GOL Linhas (GOL) Reports Profit In Q2; Revenues Decline

GOL Linhas Aereas Inteligentes S.A. (NYSE:GOL) reported second-quarter 2016 financial results wherein net profits totaled R$309.5 million (approximately $91.0 million). In the year-ago quarter, the company had reported a net loss of R$354.9 million.

Revenues

Net revenue declined 2% year over year to R$2,089 million (approximately $614.4 million). Cargo revenues improved 4.8%, while passenger revenues declined 3%.

Operational Statistics

Revenue passenger kilometers (RPK) – implying revenue generated per kilometer per passenger – deteriorated 11.2% year over year, mainly due to a decrease of 10.6% in International RPK and 11.2% in domestic RPK.

Available seat kilometers (ASK) – the measure of an airline's passenger carrying capacity – fell 9.3% year over year owing to a 12.2% decline in international ASK and 8.9% in domestic ASK.

During the reported quarter, the company’s total load factor (percentage of seats filled with passengers) stood at 75.2%, compared with 76.8% in the year-ago quarter. Domestically, load factor fell 200 basis points (bps) while internationally, the figure improved 110 bps.

GOL LINHAS-ADR Price, Consensus and EPS Surprise

GOL LINHAS-ADR Price, Consensus and EPS Surprise | GOL LINHAS-ADR Quote

Financials

Exiting the second quarter of 2016, GOL Linhas had cash and cash equivalents of R$607 million (approximately $178.5 million), compared with R$1,072 million (approximately $315.3 million) at 2015-end. Long-term debt totaled R$5,956 million (roughly $1,751.8 million) in the quarter, compared with R$7,908 million (approximately $2,325.9 million) at 2015-end.

Margins and Outlook

Operating costs and expenses in the quarter were down 5% to R$2,260.8 million (approximately $665.0 million). Total volume of departures fell 21% while supply deteriorated 20.8% on a year-over-year basis.

Meanwhile, GOL Linhas maintained its outlook at 15–18% decline in departures for 2016, while supply is projected to fall 5–8%.

Zacks Rank and Stocks to Consider

GOL Linhas currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the transportation sector include Copa Holdings SA (NYSE:CPA) with a Zacks Rank #1 (Strong Buy), and Dynagas LNG Partners LP (NYSE:DLNG) and SkyWest Inc. (NASDAQ:SKYW) with a Zacks Rank #2 (Buy).