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

Shares of the Brazilian carrier GOL Linhas Areas Inteligentes GOL 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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Gol Linhas Aereas Inteligentes S.A. (GOL): Free Stock Analysis Report
 
Copa Holdings, S.A. (CPA): Free Stock Analysis Report
 
LATAM Airlines Group S.A. (LTM): Free Stock Analysis Report
 
AZUL SA (AZUL): Free Stock Analysis Report
 
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