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GOL Linhas (GOL) Issues Bullish Q2 Forecast, Stock Up

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Shares of the Brazilian carrier GOL Linhas Areas InteligentesGOL have gained 13.32% to $12.68 on Jul 5, following the bullish projection unveiled by the company for the second quarter of 2017. In fact, shares of this Zacks Rank #3 (Hold) carrier have performed well so far this year. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

The stock has gained 86.2% on a year-to-date basis, handily outperforming the Zacks categorized Transportation Airline industry's gain of 16.4%.

Q2 View

GOL Linhas expects operating margin (excluding non recurring items) in the band of 1.5% to 2%. This projected range represents a marked improvement from the reading of -8.2% recorded a year ago. Moving ahead, the company expects earnings before interest, tax, depreciation and amortization (EBITDA) margin in the band of 6% to 7%.

Additionally, the carrier projects ancillary revenue (cargo and other) in the band of 14.5% to 15% of net revenue. On the back of its capacity discipline and revenue management plans, the company also anticipates passenger unit revenue (PRASK) to grow in the band of 7.5% to 8% on a year-over-year basis.

Meanwhile, unit revenue (RASK) is expected to increase in the band of 8.5% to 9% in the second quarter. On the contrary, GOL Linhas forecasts capacity (available seat kilometres) to decline 3.2% on a year-over-year basis. Also, non-fuel unit costs are projected to decline approximately 4%. The carrier further said that as part of its efforts to bring down its debt levels, it has reduced the same by approximately R$100 million in the quarter.

We note that GOL Linhas, which competes with the likes of Copa Holdings CPA , LATAM Airlines Group LTM and Azul SA AZUL in the Latin American space had recently issued an improved outlook for full-year 2017 as well.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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