Gol Linhas' Q2 Unit Revenue View Bullish, Costs View Bleak

Gol Linhas Aereas Inteligentes S.A. (NYSE:GOL) has provided an update on its likely performance in second-quarter 2019.

Witnessing solid demand, the carrier anticipates passenger unit revenues (PRASK) to rise approximately 24% year over year. Moreover, unit revenue (RASK) is forecast to jump nearly 23%.

EBITDA margin is expected between 22% and 24% in the upcoming quarterly release compared with 16.4% achieved in the year-ago period. Also, EBIT margin is estimated in the 9-10% range in the same time frame.

While total demand (RPK) is predicted to rise approximately 11.6% in the second quarter, total capacity (ASK) is expected to climb approximately 6.5%. Additionally, total seats are anticipated to be up approximately 3.2% year over year.

However, average fuel price per liter is anticipated in the R$2.94-R$3.02 band compared with R$2.73 reported in the year ago quarter. Also, non-fuel unit costs are projected to ascend approximately 15% in the quarter due to 9% year-over-year depreciation of the Brazilian real and other factors.

As of Jun 30, 2019, Gol Linhas’ Net Debt/LTM EBITDA ratio was approximately 3.2x. During the quarter, it repaid R$100 million of debt. The company envisions total liquidity of R$3.7 billion at the end of the quarter, higher than R$3.5 billion at the end of the previous quarter.

Zacks Rank & Other Key Picks

Gol Linhas carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same space include Air China Ltd. (OTC:AIRYY) , United Airlines Holdings Inc (NASDAQ:UAL) and Azul (NYSE:AZUL) . While Air China and United Airlines sport a Zacks Rank #1 (Strong Buy), Azul holds a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Air China, United Airlines and Azul have rallied more than 11%, 26% and 100%, respectively, in a year’s time.

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