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GOL Linhas (GOL) Q1 Earnings In Line, Revenues Miss Estimates

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GOL Linhas Aereas Inteligentes S.A.’s first-quarter 2018 earnings (excluding 16 cents from non-recurring items) of 42 cents per share were in line with the Zacks Consensus Estimate and the year-ago figure.

Net revenues came in at $862.2 million (R$3.0 billion), missing the Zacks Consensus Estimate of $919.1 million. However, the top-line figure increased on a year-over-year basis.

Passenger revenues accounted for bulk of the top line and increased significantly on a year-over-year basis. The upside was driven by the solid demand for air travel owing to improvement in the Latin American economy.

Operational Statistics

Consolidated revenue passenger kilometres (RPK) — the measure of revenues generated per kilometre per passenger — increased 4.5% year over year. The metric improved 22.8% and 2.2% on international and domestic fronts, respectively.

Consolidated, available seat kilometres (ASK) — the measure of an airline's passenger carrying capacity — rose 3.3% year over year. While domestic capacity improved merely 0.8%, the metric expanded by a significant 23.5% internationally.

In the first quarter, the company’s total load factor (percentage of seats filled with passengers) was 80.4% compared with 79.6% in the year-ago quarter. The metric improved as traffic growth outpaced capacity expansion.

Average fares increased 13.1% in the quarter. While, net passenger revenue per ASK improved 11.5%, total revenue per ASK grew 10.3% year over year. Cost per ASK increased 1.9% due to rising fuel costs. The metric, excluding fuel, fell 4.8%.

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

 

Financials

GOL Linhas exited the first quarter with total liquidity (cash and cash equivalents, financial investments, restricted cash and accounts receivable) of R$3.1 billion, reflecting a marginal decline from the final quarter of 2017. Additionally, long-term debt totalled R$5,827 million at the end of the quarter compared with R$5,943 million at the end of 2017.

Total operating expenses were up 5.3% to R$2,460 million.  The measure, excluding fuel, declined 1.6% year over year. Total volume of departures and number of seats increased 0.7% and 0.8%, respectively.

2018 View Revised

This Zacks Rank #3 (Hold) company revised certain aspects of its guidance for 2018. Total fleet size at the end of the current is expected to be 117 (earlier guidance: 118). The carrier envisions system capacity (available seat kilometres) to increase in the 1-2% range (earlier guidance: 1-3%).Fuel price per liter is anticipated to be R$2.5 compared with R$2.2 projected earlier.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2019 Outlook

GOL Linhas also unveiled its guidance for 2019 in line with the improved Brazilian economy. The company projects earnings before interest and taxes (EBIT) margin – a measure of the company's earnings ability – to be approximately 13%. Total net revenues are anticipated to be approximately R$12 billion.

Moreover, GOL Linhas, which is projecting an average fleet size between 122 and 124, anticipates capacity (available seat kilometres) to increase in the 5-10% band. Another important metric, load factor, is projected in the range of 79-81% in 2019. Earnings per share is expected between R$1.70 and R$2.30.

Despite stiff competition from its peers like Copa Holdings S.A. (CPA - Free Report) and Azul S.A. (AZUL - Free Report) in the Latin American space, GOL Linhas is expected to perform well in the near term backed by robust demand and cost control efforts.

Important Release Coming Up

With the earnings season almost over, investors interested in the broader Zacks Transportation industry are likely to await first-quarter results from the likes of Golden Ocean Group Limited (GOGL - Free Report) . Golden Ocean Group will unveil its results on May 31.

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