GOL Linhas (GOL) Reports Robust November Traffic Figures

Shares of GOL Linhas Aereas Inteligentes S.A. (NYSE:GOL) have performed exceedingly well so far this year, gaining in excess of 100% and significantly outperformed the Zacks Airline industry’s rally of 11.8%.

Ushering in further good news, the carrier recently unveiled an impressive November traffic report. Traffic, measured in revenue passenger kilometers (RPK), increased 7.1% to 3.12 billion in the month.

On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) rose 2.8% to 3.81 billion, primarily because of the expansion of 2% and 9.8% in domestic and international capacity, respectively. Domestic and international RPK in November also improved 7.2% and 6.3%, respectively. The carrier further witnessed a 6.3% increase in passenger count in the same period.

Load factor — percentage of seats filled by passengers — rose to 81% from 77.8% a year-ago, owing to traffic expansion exceeding capacity growth.

At the end of the first 11 months of 2017, RPK increased 3.1% while ASK inched up 0.3%. Moreover, load factor for the period improved 220 basis points to 79.6%. However, the company recorded a 4.6% reduction in the number of seats on a year-to-date basis while volume of departures fell 4.9%.

2018 Outlook

Gol Linhas, which competes with the likes of Copa Holdings (NYSE:CPA) in the Latin American space, issued a bullish outlook for 2018 backed by an improved economy. The company expects operating earnings before interest, taxes, depreciation and amortization (EBITDA) margin of around 16% (the metric is estimated to be around 14% in 2017). Additionally, the carrier projects an average fleet size of 118 (2017 projection stands at 116) and expects capacity (available seat kilometers) to expand between 1% and 3% in 2018. Volume of departures are anticipated to grow in the band of 1% to 3% (2017 guidance projects the metric to decline approximately 5%).

Another important metric, load factor (percentage of seats filled by passengers) is projected in the band of 79% to 80% in 2018 (the metric is estimated to be around 79% in 2017). Going forward, we expect the company’s focus on capacity discipline to result in increasing yields.

Zacks Rank & Other Stocks to Consider

Gol Linhas sports a Zacks Rank #1 (Strong Buy). Investors interested in the airline space may also consider Deutsche Lufthansa (DE:LHAG) AG (OTC:DLAKY) and SkyWest, Inc. (NASDAQ:SKYW) . While SkyWest sports a Zacks Rank #1, Deutsche Lufthansa carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Deutsche Lufthansa and SkyWest have surged more than 43% and 100%, respectively, year to date.

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