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Gol Linhas Bolsters Liquidity Through Increased Cost Cuts

Zacks Equity Research

Gol Linhas Aereas Inteligentes SA GOL has strengthened its liquidity position, preserving cash reserves of more than 12 months.

As of May 31, 2020, the company had approximately R$3.5 billion in total liquidity, indicating more than 12 months of cash on hand (excluding refunds and restricted cash). As of April, it had more than 10 months of cash-on-hand. The increased liquidity can be attributed to greater cost cuts and improving passenger demand.

Gol Linhas’ gross cash operating costs were R$8 million/day in May. In June, costs are expected to remain at the same level, excluding revenue, ATL refunds and non-aircraft debt payments. Meanwhile, the carrier had a net cash burn of R$2 million/day last month, including sales and receivables of approximately R$8 million/day. Based on some assumptions, the company expects a net cash burn of R$4 million/day during the June-December period.

Gol Linhas Aereas Inteligentes S.A. Price

 

Gol Linhas Aereas Inteligentes S.A. Price

Gol Linhas Aereas Inteligentes S.A. price | Gol Linhas Aereas Inteligentes S.A. Quote


With easing travel restrictions, Gol Linhas’ May ticket sales increased from April by more than 100% in all its channels. Moreover, increasing capacity in the last week of May helped the carrier generate 22% higher passenger revenues from that in April.

Per Gol Linhas’ vice president of sales and marketing, “GOL's sales have increased by more than 20% every seven days for the last three weeks, and we are ramping-up our July network to offer Clients more travel options.”

During May, the airline’s initial capacity was only 7% of the network in the comparable prior-year month. Toward the end of the month, capacity was increased to 10% with a few flights being resumed. With the re-opening of some bases and operation of additional flights, June’s capacity is expected to be around 20% of the year-ago period’s schedule.

Zacks Rank & Other Key Picks

Gol Linhas carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the broader Transportation sector are Scorpio Tankers Inc. STNG, Teekay Tankers Ltd. TNK and Frontline Ltd FRO. While Frontline sports a Zacks Rank #1 (Strong Buy), Scorpio Tankers and Teekay Tankers carry the same Zacks Rank as Gol Linhas. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Scorpio Tankers’ current-year earnings has been revised upward in excess of 100% in the past 60 days.

The Zacks Consensus Estimate for Teekay Tanker’s current-year earnings has been revised 35.6% upward in the past 60 days.

The Zacks Consensus Estimate for Frontline’s current-year earnings has been revised 17.1% upward in the past 60 days.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
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