On March 26, 2012, GOL Linhas A (GOL) reported financial results for the fourth quarter and fiscal 2011. Net income, in the quarter, was recorded at R$54.3 million (US$30.3 million), down 59% compared with a net income of R$132.2 million (US$78.2 million) in the year-ago quarter.
The loss was primarily attributable to the huge net expense, incurred from the depreciation of the Brazilian currency against US dollar. Such foreign exchange variation had a depressing effect on the company’s results as most of its financial liabilities are represented in Dollars. Increase in the cost of jet fuel as well as non-recurring expenses in 2011 added to the blow. Moreover, an expense related to 87 days of Webjet’s operations was also incorporated into the quarter’s net financial result.
For FY11, the company reported adjusted net loss of R$710.4 million (US$425.4 million), versus a net income of R$214.2 (US$122.4 million) reported in fiscal 2010.
Revenue
For the fourth quarter 2011, consolidated net revenue was R$2,233.5 million (US$1,247.8 million), up 19.5% year over year. This increase reflected incorporation of Webjet’s operating revenue of R$280.6 million (US$ 156.8 million) for 87 days during 4Q11.
The load factor on GOL’s route network reached 64.3% in 4Q11, down from 67.7% reported in 4Q10 and 71.5% in the prior quarter. GOL’s domestic demand increased by 2.9% during the quarter based on an increase of 9.0% in supply. International route network demand fell by 19.5% over the prior-year quarter primarily due to the discontinuation of flights to Bogot? and winding up of international charter flights.
During the close of the quarter, GOL Linhas had a total fleet of 123 B737-700 and 800 NG aircraft with an average age of 7 years and that of Webjet’s 24 B737-300s, with an average age of 18 years.During the quarter, the company delivered three aircrafts and announced a long-term strategic partnership with Delta Airlines Inc.
For FY11, the company reported total revenue of R$ 7,539.3 million (US$ 4,514.6 million), up 8.0% y/y.
Operating costs and expenses increased 41% year over year to R$2,267.4 million (US$1,266.7 million) in the reported quarter. Operating loss (EBIT) came in at R$33.9 million (US$18.9 million) with a margin of negative 1.5% compared with an operating income of R$261.9 million (US$155.0 million) with a margin of 14% in the prior-year period. The loss reflected an expense of R$19.4 million (US$ 10.8 million) toward 87 days of Webjet’s operations during the quarter. Moreover, higher-than-expected expenses, related to salaries, wages and benefits, landing fees alongside expenses from aircraft returns, termination of contracts with suppliers, and the impairment of VRG and Webjet’s assets raised expenses.
The company reported an EBITDA of R$83.2 million (US$46.5 million) with a margin of 3.7%, down from R$336.1 million (US$198.9 million) with a margin of 18% recorded in the fourth quarter of 2010.
For full-year 2011, EBIT and EBITDA declined 126.8% and 79.4% year over year, respectively. (2011: excludes non-cash bookings in 1Q11).
Balance Sheet
Exiting the fourth quarter, GOL Linhas’ cash and cash equivalents decreased sequentially from R$1,302.7 million (US$711.9 million) to R$1,230.3 million (US$651.0 million). Long-term debt increased sequentially from R$4,282.4 million (US$2,340.1million) to R$3,439.0 million (US$1,819.6 million) in the reported quarter.
Net cash provided by operating activities declined 9% year over year to a negative R$602.5 million (US$336.6 million) from R$ 723.9 (US$ 428.3 million) in the year-ago quarter. Payment for property, plant and equipment increased 21.4% year over year to R$279.8 million (US$156.3 million).
Guidance
The Company revised operating margin guidance in the range of 4% to 7% compared with the guidance of 1% to 4%, provided in the previous sequential quarter. Moreover, management held an expectation for Domestic Demand growth within the range of 7% to 10%, below the expectation of 12% to 18% anticipated during the previous quarter.
GOL Linhas is one of the most profitable low-cost airlines in the world connecting the cities of Brazil as well as those in Argentina, Bolivia, Chile, Paraguay, Peru and Uruguay. It competes directly with its peers, such as Copa Holdings SA (CPA), LAN Airlines S.A (LFL), and TAM S.A (TAM).
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