GOL Posts Wider Q4 Loss Despite Y/Y Revenue Growth

GOL Linhas Aereas Inteligentes S.A. GOL reported fourth-quarter 2014 net loss approximately $248 million, much wider than the year-ago loss of $8.4 million. Net loss in 2014 was approximately $474 million, much wider than the year-ago figure. A decline in domestic supply hurt the 2014 results.

Quarterly Revenues

Net revenue in the fourth quarter increased marginally to R$2,729.8 million. Increased demand and load factor, in addition to the company’s efforts to enhance service for its customers, accounted for the year-over-year growth.

Passenger revenues grossed R$2,440.8 million while cargo revenues totaled R$289 million.

Operational Statistics

Revenue passenger kilometers (RPK) – implying revenue generated per kilometer per passenger –improved 9.1% year over year to 10,352 million. International RPK spiked 24.5% while domestic RPK rose 7.5%.

Available Seat kilometers (ASK) – measuring an airline's passenger carrying capacity – increased 3.8% year over year to 13,155 million. ASK in the domestic market reduced 1.8% against 19.8% growth on the international front.

During the final quarter of 2014, the company’s total load factor stood at 78.7%, up 390 basis points (bps) from the year-ago quarter. Domestically, load factor moved up 430 bps while internationally, it rose 270 bps.

Margins

Operating costs and expenses in the quarter decreased 0.3% to R$2,558.8 million. Fourth-quarter 2014 operating income (EBIT) improved to R$170.7 million, up 4.8%.

Financials

Exiting 2014, GOL had cash and cash equivalents of R$1,898.8 million against R$1,635.7 million at the end of 2013. Long-term debt came in at R$5,124.5 million in the reported quarter as against R$5,148.6 million at the end of 2013.

2015 Outlook

For 2015, the company expects domestic supply to remain flat year-over-year. Moreover, the company expects to report a positive operating result for 2015. Operating margin for the year is expected to vary between 2% and 5%.

Zacks Rank

GOL carries a Zacks Rank #3 (Hold). Better-ranked airline stocks include JetBlue Airways Corp. JBLU, Alaska Air Group ALK and Southwest Airlines Co. LUV. While JetBlue sports a Zacks Rank #1 (Strong Buy), both Alaska Air and Southwest carry a Zacks Rank #2 (Buy).

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