Gol Linhas Posts a Rise in June Traffic, Guides for Q2

Gol Linhas Aereas Inteligentes S.A. GOL reported unimpressive traffic figures for June 2018, with load factor (percentage of seats filled by passengers) declining as capacity expansion outweighed traffic growth.

Traffic, measured in revenue passenger kilometers (RPK), increased 4.6% to 2.81 billion. While domestic RPK climbed 6.7%, international RPK plunged 16.6%. On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) expanded 4.7% to 3.61 billion. Domestic ASK ascended 5.9% while international ASK slid 5.8%. The carrier witnessed a 4.2% rise in passenger count. Load factor slipped to 78% from 78.1%, recorded a year ago.

At the end of the first six months of 2018, RPK was up 3.6% while ASK grew 2.7%. Also, load factor for the period improved 60 basis points. Volume of departures inched up 0.6% whereas the number of seats rose 1.3%.

Gol Linhas Aereas Inteligentes S.A. Price and Consensus

 

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

Q2 Outlook

With seasonal softness in the Brazilian domestic passenger air transportation market during the second quarter of 2018, the company trimmed its domestic supply by 11% to strike a proper supply-demand balance.

The carrier expects operating margin between 1% and 1.5% in the second quarter flat year over year. While EBITDA margin is estimated in the 8-8.5% range. Also, operating cash flow is predicted in the R$500-550 million band.

Gol Linhas’ focus on capacity discipline and revenue management strategies has been aiding results. Owing to this tailwind, the company anticipates second-quarter passenger unit revenues (PRASK) to expand in the 7.5-8% range while unit revenues (RASK) are projected to increase between 6% and 6.5%.

Additionally, non-fuel unit costs (CASK ex-fuel) are expected to be down 2% year over year in the to-be-reported quarter. Total capacity (ASK) is forecast to grow approximately 2% year over year. Total number of seats is also anticipated to rise by around 2%.

Zacks Rank & Key Picks

Gol Linhas carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are GATX Corporation GATX, Atlas Air Worldwide Holdings AAWW and Expeditors International of Washington, Inc. EXPD. While GATX holds a Zacks Rank #2 (Buy), Expeditors and Atlas Air Worldwide sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of GATX, Atlas Air Worldwide and Expeditors have rallied more than 21%, 30% and 28%, respectively, in a year.

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