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Gol Linhas (GOL) Q3 Loss Wider Than Expected, Revenues Plunge

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Gol Linhas Aereas Inteligentes GOL incurred a loss (excluding 89 cents from non-recurring items) of 91 cents per share in the third quarter of 2020, wider than the Zacks Consensus Estimate of a loss of 80 cents. In the year-ago period, the company had reported earnings of 34 cents per share.

Net operating revenues of $181.4 million also missed the Zacks Consensus Estimate of $188 million. Moreover, the top line declined significantly year over year with passenger revenues (accounting for 90.2% of total revenues) plummeting 74.9% on a year-over-year basis due to suppressed air-travel demand amid coronavirus concerns.

Cargo and other revenues also declined 54.1%. The airline carried only 2.6 million customers in the reported quarter, indicating a drop of 73% 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 71.5% year over year. The metric fell 67% on the domestic front. The carrier did not operate regular international flights in the quarter.

Consolidated available seat kilometers (“ASK”), measuring an airline's passenger-carrying capacity, decreased 70.2% year over year. Domestic capacity declined 65.2%.

The company’s total load factor (percentage of seats filled with passengers) was 79.3% compared with 82.9% in the year-ago period. The metric deteriorated as traffic declined more than the amount of capacity contraction. Average yield per passenger slipped 12% year over year to 27.78 cents.

Net passenger revenues per ASK declined 15.7%. Meanwhile, net revenues per ASK fell 11.7%. Average fuel price per liter decreased 16.7%. However, cost per ASK soared 51.6% year over year due to 46.8% reduction in aircraft use. Excluding fuel, the metric surged 79.9%. Total net operating expenses declined 44% year over year to R$1.73 billion.

Gol Linhas, carrying a Zacks Rank #4 (Sell), exited the quarter with total liquidity (cash and cash equivalents, cash investments, restricted cash, accounts receivable and securities and receivables) of R$2.2 billion compared with R$4 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 third quarter, operating activities consumed R$35.5 million, against an operating cash flow of R$1.07 billion in the year-ago period. The company repaid debts worth R$2.58 billion in the reported quarter. Long-term debt totaled R$12.93 billion at the end of the reported quarter, up 20.8% year over year.

Outlook

For the fourth quarter, Gol Linhas anticipates capacity to be double of that in the third quarter. By the end of 2020, the airline expects to operate an average of 94 aircraft, which indicates more than 75% of the operating fleet a year ago. Load factor is estimated to be approximately 80% in the fourth quarter. Moreover, the company expects to end the fourth quarter of 2020 with R$2.4 billion in liquidity and R$13.1 billion in adjusted net debt.

Performance of Other Airline Stocks

Spirit Airlines Inc. SAVE, carrying a Zacks Rank #3 (Hold), incurred a loss of $2.32 per share (excluding $1.25 from non-recurring items) in the June quarter, narrower than the Zacks Consensus Estimate of a loss of $2.63. Meanwhile, operating revenues of $401.9 million beat the Zacks Consensus Estimate of $384.7 million.

Southwest Airlines Co. LUV, carrying a Zacks Rank #3, incurred a loss of $1.99 per share (excluding 3 cents from non-recurring items) in the third quarter of 2020, narrower than the Zacks Consensus Estimate of a loss of $2.44. Moreover, operating revenues of $1,793 million surpassed the Zacks Consensus Estimate of $1,678.2 million.

SkyWest Inc SKYW, carrying a Zacks Rank #4, reported earnings of 66 cents per share, surpassing the Zacks Consensus Estimate of 9 cents. Quarterly revenues of $457.5 million surpassed the Zacks Consensus Estimate of $426.8 million.

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