GOL reports 2Q16 operating loss

GOL Linhas Aéreas Inteligentes has released its consolidated results for the second quarter of 2016 (2Q16), featuring a net income of R$309.5 million, but an operating loss on recurring EBIT of R$149.6 million.

GOL's capacity measured by ASKs in the domestic and international markets decreased by 8.9% and 12.2%, respectively, resulting in an overall GOL system reduction of 9.3% in 2Q16 compared with the same period in 2015. The demand for the company's seats (RPKs) fell in the domestic market by 11.2% and by 10.6% in the international market. The overall GOL system decrease in 2Q16 was 11.2%. The total load factor fell by 1.6 percentage points, to 75.2%.

GOL’s net revenue totalled R$2.1 billion in 2Q16, a decrease of 2.0% from 2Q15. Net revenue for the last twelve months was R$10 billion. Ancillary and cargo revenues reached R$297.8 million in 2Q16, up 4.8% and representing 14.3% of total net revenue. In the last 12 months, ancillary and cargo revenues totalled R$1.2 billion.

With 14.1% devaluation of the Real against the US Dollar during the period, plus Brazilian inflation of around 9%, and the ASK reduction of 9.3%, the year-over-year cost-per-ASK (CASK), excluding fuel expenses and non-recurring events, increased by 15.7% in the second quarter.

The non-recurring losses on the early return of aircraft under finance lease contracts amounted to R$21.8 million in the quarter.

Operating losses on a recurring basis (recurring EBIT) in 2Q16 were R$149.6 million – representing a margin of –7.2%. The EBITDA loss was R$39.5 million, a margin of –1.9%, and EBITDAR was R$247.0 million, which equated to a margin of 11.8%. Including the non-recurring event (early return costs of aircraft under finance leases), the EBIT loss was R$171.4 million, representing a margin of –8.2%, the EBITDA loss was R$61.3 million, which was a margin of –2.9%, and EBITDAR was R$225.3 million, a margin of 10.8%.

The appreciation of the Real against the US Dollar generated an accounting gain of R$778.8 million, and net income was R$309.5 million in 2Q16.

The company renegotiated the amortisation schedule of its debentures with Brazilian banks totalling R$1.025 billion, and received waivers of financial covenants on 30 June 2016. The new amortisation schedule postpones R$225 million from 2016 and 2017 to 2019 at the same interest cost.

In July 2016, GOL concluded a private exchange offer for its US Dollar unsecured bonds, reducing its total debt by $101.8 million (R$326.8 million) and providing an annual cash interest expense savings of approximately $9.3 million.

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