Gol Linhas' (GOL) Q4 Unit Revenue & Cost Guidance Upbeat

Gol Linhas Aereas Inteligentes S.A. (NYSE:GOL) provided an update on fourth-quarter 2019 performance.

The company expects earnings per share to have been 30 cents in the fourth quarter, in line with the Zacks Consensus Estimate. Additionally, EBITDA margin is anticipated to have been 37-39% in the quarter compared with 16.3% reported in the fourth quarter of 2018. Also, the company predicts EBIT margin to have been 26-27% in the to-be-reported quarter.

With revenue passenger kilometers (RPK or total demand) estimated to have risen 6% on the back of strong demand for Gol Linhas’ services, passenger revenue per available seat kilometers is likely to have augmented approximately 11%, per the company. Additionally, revenue per available seat kilometers is predicted to have ascended 11% year over year in the fourth quarter. While available seat kilometers (ASK or capacity) are expected to have climbed 6%, total capacity (seats) is expected to have increased 9% in the fourth quarter.

On a further positive note, with ramped-up productivity cost per ASK excluding fuel (CASK, ex-fuel) is expected to have declined 10% year over year in the soon-to-be-reported quarter. Moreover, with 13% decrease in average fuel price and a 2% dip in fuel consumption per flight hour, CASK fuel (fuel unit costs) is likely to have plunged approximately 21%. Average fuel price per liter is estimated to have been in the range of R$2.80-R$2.86 during the fourth quarter.

At the end of the December quarter, Gol Linhas’ financial leverage, measured by the Net Debt/LTM EBITDA ratio, was approximately 2.7X. After amortization of R$100 million debt in the fourth quarter, total liquidity is anticipated to have been R$4.3 billion at the end of the fourth quarter compared with R$4 billion at the end of December 2018.

Zacks Rank & Key Picks

Gol Linhas carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the same space are Controladora Vuela Compania de Aviacion, S.A.B. de C.V. (NYSE:VLRS) , Delta Air Lines, Inc. (NYSE:DAL) and SkyWest, Inc. (NASDAQ:SKYW) . While Controladora Vuela sports a Zacks Rank #1 (Strong Buy), Delta and SkyWest carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Controladora Vuela, Delta and SkyWest have rallied more than 56%, 20% and 30%, respectively, in a year’s time.

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