GOL Reports Q4 Loss, Misses Ests (Revised) - Analyst Blog
28 March 2014 - 12:00AM
Zacks
GOL Linhas Aereas
Inteligentes S.A. (GOL) reported fourth-quarter 2013 net
loss per share of R$0.07 or approximately 3 cents, which compared
unfavorably with the Zacks Consensus Estimate of a break-even. The
results, however, improved from the year-ago loss of R$1.66 (or
approximately 81 cents). The quarter’s results were hurt by a
decline in domestic supply, record jet fuel prices and depreciation
of Brazilian real against the dollar.
The company reported fourth-quarter
net loss of R$19.3 million (approximately $8.49 million), better
than the year-ago net loss of R$447.1 million (approximately $217.2
million).
For full-year 2013, the company
reported loss per share of R$2.62 (approximately $1.22), 53.2%
lower than the year-ago loss of R$5.61 (approximately $2.88).
For the year, net loss stood at
R$724.6 million (approximately $337.15 million), 52.1% narrower
than the year-ago loss of R$1,512.9 million (approximately $777.78
million).
Revenue
Net revenue increased 28.7% year
over year to R$2,728.2 million (approximately $1199.87 million) in
the reported quarter. The top line was way ahead of the Zacks
Consensus Estimate of $961.0 million. Net revenue for full-year
2013 was up 10.5% year over year to R$8,956.2 million
(approximately $4167.3 million).
The domestic market generated
revenues of R$2,494.6 million ($1,097.12 million), while
international market revenues totaled R$233.6 million ($102.73
million).
Operational
Statistics
Revenue passenger kilometers or RPK
– implying revenue generated per kilometer per passenger – for the
quarter improved 10.1% from the year-ago quarter to 9,484.4
million. International RPK improved 44.4% while domestic RPK rose
7.3%.
Available Seat kilometers (ASK) –
that measures an airline's passenger carrying capacity – inched up
2.6% year over year to 12,667.4 million. ASK in the domestic market
improved 0.3% against a substantial 26.2% in the international
front.
During the quarter, the company’s
total load factor stood at 74.8%, up 510 basis points (bps) from
the year-ago quarter. Domestically, load factor moved up 490 bps
and internationally, it rose 860 bps.
Margins
Operating costs and expenses, in
the reported quarter, remained flat with the year-ago figure of
R$2,565.35 million (approximately $1,128.24 million).
Fourth-quarter operating income
(EBIT) came in at R$162.86 million (approximately $71.62 million)
compared with an operating loss of R$357.57 million (approximately
$173.7 million) in the year-earlier quarter.
Financials
Exiting 2013, GOL Linhas' cash and
cash equivalents increased to R$1,635.64 million (approximately
$761.1 million) from R$775.51 million (approximately $367.7
million) in the corresponding year-ago quarter. Long-term debt
increased to R$5,148.7 million (approximately $2,395.7 million)
from R$3,471.55 million (approximately $1,690.0 million) in
2012.
Outlook
For 2014, the company is expecting
a negative 3–1% variation in domestic capacity, while growth in
international market is projected at around 8%. GOL expects
increased profits on improved yield management, supply flexibility
and increased load factor. The company expects RASK (revenue per
available seat kilometer) growth of above 10% and a CASK (cost of
available seat kilometer), excluding fuel growth, of around 10% or
below. In keeping with these views, GOL expects EBIT margin of 3–6%
in 2014.
Our Take
Persistent weakness in Brazilian
currency, which contributed to the 8% increase in fuel prices
offsetting some of the positives of the quarter, is likely to pose
considerable obstruction to GOL’s 2014 growth strategies. Other
risks, such as competition, subdued global economy, increased
aircraft maintenance costs and high debt, remain concerns.
However, Brazil will host the 2014
football world cup and 2016 summer Olympics, two of the biggest
sporting extravaganzas. The country is expected to get around
600,000 international and 3 million domestic visitors this year,
presenting a big opportunity for passenger carriers like GOL.
GOL – which operates with other
industry players like Copa Holdings S.A. (CPA) –
has a Zacks Rank #4 (Sell).
Other Stocks
Better-ranked stocks within this
sector include Southwest Airlines Co. (LUV) and
American Airlines Group Inc. (AAL). Both the
stocks sport a Zacks Rank #1 (Strong Buy).
(We have revised this article to correct a mistake. The
previous version, published earlier, should not be relied
upon.)
AMER AIRLINES (AAL): Free Stock Analysis Report
COPA HLDGS SA-A (CPA): Free Stock Analysis Report
GOL LINHAS-ADR (GOL): Free Stock Analysis Report
SOUTHWEST AIR (LUV): Free Stock Analysis Report
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