GOL Linhas Aereas Inteligentes S.A.
) reported first-quarter 2013 net loss per share of R$0.27 or a
loss of approximately 13 cents, which was wider than the Zacks
Consensus Estimate of loss per share of one cent. The results
also deteriorated from the year-ago loss of R$0.15 (or
approximately 7 cents). The quarter's results were impacted
largely by a rise in aircraft rent and traffic service fess along
with higher maintenance, materials and repair charges.
The company reported first-quarter net loss of R$75.3 million
(approximately $37.6 million), a steep plunge from the year-ago
net income of R$41.4 million (approximately $20.7 million).
Net revenue was down 3.8% year over year at R$2,082.7 million
(approximately $1,040.9 million) in the reported quarter. The
results also failed to meet our expectation of $1,061.0 million.
Revenue passenger kilometers or RPK - implying revenue generated
per kilometer per passenger - for the quarter declined 12.8% from
the year-ago period to 8,292.0 million. International RPK
improvement of 21.1% was somewhat negated by lower revenues (down
12.8%) from the domestic grounds.
Available seat kilometers (ASK) - that measures an airline's
passenger carrying capacity - fell 11.9% year over year to
12,329.0 million, with domestic decline of 15.7%. On the
international front, ASK moved up 34.0%.
During the quarter, the company's total load factor was at 67.3%,
down 60 basis points from the year-ago quarter. Load factor on
the domestic arena moved up 10 basis points (bps) and
internationally, it plunged 650 bps.
Exiting the quarter, GOL Linhas had a total fleet of 148 jets
The Boeing Company'
) 131 B737-700 and 800 NG aircraft with an average age of 7.1
years, in addition to 15 B737-300s.
On Nov 23, 2012, GOL announced the grounding of 19 B737-300s due
to discontinuation of Webjet's operations. During the reported
quarter, 4 of the leased aircraft of Webjet were returned and the
remaining will be returned by mid 2013. The company is seeking
negation for the remaining six B737-300s.
Operating costs and expenses fell 8.2% year over year to
R$1,981.5 million (approximately $990.4 million) in the reported
quarter, based on a drop in fuel prices and less pressure from
salaries and wages.
First-quarter operating income (EBIT) came in at R$101.2 million
(approximately $50.6 million) compared with R$7.3 million
(approximately $3.6 million) in the year-ago quarter. Operating
margin was 4.9%, up 460 basis points from first quarter 2012.
The company's first-quarter adjusted EBITDA of R$212.1 million
(approximately $106.0 million) was up from EBITDA of R$126.2
million (approximately $63.1 million) reported in first quarter
2012. EBITDA margin was 10.2% compared with 5.8% in the
Exiting the first quarter, GOL Linhas' cash and cash equivalents
decreased to R$866.0 million (approximately $432.8 million) from
R$1,314.6 million (approximately $657.0 million) in the
corresponding year-ago period. Long-term debt increased to
R$4,849.9 million (approximately $2,424.0 million) from R$4,404.2
million (approximately $2,201.2 million) in the year-earlier
period. The company incurred capital spending of nearly R$242.0
million (approximately $121.0 million).
During the quarter, management of GOL gave a nod for the initial
public offering (IPO) of Smiles S.A. On May 10, Smiles S.A.
commenced the offering at a price of about R$1.1 billion,
representing 52,173,912 common shares.
GOL entered into a codeshare agreement with
), whereby the two carriers will maximize the connecting routes
in the Brazil-United States passage. By August-end, all spots in
Brazil that are operated by Delta will be incorporated into GOL's
network. These will also be available for sale through GOL's
We believe that GOL's long-term business strategy of route
expansion, strategic acquisitions and agreements with other
companies are likely to create significant operational synergies.
However, various risk factors such as competitive threats,
international business risks, increased aircraft maintenance
costs along with lower demand remain our nagging concerns on the
stock. Also, the company's increased loans and debts along with
the effects of currency depreciation may cloud the near-term
GOL - which operates with other industry players such as
Copa Holdings SA
) - has a Zacks Rank #4 (Sell).
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