GOL Linhas Aereas Inteligentes S.A GOL recently reported the air traffic figures for the month of November. According to the update, traffic - measured in revenue passenger kilometers (RPK) - dipped 0.5% to 2.88 billion from 2.89 billion a year ago.
On a year-over-year basis, consolidated capacity (or available seat kilometers/ASKs) contracted 6.4% to 3.7 billion. This was mainly because of declines of 4.9% and 17% in domestic and international capacity, respectively. International RPK in the month deteriorated 9.9%. However, domestic RPK increased by 0.7%. The carrier witnessed a 12.9% decrease in passenger count in Nov 2016.
On the other hand, load factor - percentage of seats filled by passengers - rose to 77.8% from 73.2% in Nov 2015. At the end of the first eleven months of 2016, RPK was down 6.7%, while ASK slipped 7%. Load factor for the same period improved 0.2 percentage points. The company recorded a 16.7% reduction in number of seats in November, while volume of departures decreased 17%.
Rating Maintained by S&P
Per media reports , global rating agency - S&P Global - has maintained the company's rating. Payments made by GOL Linhas in 2012 and 2013 had been under review by tax authorities in Brazil. This is part of an ongoing investigation in Brazil regarding corruption. Several companies are being scrutinized in the nation due to this. GOL Linhas will be paying a fine of around $3.6 million to tax authorities in relation to this investigation. According to S&P, the payment is not expected to have an immediate effect on the company and its cash flows and liquidity are not likely to be weakened by the payment. However, the company continues to hold negative ratings due to a number of challenges, such as macroeconomic issues in Brazil, market volatility and a strong U.S. dollar. GOL Linhas also faces tough competition from the likes of Copa Holdings CPA , LATAM Airlines LFL , and Avianca Holdings S.A. AVH .
Since the company's ratings were not changed, GOL Linhas inched up 2.58% at the close of business on Dec 13. However, we note that the company has underperformed the Zacks categorized Transportation-Airline industry over the last three months. The stock has declined 32.86% compared with the industry, which has advanced 20.57% over the same period.
We believe that it will be possible for the stock to perform better once the ongoing investigations in Brazil are over and there is more clarity on its overall impact on the company's performance.
GOL Linhas currently holds a Zacks Rank #3 (Hold).You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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