GOL Linhas Aéreas Inteligentes S.A.
) reported air traffic update and announced the company's total
supply, demand, yield and load factor for the month of May,
Flight rationalization program, which commenced in March 2012,
have been cutting down longer routes and night flights over these
few months. This, in turn, has led to a fall in GOL's domestic
supply by 1.2% over May 2011. Although such a measure was
targeted to raise flight profitability, it resulted in a 7%
reduction in daily aircraft productivity. Also, at the end of May
2012, GOL's route network comprised approximately 810 daily flights
versus 900 in May 2011.
Supply on GOL's international route network fell by 24.6% year
over year, on account of discontinuation of flights to Bogotá,
Colombia and replacement of 187-seat 737-800s with 144-seat
737-700s on flights to Montevideo.
Looking at the domestic demand side, GOL recorded 3.2%
year-over-year increase in domestic demand on account of "mini
holiday break" on Labor Day (May 1). International demand however
declined 29.4% year over year due to the discontinuation of flights
to Bogotá and the replacement on Montevideo flights.
GOL's net yieldinched up 2% year over year while net PRASK
increased approximately 6.5% over the year-ago period. The
company's total load factor was recorded at 65.2%, up 2.3
percentage points above May 2011.
Also, on May 4, GOLreported financial results for the first
quarter of 2012 with a net loss of US$23.4 million. The loss was
due to rising operating costs, especially fuel, landing fees at
Brazilian airports as well as currency depreciation and income
taxes. However, GOL's strategy of enhancing the efficacy of its
fleet continues to boost productivity and occupancy rates
reinvigorating customer demand.
GOL Linhas, one of the most profitable low-cost airlines in the
world, gives a tough competition to other industry players, such as
Copa Holdings SA
LAN Airlines S.A
We currently maintain a long-term 'Neutral' recommendation on
the stock. Also, GOL has a Zacks #3 Rank, which translates into a
short-term (1-3 months) 'Hold' rating.
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