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GOL Linhas' (GOL) July Traffic Rises, Load Factor Falls

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GOL Linhas Aereas Inteligentes S.A. (GOL - Free Report) announced traffic results for July.  Traffic – measured in revenue passenger kilometers (RPK) — increased 6.3% to 3.65 billion in Jul 2017 from 3.44 billion, recorded a year ago.

On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) expanded 7.9% to 4.46 billion, thanks to a rise of 7.9% and 8%% in domestic and international capacity, respectively. Domestic and International RPK for July also appreciated 5.8% and 10.2%, respectively. The carrier further witnessed a 4.9% increase in passenger count for the same month.

On the other hand, load factor – percentage of seats filled by passengers – decreased 130 basis points (bps) to 81.9% in July due to capacity expansion exceeding traffic growth.

At the end of the first seven months of 2017, RPK inched up 1.5%, while ASK slipped 0.9%. Load factor for the same period improved 190 bps. The company however, recorded a 7.3% reduction in the number of seats in the first seven months of 2017 and volume of departures fell 7.6%.

The company recently reported second-quarter earnings numbers. The carrier’s earnings of 24 cents per share compared favorably with the Zacks Consensus Estimate of a loss of 60 cents. However, the bottom line contracted 51% on a year-over-year basis due to higher expenses on aircraft fuel. Net revenue, comprising cargo and passenger revenues, came in at $696.2 million (R$2.2 billion), up significantly year over year. 

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

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