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GOL Linhas' (GOL) Q4 Loss Wider than Expected, Sales Miss

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Latin-American carrier, GOL Linhas Aereas Inteligentes S.A . GOL posted disappointing results for the fourth quarter of 2016, reporting wider-than-expected loss and lower-than-expected revenues. The carrier's fourth-quarter loss of 26 cents was wider than the Zacks Consensus Estimate of a loss of 12 cents. However, the loss was much narrower than the year-ago figure of 90 cents.

Net revenue in the final quarter of 2016 came in at $808 million (R$2.66 billion). While ancillary and cargo revenues dipped 1.3%, passenger revenues were up 0.7%. The top line also fell short of the Zacks Consensus Estimate of $856 million.

Operational Statistics

Revenue passenger kilometers (RPK) - the measure of revenues generated per kilometer per passenger - deteriorated 3% year over year. A decrease of 9.1% in international RPK and 2.2% in domestic RPK mainly contributed to the deterioration.

Also, available seat kilometers (ASK) - the measure of an airline's passenger carrying capacity - fell 5.7% year over year. A 14.9% decline in international ASK and 4.5% in domestic ASK led to the downside.

During the reported quarter, the company's total load factor (percentage of seats filled with passengers) was 77.6% compared with 75.4% in the year-ago quarter. The metric improved as capacity contraction was more than the decline in traffic.

Financials

GOL Linhas exited 2016 with cash and cash equivalents of R$562.2 million compared with R$1,072 million at year-end 2015. Additionally, long-term debt totaled R$5,543million in 2016 compared with R$7,908 million at year-end 2015.

Operating costs and expenses in the quarter were down 7.9% to R$9,169.5 million. While total volume of departures fell 19.5%, total number of seats available deteriorated 19%, both on a year-over-year basis.

Gol Linhas Aereas Inteligentes S.A. Price, Consensus and EPS Surprise

Gol Linhas Aereas Inteligentes S.A. Price, Consensus and EPS Surprise | Gol Linhas Aereas Inteligentes S.A. Quote

Outlook

The carrier unveiled a forecast for 2017 in line with the struggling Brazilian economy. The company expects earnings before interest and taxes (EBIT) margin - a measure of the company's earnings ability - in the band of 6% to 8% for full-year 2017. Moreover, the company, which is projecting an average fleet size of 115, expects capacity (available seat kilometers) to either remain flat or decline up to 2% on a year-over-year basis.

With the volume of departures expected to decline in the band of 3% to 5%, given the sorry state of the economy, the carrier is trimming the number of seats to cope with the struggles. Total seats are also projected in the range of (3%) to (5%). Another important metric, load factor is projected in the range of 77% to 79% in 2017.

Despite stiff competition from its peers like Copa Holdings S.A. CPA and LATAM Airlines Group S.A. LFL in the Latin American space, the company is expected to perform well in the near term, driven by its restructuring efforts. This is reflected by the company's Zacks Rank #1 (Strong Buy).You can see the complete list of today's Zacks #1 Rank stocks here .

Important release Coming up

With the earnings season almost over, investors interested in the broader transportation space will await results from the likes of FLY Leasing Limited FLY . The company, which will release fourth-quarter results on Mar 9, has an impressive history with respect to earnings per share. The company beat the Zacks Consensus Estimate in each of the last four quarters with an average positive surprise of 36.49%.

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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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