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Gol Linhas (GOL) Q2 Loss Narrower Than Expected, Revenues Lag

Zacks Equity Research

Gol Linhas Aereas Inteligentes GOL incurred a loss (excluding $1.27 from non-recurring items) of 81 cents per share in the second quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $1.1.

Net operating revenues of $66.7 million missed the Zacks Consensus Estimate of $152.9 million and also declined significantly year over year. Passenger revenues accounting for bulk (68%) of the top line plunged 91.8% on a year-over-year basis due to suppressed air travel demand amid coronavirus concerns.

Cargo and other revenues also declined 37.1%. The airline carried only 0.6 million customers in the reported quarter, indicating a drop of 92% from the year-ago period.

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 and EPS Surprise

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

Operational Statistics

Consolidated revenue passenger kilometers (RPK) — the measure for revenues generated per kilometer per passenger — were down 91.7% year over year. The metric declined 90.5% and 99.8% on the domestic and international fronts, respectively.

Consolidated available seat kilometers (ASK), measuring an airline's passenger-carrying capacity, fell 91.3% year over year. While domestic capacity dropped 89.9%, international capacity contracted 99.8%.

Furthermore, the company’s total load factor (percentage of seats filled with passengers) was 78.1% compared with 82% in the year-ago period. The metric deteriorated as traffic declined more than the amount of capacity contraction. Average yield per passenger was stable year over year.

Net passenger revenues per ASK dropped 5.6%. Meanwhile, net revenues per ASK jumped 30.8%. Average fuel price per liter decreased 26.5%. However, cost per ASK soared more than 200% year over year due to 44.4% reduction in aircraft use. Excluding fuel, the metric surged more than 300%. Total operating expenses declined 55.5% year over year to R$1.25 billion.

Gol Linhas, carrying a Zacks Rank #3 (Hold), exited the quarter with total liquidity (including cash and cash equivalents, financial investments, restricted cash and accounts receivable) of R$3.3 billion compared with R$3.66 billion at the end of the year-ago period. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

During the second quarter, operating activities consumed R$915.9 million, against an operating cash flow of R$872.7 million in the year-ago period.  The company repaid debt worth R$351 million in the reported quarter. Long-term debt totaled R$12.86 billion at the end of the reported quarter, up 15.3% year over year.

Q3 Outlook

Gol Linhas’ estimated third-quarter capacity indicates a 300% jump from the second quarter. At the end of the third quarter, the carrier’s fleet is expected to consist of 74 operating aircraft, which is 60% of the year-ago operating fleet. Load factor is estimated to be approximately 79% in the current quarter. Meanwhile, the airline anticipates revenues to decline approximately 73% year over year in the period. Total expenses are predicted to drop nearly 70% owing to cost-cutting measures, reduced capacity and low fuel consumption.

The company expects to have liquidity of R$2.9 billion at the end of the third quarter. Adjusted net debt is estimated to be R$13.8 billion at the end of the same period.

Sectorial Snapshot

Let’s take a look into some other Zacks Transportation sector companies’ second-quarter earnings results.

Kirby Corporation’s KEX second-quarter earnings of 42 cents per share were in line with the Zacks Consensus Estimate. The bottom line plunged 46.8% year over year. This Zacks Rank #5 (Strong Sell) company’s total revenues of $541.2 million lagged the Zacks Consensus Estimate of $618.4 million and declined 29.8% year over year.

United Parcel Service’s UPS earnings (excluding 10 cents from non-recurring items) per share of $2.13 surpassed the Zacks Consensus Estimate of $1.04. The bottom line also improved 8.7% year over year. The company, carrying a Zacks Rank #3, generated revenues worth $20,459 million in the quarter, outperforming the Zacks Consensus Estimate of $17,344.4 million. Moreover, the top line improved 13.4% on a year-over-year basis.

Norfolk Southern Corporation’s NSC second-quarter earnings of $1.53 per share surpassed the Zacks Consensus Estimate of $1.39. However, the bottom line plunged 43% on a year-over-year basis. Railway operating revenues in the quarter under review came in at $2,085 million, edging past the Zacks Consensus Estimate of $2,061.5 million. This Zacks Rank #3 company’s top line however declined 29% year over year.

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United Parcel Service, Inc. (UPS) : Free Stock Analysis Report
 
Norfolk Southern Corporation (NSC) : Free Stock Analysis Report
 
Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
 
Kirby Corporation (KEX) : Free Stock Analysis Report
 
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