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GOL Linhas (GOL) Posts Q1 Profit, Revenues Up; Keeps View

GOL Linhas Aereas Inteligentes S.A. GOL reported financial results for the first quarter of 2016. The Latin American carrier reported net profit of R$757 million (approximately $194.4 million). In the year-ago quarter, the company had reported a net loss of R$672.7 million.

Revenues

Net revenue climbed 8.3% year over year to R$2,713 million (approximately $696.7 million). Cargo revenues dipped 1.3%, while passenger revenues were up 9.5%.

Operational Statistics

Revenue passenger kilometers (RPK) – implying revenue generated per kilometer per passenger – deteriorated 6.6% year over year, mainly due to a decrease of 12% in International RPK and 5.9% declines in domestic RPK.

Available seat kilometers (ASK) – the measure of an airline's passenger carrying capacity – fell 5.9% year over year owing to a decline of 18.5% in international ASK and 4% in domestic ASK.

During the reported quarter, the company’s total load factor (percentage of seats filled with passengers) stood at 77.5%, compared with 78.1% in the year-ago quarter. Domestically, load factor fell 160 basis points (bps), while internationally, the figure improved 580 bps.

Financials

Exiting the first quarter of 2016, GOL had cash and cash equivalents of R$1,815.1 million (approximately $505.21 million), compared with R$2,299.5 million (approximately $580.6 million) at 2015 end. Long-term debt totaled R$7,031.1 million (roughly $1,957 million) in the quarter, compared with R$7,903.3 million (approximately $1,955.5 million) at 2015 end.

Margins and Outlook

Operating costs and expenses in the quarter were down 3.3% to R$2,272 million (approximately $583.3 million). Total volume of departures fell 8%, while total supply dropped 6% on a year-over-year basis. Meanwhile, GOL maintained its outlook of a 15–18% decline in departures in 2016, while supply is projected to fall in the 5–8% band.

GOL Linhas currently carries a Zacks Rank #2 (Buy). Other favorably ranked stocks in the same space include Air France-KLM SA AFLYY, Ryanair Holdings plc RYAAY and LATAM Airlines Group S.A. LFL. All of them carries the same Zacks Rank as GOL Linhas.

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