GOL Recovers in 3Q - Analyst Blog

GOL Linhas Aereas Inteligentes S.A. (GOL) reported a net loss of R$309.4 million (US$152.7 million) in the third quarter of 2012, much lower than the year-ago loss of R$516.5 million (US$316.9 million).

Despite the narrower loss, the quarter's results were impacted largely by a rise in fuel costs and landing fees at Brazilian airports with currency depreciation adding to the woes.


Consolidated net revenue was up 7.8% year over year to R$1,987.3 million (US$993.7 million) in the reported quarter. This increase reflected a rise in consolidated demand as well as in load factor.

During the quarter, the company's total load factor was recorded at 73.8%, up 210 basis points from the year-ago quarter. GOL's domestic supply decreased 8.4% while supply on GOL's international route network increased 7.0% year over year. Looking at the domestic demand side, GOL recorded a 5.7% year-over-year decline whereas, international demand increased 8.8% year over year.

Exiting the quarter, GOL Linhas had a total fleet of 127 B737-700 and 800 NG aircraft with an average age of 7.4 years, in addition to 20 B737-300s, with an average age of 21.0 years. Besides, under an operational leasing contract, the company took delivery of four aircraft and returned four, including three of Webjet's 737-300s.


Operating costs and expenses increased 14% year over year to R$2,188.0 million (US$1,094.0 million) in the reported quarter. Operating income (EBIT) came in at a negative R$200.6 million (US$100.3 million) compared to an operating loss of R$75.1 million (US$46.1 million) in the year-ago quarter. The operating margin stood at negative 10.1% in comparison with a negative operating margin of 4.1% in the prior-year period.

The company reported EBITDA of negative R$79.5 million (US$39.8 million), down from EBITDA of R$15.6 million (US$9.6 million) reported in third quarter 2011. EBITDA margin came in at (4.0%) compared with 0.8% in the third quarter of 2011.

Balance Sheet

Exiting the third quarter 2012, GOL Linhas' cash and cash equivalents increased to R$1.05 billion (US$525.3 million) from R$0.98 billion (US$0.47 billion) sequentially. Long-term debt increased sequentially to R$4.64 billion (US$2.32 billion) from R$4.62 billion (US$2.2 billion).

Further, GOL retains its target of fleet rationalization with a future fleet plan of 138 in 2012, 136 in 2013 and 140 in 2014.

GOL Linhas, one of the most profitable low-cost airlines in the world, gives tough competition to other industry players, such as Copa Holdings SA ( CPA ), LAN Airlines S.A ( LFL ), and TAM S.A ( TAM ).

GOL has a Zacks #5 Rank, which translates into a short-term (1-3 months) Strong Sell rating.

COPA HLDGS SA-A (CPA): Free Stock Analysis Report

GOL LINHAS-ADR (GOL): Free Stock Analysis Report

LAN CHILE-ADR (LFL): Free Stock Analysis Report

(TAM): ETF Research Reports

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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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