Herc Holdings have gained more than 76%, 45% and 100% in the last six months respectively.

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