Yahoo Finance Gol Linhas (GOL) Rides on Solid Air Traffic Despite Cost Woes
Gol Linhas GOL is benefiting from buoyant air-travel demand (particularly on the leisure front). However, escalated fuel costs are limiting its bottom-line growth.
Factors Favoring GOL
The gradual improvement in air-travel demand is a huge boon for Gol Linhas. Owing to this tailwind, the company reported healthy traffic data for May. The number of flight departures at GOL in May registered a 20.7% year-over-year increase.
Domestic departures, accounting for more than 95% of total departures during the month, have grown 19.3% on a year-over-year basis. On the domestic front, the number of seats increased 19.5% in May.
International departures have surged 66.9% in May on a year-over-year basis. Consolidated passenger on board metric rose 20.1% year over year.
In first-quarter 2023, revenues from passenger transportation, accounting for 92.2% of total revenues, improved 50.6%, thanks to continued recovery in air-travel demand in Brazil. Gol Linhas transported 7.9 million passengers in the first quarter, up 17.7% from the year-ago number. Strong air-travel demand is likely to aid second-quarter results as well.
With air-travel demand improving, Gol Linahs’ acquisition of MAP Transportes Aéreos Ltd, a Brazilian domestic airline, for R$28 million is a prudent move. The acquisition is likely to boost the company's top line by attracting additional traffic.
Key Risk
Escalating fuel prices pose a threat to Gol Linhas’ bottom line. In the first quarter of 2023, average fuel price per liter increased 24.4% year over year. Total operating expenses rose 31.2% year over year, primarily due to significant increase in fuel costs. For 2023, GOL continues to expect fuel price per liter to be R$5.4.
In May, consolidated load factor (percentage of seats filled by passengers) declined to 76.1% compared with 77.3% a year ago. On a consolidated basis, load factor decreased as traffic growth of 13.1% in the month was less than the capacity expansion of 14.9%.
Zacks Rank & Key Picks
Currently, GOL carries a Zacks Rank #3 (Hold).
Some better-ranked stocks for investors interested in the Zacks Airline industry are Copa Holdings, S.A. CPA and Allegiant Travel Company ALGT.
Copa Holdings, which presently sports a Zacks Rank #1 (Strong Buy), is aided by improved air-travel demand. We are encouraged by the company’s initiatives to modernize its fleet. CPA's focus on its cargo segment is also impressive. You can see the complete list of today’s Zacks #1 Rank stocks here.
For second-quarter and full-year 2023, CPA’s earnings are expected to register 765.6% and 75.4% growth, respectively, on a year-over-year basis.
Allegiant, currently sporting a Zacks Rank #1, also benefits from buoyant air-travel demand. With air-travel demand rising in the United States, operating revenues improved 8.5% year over year in 2022.
Management expects revenues to remain strong in 2023 as well. In first-quarter 2023, operating revenues increased 29.9% on a year-over-year basis. For second-quarter and full-year 2023, ALGT’s earnings are estimated to rise 364.5% and 192%, respectively, on a year-over-year basis.
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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
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