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Gol Linhas (GOL) Q4 Earnings Lag Estimates, Improve Y/Y

Maharathi Basu

Gol Linhas Aereas Inteligentes’ GOL earnings (excluding 1 cent from non-recurring items) of 43 cents per share in fourth-quarter 2019 fell short of the Zacks Consensus Estimate by a couple of cents. The bottom line, however, increased 13.2% on a year-over-year basis, mainly on high passenger revenues.

Additionally, net revenues of $924.3 million rose 9.9% year over year. Passenger revenues accounting for bulk (94.2%) of the top line also improved 20.1% on a year-over-year basis as demand for air travel remained strong. Cargo revenues inched up 4.9%. The airline carried 9.7 million customers in the reported quarter.

Operational Statistics

Consolidated revenue passenger kilometers (RPK) — measure for revenues generated per kilometer per passenger — were up 5.5% year over year. The metric climbed 6.6% domestically but dipped 2.6% on the international front.

Consolidated available seat kilometers (ASK), measuring an airline's passenger carrying capacity, rose 6% year over year. While domestic capacity expanded 7%, international capacity slid 0.9%.

Furthermore, the company’s total load factor (percentage of seats filled with passengers) was 81.5% compared with 81.9% in the year-ago period. The metric deteriorated as traffic growth was outpaced by capacity expansion. Average yield per passenger ascended 13.8%

While net passenger revenue per ASK augmented 12.1%, net revenue per ASK grew 13.3%. Average fuel price per liter decreased 15.6%. Moreover, cost per ASK fell 12.8% year over year, primarily owing to improved efficiency and higher capacity. Besides, the metric was down 11.1% excluding fuel. Total operating expenses escalated 29.9% year over year to R$3.1 billion.

Gol Linhas, carrying a Zacks Rank #2 (Buy), exited the year with total liquidity (including cash and cash equivalents, financial investments, restricted cash and accounts receivable) of (Brazilian real: R) $4.3 billion compared with R$1.3 billion at 2018-end.

This Latin American carrier generated operating cash flow of R$1 billion in the reported quarter. The company repaid debt worth R$617.1 million in the period. Additionally, long-term debt totaled R$10.5 billion at the end of the reported quarter, almost flat year over year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

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. price-consensus-eps-surprise-chart | Gol Linhas Aereas Inteligentes S.A. Quote


Q1 Outlook

The company anticipates first-quarter 2020 cost per ASK excluding fuel to rise approximately 4-6% year over year. Meanwhile, courtesy of strong passenger demand and solid revenues, Gol Linhas estimates net revenue per ASK to climb 4-6% in the March quarter.

2020 & 2021 Views

For 2020, net revenues are now estimated at R$15.4 billion (old guidance: R$15.5 billion). Earnings are now expected between $1.25 and $1.5 per share. Previously, the estimate was in the range of $1.4-$1.65. The prediction for pre-tax margin is unchanged at 13%.

The company’s expected fleet size at the end of the year is anticipated to be 135-139 (earlier expectation: 134-139). The projection for capacity growth still stands at 7-9%. The EBITDA margin estimate is retained at 30%. The forecast for EBIT margin is reaffirmed at 19%.

For 2021, net revenues are envisioned at R$17 billion. Earnings are expected between $1.9 and $2.3 per share. The prediction for pre-tax margin is at 13%. The company’s expected fleet size at the year-end is anticipated to be 137-141. Capacity growth is estimated at 7-9%. The EBITDA margin is assumed at 31%. The forecast for EBIT margin is 20%.

Upcoming Releases

Investors interested in the broader Transportation sector are awaiting fourth-quarter earnings reports from key players like Azul AZUL, Frontline FRO and Golar LNG Ltd. GLNG. While Azul and Frontline will announce fourth-quarter results on Mar 12 and Feb 27, respectively, Golar LNG will release the same on Feb 25.

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