GOL Linhas Posts Decline In Traffic And Capacity In August

GOL Linhas Aereas Inteligentes S.A (NYSE:GOL) recently came up with the report on air traffic for the month of August. According to the update, traffic – measured in revenue passenger kilometers (RPK) – declined 5.6% from 3.1 billion recorded a year ago to 2.89 billion.

Also, on a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) was down 8.1% to 3.7 billion mainly because of declines of 5.4% and 25.3% in domestic and international capacity, respectively. Likewise, both domestic and international RPK in the month deteriorated a respective 2.7% and 24.2%. Also, the carrier witnessed a 14.5% plunge in passenger count in Aug 2016.

On the other hand, the load factor, which represents the percentage of seats filled by passengers, was down to 77.9% from 75.7% in Aug 2015. At the end of the first eight months of 2016, RPK was down 8.3%, while ASK slipped 7.7%. Similarly, load factor for the same period fell 0.5 percentage points.

The sharp drop in international traffic and capacity is a major concern. Adverse economic conditions in Brazil, along with foreign currency headwinds owing to the strengthening of the U.S. dollar against the Brazilian real, was largely responsible for GOL Linhas’ dismal performance.

We expect these adverse factors to persist in the near future too as any significant improvement in the macroeconomic factors seems unlikely at the moment.

Zacks Rank & Stocks to Consider

GOL Linhas currently carries a Zacks Rank #3 (Hold). A better-ranked stock from the same industry is Copa Holdings SA (NYSE:CPA) with a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. Some other well-ranked stocks in the airline space include ANA Holdings Inc. (OTC:ALNPY) and SkyWest Inc. (NASDAQ:SKYW) . Both these stocks carry a Zacks Rank #2 (Buy).

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