Low-cost and low-fare airline
GOL Linhas Aereas Inteligentes S.A.
) reported weak air traffic for Feb 2013. Revenue passenger
kilometers or RPK - implies revenue generated per kilometer per
passenger - for the month declined 17.8% from the corresponding
month prior year to 2,417.8 million. While revenue from domestic
grounds registered a 20.3% drop, international RPK improved
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Available seat kilometers (ASK) - that measures an airline's
passenger carrying capacity - fell 15.3% year over year to
3,776.4 million, with domestic decline of 19.2%. On the
international front, ASK moved up 29.7%.
Load factor on the domestic arena fell 90 basis points (bps) and
internationally it plunged 1,020 bps. On a consolidated basis,
the load factor was 64.0% compared with 66.0% recorded in Feb
For the reported month, the passenger revenue per available seat
kilometer (PRASK) increased by 14% as a result of the reduction
in the domestic market supply. Also, fuel prices for the month
increased roughly 16% year over year.
Performance within the boundaries of the country was negatively
impacted by the channeling of domestic capacity to overseas
routes and the freeze of
The Boeing Company
) 737-300 aircraft services, following the suspension of Webjet
operation, last November.
Activities in the international market remained impressive as a
result of expansion of GOL's operations to newer destinations
like Santo Domingo, Miami and Orlando.
Latin America based GOL currently holds a Zacks Rank #3 (Hold).
The company is expected to perform well in the coming months
based on its strategies of route expansion, lucrative
acquisitions and collaborations with other prominent market
players. These are expected to create significant operational
synergies, resulting in higher revenues.
However, we stay cautious due to competitive threats,
international business risks, increased operating expenses along
with lower demand and appreciation of the U.S. dollar against
Other airline stocks worth considering include Zacks Ranked #1
Ryanair Holdings plc
) that has a Strong Buy rating as well as
Delta Air Lines Inc.
) that currently holds a Zacks Rank #2 (Buy).