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GOL Linhas Posts Decline in Traffic and Capacity in October

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GOL Linhas Aereas Inteligentes S.A (GOL - Free Report) recently reported the air traffic figures for the month of October. According to the update, traffic – measured in revenue passenger kilometers (RPK) – declined 4.4% to 2.89 billion from 3.0 billion a year ago.

Performance Metrics

On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) was down 5.1% to 3.8 billion. This was mainly because of declines of 3.2% and 18.3% in domestic and international capacity, respectively. Likewise, both domestic and international RPK in the month deteriorated a respective 3.5% and 11.4%. Also, the carrier witnessed a 17.5% decrease in passenger count in Oct 2016.

On the other hand, load factor – percentage of seats filled by passengers – rose to 76.0% from 75.5% in Oct 2015. At the end of the first ten months of 2016, RPK was down 7.3%, while ASK slipped 7%. Load factor for the same period fell 0.2 percentage points. The company recorded a 19.1% reduction in number of seats in October while volume of departures declined 20.3%.

Challenges Faced

GOL Linhas faces tough competition from peers like Copa Holdings (CPA - Free Report) , LATAM Airlines , and Delta Air Lines Inc. (DAL - Free Report) . Other challenges faced by the company include a strong U.S. dollar and economic slowdown in Brazil and Latin America. We expect these adverse factors to persist in the near future as any significant improvement in the macroeconomic factors seems unlikely at the moment.

Zacks Rank

GOL Linhas currently holds a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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