Earlier this week, GOL Linhas Aรฉreas announced its consolidated results for the third quarter of 2018 along with that of the nine months of 2018 which shows revenues increased by 2.2% but load factor fell slightly. The airline also expects its revenues to fall looking ahead to the full year of 2018 and 2019.
Financial and Operational Highlights:
- Significantly improved operating indicators: RPKs increased by 2.2% to 9.9 billion in 3Q18, mainly due to a 4.5% increase in the number of transported passengers. As a result of strong passenger demand and GOL's continued focus on revenue management, the Company was able to achieve (i) an average yield per passenger of 27.44 cents (R$), an increase of 6.5% compared to 3Q17, (ii) an average load factor of 79.1%, a decrease of 1.1 p.p compared to 3Q17, and (iii) on-time performance of 92.1% in 3Q18 according to Infraero.
- Strong revenue growth: the combination of higher demand and optimized pricing resulted in net revenue for the quarter of R$2.9 billion, an increase of 8.3% compared to 3Q17. Net RASK was 23.22 cents (R$) in 3Q18, an increase of 4.5% over 3Q17. Net PRASK increased 5.0% over 3Q17, reaching 21.70 cents (R$). Average fare increased by 4.2% from R$299 to R$312. GOL's 2018 net revenue guidance is approximately R$11.5 billion.
- Controlled Cost environment: due to higher jet fuel prices, total CASK in 3Q18 increased 11.5% to 21.77 cents (R$) relative to 3Q17. On an ex-fuel basis, CASK fell by 3.4%. GOL remains the cost leader in South America for the 17th consecutive year.
- EBIT, EBITDA and EBITDAR margin: While the average price of jet fuel increased by 3.7% in 3Q18 over 2Q18, the combination of stronger pricing, higher demand, and R$10 million of operating results in hedging, permitted GOL's EBIT margin to reach 6.2% in 3Q18, the ninth consecutive quarter of profitable results. Operating income (EBIT) in 3Q18 was R$180.5 million, a reduction of 44.5% compared to 3Q17 (R$325.4 million). EBITDA margin was 12.3% in 3Q18, a decrease of 5.0 p.p. q-o-q. EBITDAR margin was 22.5% in 3Q18, down by 3.4 p.p. q-o-q over 3Q17. GOL's 2018 EBIT margin guidance is approximately 11%.
- Balance sheet strengthening: While the Real depreciated 3.8% against the U.S. dollar in 3Q18 (end of period) causing a net exchange and monetary variation loss of R$187.3 million, net debt (excluding perpetual bonds) to LTM EBITDA was 3.2x as of September 30, 2018, up versus June 30, 2018 (2.9x) and improving versus a year-ago metrics (3.4x). Total liquidity, including cash, financial investments, restricted cash and accounts receivable, totalled R$3.0 billion, flat in comparison to June 30, 2018 and an increase by R$871.6 million versus a year ago. The combination of GOL's operational cash flow generation of R$460.8 million in the quarter and stable cash liquidity increased the Company's financial flexibility.
- Preliminary IFRS 16: As a result of the mandatory adoption of IFRS 16 as of January 1, 2019, our preliminary valuation shows an estimate of a significant reduction in adjusted net debt, as well as an improvement in the net adjusted debt to LTM EBITDA ratio.
"We expect to continually drive our operational efficiency and capacity rationalization. In August, we took delivery of our second 737 MAX 8 aircraft, which enable GOL to serve Brazil's large addressable market of passengers travelling between Midwest/Northeast Brazil and the State of Florida," commented Paulo Kakinoff, CEO.
