Shares of GOL Linhas Aereas Inteligentes S.A. (GOL - Free Report) have performed exceedingly well over the last six months. The company has surged more than 60%, significantly outperforming the Zacks Airline industry’s rally of 5.8%.
Ushering in further good news, the carrier recently unveiled an impressive January traffic report. Consolidated traffic, measured in revenue passenger kilometers (RPK), increased 5.2% to 4.15 billion in the month.
On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) rose 4.9% to 4.92 billion primarily owing to the expansion of 2.3% and 27.5% in domestic and international capacity, respectively. In January, domestic and international RPK also improved a respective 2.7% and 27.9%. The carrier further witnessed a 2.4% increase in passenger count in the same period.
Load factor — percentage of seats filled by passengers — improved to 83.5% from 83.2% a year ago as traffic expansion exceeded capacity growth.
Additionally, GOL Linhas, which competes with the likes of Copa Holdings (CPA - Free Report) , Latam Airlines Group S.A. (LTM - Free Report) and Azul S.A. (AZUL - Free Report) in the Latin American aviation space, is benefiting from an increased demand for air travel owing to an improved Brazilian economy. Consequently, this Zacks Rank #3 (Hold) carrier is expected to perform well in the fourth quarter of 2017. Detailed results will be out on Mar 7. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
For the fourth quarter, GOL Linhas anticipates operating margin in the range of 13.2-14.2%. This metric (excluding non-recurring expenses) was 12.8% in the year-ago quarter. Passenger unit revenue (PRASK) is also projected to increase between 7% and 7.5% year over year as the airline is benefiting from capacity discipline and revenue management strategies.
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