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Gol Linhas Buoyed by Robust Demand Expects Solid Q3 PRASK

Zacks Equity Research

Gol Linhas Aereas Inteligentes S.A. GOL provided an update on its upcoming third-quarter 2019 results, set to be released on Oct 31.

The company is thriving on the back of solid demand for air travel. Evidently, air traffic, measured in revenue passenger kilometers (RPK), is anticipated to rise approximately 12.8% year over year in the third quarter. Owing to this tailwind, passenger unit revenues (PRASK) are anticipated to ascend approximately 20% year over year. Additionally, unit revenue (RASK) is estimated to climb nearly 19% in the quarter.

While total capacity (available seat kilometers or ASKs) is predicted to increase approximately 7.6%, the total number of seats are estimated to go up nearly 7.8%.

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

The airline anticipates EBITDA margin in the range of 29-31%, indicating an increase from 18.9% in the third quarter of 2018. Additionally, EBIT margin is expected in the band of 17-18%.

Fuel unit costs (CASK fuel) are anticipated to decrease 7% year over year. Average fuel price per liter is expected in the range of R$2.90-R$2.98. On the contrary, non-fuel unit costs (CASK ex-fuel) are forecast to jump approximately 15% year over year due to delivery delays from the MAX groundings among other factors.

Gol Linhas reduced its debt levels in the quarter by amortizing R$182 million. The company’s financial leverage, measured by Net Debt/LTM EBITDA ratio, at the end of the quarter was approximately 2.9x. Total liquidity at the end of the third quarter is estimated to be R$4 billion, suggesting an increase from R$3.7 billion sequentially.

Zacks Rank & Other Key Picks

Gol Linhas carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the same space are Allegiant Travel Company ALGT, Controladora Vuela Compania de Aviacion, S.A.B. de C.V. VLRS and SkyWest, Inc. SKYW, each carrying the same Zacks Rank as Gol Linhas. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Allegiant Travel, Controladora Vuela and SkyWest have rallied more than 47%, 97%, and 23%, respectively, so far this year.

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