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GOL Linhas (GOL) Q1 Earnings Beat Estimates, Decrease Y/Y

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Latin-American carrier, GOL Linhas Aereas Inteligentes S.A.’s (GOL - Free Report) first-quarter 2017 earnings per share of $1.06 per share topped the Zacks Consensus Estimate of 15 cents. However, the bottom-line contracted 23.2% on a year-over-year basis due to higher costs.

Net revenue in the first quarter of 2017 came in at $841.2 million (R$2.6 billion). While cargo revenues increased 27.3%, passenger revenues declined 5.8%.

Operational Statistics

Revenue passenger kilometres (RPK) – the measure of revenues generated per kilometre per passenger – grew 0.7% year over year. However, international RPK deteriorated 4.3%, the measure improved 1.3% on the domestic front.

Also, available seat kilometres (ASK) – the measure of an airline's passenger carrying capacity – fell 2% year over year. Decline of 5.5% in international ASK and 1.5% in domestic ASK too led to the downside.

During the reported quarter, the company’s total load factor (percentage of seats filled with passengers) was 79.6% compared with 77.5% in the year-ago quarter. The metric improved as capacity contracted and traffic expanded.

Financials

GOL Linhas exited the quarter with cash and cash equivalents of R$ 386.11 million compared with R$562.2 million at year-end 2016. Additionally, long-term debt totalled R$5,364 million at the end of the quarter compared with R$5,543 million at year-end 2016.

Operating costs and expenses in the quarter were up 5.3% to R$2,392.8 million. While total volume of departures fell 13.6%, total number of seats available declined 13.2%, both on a year-over-year basis.

Gol Linhas Aereas Inteligentes S.A. Price, Consensus and EPS Surprise

 

Gol Linhas Aereas Inteligentes S.A. Price, Consensus and EPS Surprise | Gol Linhas Aereas Inteligentes S.A. Quote

Outlook

This Zacks Rank #3 (Hold) company unveiled a forecast for 2017 in line with the volatile nature of the Brazilian economy. The company expects earnings before interest and taxes (EBIT) margin – a measure of the company's earnings ability – in the band of 6% to 8% for full-year 2017. Moreover, GOL Linhas, which is projecting an average fleet size of 115, anticipates capacity (available seat kilometres) to either remain flat or decline up to 2% on a year-over-year basis. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

With the volume of departures expected to decline in the band of 3% to 5%, the carrier is trimming the number of seats to cope with the struggles. Another important metric, load factor is projected in the range of 77% to 79% in 2017.

Despite stiff competition from its peers like Copa Holdings S.A. (CPA - Free Report) and LATAM Airlines Group S.A. in the Latin American space, the company is expected to perform well in the near term, driven by its restructuring efforts.

Important Release Coming Up

With the earnings season almost over, investors interested in the broader transportation space are likely to await first-quarter results from the likes of Diana Shipping Inc. (DSX - Free Report) on May 23.

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