Gol Linhas Aereas Inteligentes S.A.'s (GOL - Free Report) earnings (excluding 39 cents from non-recurring items) of 11 cents per share in the second quarter of 2019 matched the Zacks Consensus Estimate. The company reported a loss in the year-ago period. Results were partly affected by 8.8% depreciation of the Brazilian real against the US dollar and high fuel costs.
Meanwhile, net revenues of $801.1 million (R$3.14 billion) surpassed the Zacks Consensus Estimate of $702.4 million and also increased year over year owing to solid demand in the corporate segment and capacity discipline. Passenger revenues accounting for bulk (94.2%) of the top line surged 37.9% on a year-over-year basis.
The revenue beat and its year-over-year rise perhaps pleased investors. Evidently, shares of the company gained more than 4% at the close of business on Aug 1.
Consolidated revenue passenger kilometers (RPK) — measure for revenues generated per kilometer per passenger — increased 11.7% year over year. The metric climbed 6.1% and 71.1% each on the domestic and international front.
Consolidated available seat kilometers (ASK), measuring an airline's passenger carrying capacity, rose 6.5% year over year. While domestic capacity inched up 1.3%, international capacity expanded 53.4%.
Furthermore, the company’s total load factor (percentage of seats filled with passengers) was 82% compared with 78.1% in the year-ago period. The metric improved as traffic growth outpaced capacity expansion.
While net passenger revenue per ASK augmented 29.5%, net revenue per ASK grew 25.3%. However, fuel price per liter increased 9.8%. Also, Cost per ASK rose 13.6% year over year. Besides, the metric increased 12.4% excluding fuel.
Gol Linhas, sporting a Zacks Rank #1 (Strong Buy), exited the second quarter with a total liquidity (including cash and cash equivalents, financial investments, restricted cash and accounts receivable) of R$3.7 billion, reflecting an increase of R$644.4 million from the year-ago reported figure. Additionally, long-term debt totaled R$11.15 billion at the end of the reported quarter compared with R$10.31 billion in the year-ago period. You can see the complete list of today's Zacks #1 Rank stocks here.
Total operating expenses escalated 29.4% year over year to R$2.82 billion. The metric excluding fuel surged 32.9% year over year. Meanwhile, total volume of departures inched up 0.9% and the number of seats increased 3.2%.
The company envisions CASK to ascend approximately 11-13% year over year in the third quarter. Additionally, Revenue per ASK (RASK) is estimated to augment between 11% and 13%.
GOL Linhas anticipates net revenues of approximately R$13.5 billion compared with R$13 billion expected previously. Further, earnings are envisioned in the range of 80-95 cents per share. Previously, the estimate was in the 70-90 cents band. The mid-point (87.5) of the guided range is below the Zacks Consensus Estimate of 89 cents. For fuel price, the forecast has been revised to R$2.9 per liter from R$3. Meanwhile, the prediction for pre-tax margin has been retained at 10%.
Capital expenditures are still anticipated at R$700 million. Also, the effective tax rate estimate is unchanged at 22%. The company’s expected fleet size at the end of the year is anticipated between 125 and 127 (earlier expectation: 124-127). The prediction for capacity now stands at 9-11% compared with 7-10% projected earlier.
For average load factor, the forecast is still in the 79-81% range. The EBITDA margin prediction has also been reiterated at 28%.
For 2020, the carrier anticipates fleet size to grow between 131 and 136 (earlier view was between 128 and 131). Additionally, capacity is now predicted at 6-8% compared with 7-10% expected earlier. Moreover, load factor is estimated in the range of 80-82%, above 79-81% envisioned previously. The guidance for total net revenues has also been raised to R$15.5 billion from R$14.5 billion. Meanwhile, for effective tax rate, the forecast is intact at 22%. The same for capex is reaffirmed at R$650 million as well.
The company also maintains the projection for fuel price per liter at R$3.1. The expectations for EBITDA margin and pre-tax margin are also flat at 29% and 12%, respectively. However, earnings per share are now anticipated between $1.2 and $1.5 compared with $1 and $1.3, guided previously.
Investors interested in the broader Transportation sector are keenly awaiting second-quarter earnings reports from key players, namely Expeditors International of Washington, Inc. (EXPD - Free Report) , Air Lease Corporation (AL - Free Report) and Hertz Global Holdings, Inc (HTZ - Free Report) . While Expeditors and Hertz will report earnings numbers on Aug 6, Air Lease will release the same on Aug 8.
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