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Gol Linhas (GOL) Buoys Investors’ Hope With Boosted Q3 View


Gol Linhas Aereas Inteligentes S.A. GOL recently provided updated information on third-quarter 2017 guidance.

The low-cost Latin American carrier anticipates third-quarter operating margin in the range of 12-12.5%, up approximately 3% year over year. This metric (excluding non-recurring expenses) was 9.1% in the comparable quarter previous year. GOL expects third-quarter unit revenue (RASK) to increase in the 8.5-9% band.

The airline expects earnings before interest, tax, depreciation and amortization (EBITDA) and earnings before interest and taxes (EBIT) margins, both excluding non-recurring expenses, in the range of 17-17.5% and 12-12.5%, respectively. Ancillary Revenues (cargo and other) are projected between 14.5% and 15% of total net revenues. Aircraft Rent of approximately R$240 million is estimated in the soon-to-be-reported quarter. Average fuel price per liter is anticipated between R$2.00 and R$2.05. On the other hand, the carrier expects to incur non-recurring expenses in the range of R$5-R$10 million in the third quarter.

Passenger unit revenue (PRASK) has risen 6-6.5% year over year in the third quarter, thanks to the airline benefiting from capacity discipline and revenue management strategies. The carrier expects non-fuel unit costs (CASK ex-fuel), excluding non-recurring expenses, to be reduced almost 6% compared with second-quarter 2017, while it predicts the metric to increase nearly 3% year over year. Also, capacity (ASK) is projected to expand around 4% year over year in the third quarter of 2017.

The company is working hard to reduce its debt levels. In the third quarter of 2017, GOL lowered its debt, including finance and operating leases by approximately R$285 million.

GOL is expected to report third-quarter 2017 results on Nov 8.

Zacks Rank & Key Picks

GOL currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the airline space are Deutsche Lufthansa AG DLAKY, AZUL SA AZUL and Bristow Group Inc BRS. While Deutsche Lufthansa sports a Zacks Rank #1 (Strong Buy), AZUL and Bristow Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of Deutsche Lufthansa and AZUL have soared more than 100% and 28%, respectively, in a year, while Bristow Group shares have surged more than 46% in the last three months.

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