Entering text into the input field will update the search result below

November Traffic Update: Is Gol Back On Track?


  • Following a pitiful month of October, Gol managed to deliver impressive traffic, capacity and occupancy growth in November.
  • A few trends worth keeping an eye on include (1) rebound in moribund international business and (2) sharp deterioration in on-time departures.
  • Because GOL tends to be more exposed to the downside than its peers, I choose to keep my distance from this erratic stock.
  • Looking for more? I update all of my investing ideas and strategies to members of Storm-Resistant Growth . Start your free trial today »

What a month it has been for Gol Linhas Aéreas (NYSE:GOL).

The São Paulo-based air carrier released its November operational update on Thursday morning. With regard to traffic, capacity and utilization, this has been one of Gol's most impressive months in recent memory. Better yet, it happened right after a period of concerning and unusual contraction in both total company RPK (revenue passenger kilometer) and ASK (available seat kilometer), which I called a "yellow flag" roughly one month ago.

Credit: UOL

The company's 2018 spring off-season seemed to be faced with tough comps, as traffic growth in the fourth quarter of 2017 had been the best of the past 18 months at least: About 8% per month, on average. Gol lavishly topped my subdued expectations in November, delivering an RPK increase of 6.1%, the third best reading of the year over a respectable 7.1% improvement in November 2017. Seat supply also was up, but by a more modest 4%, helping to push load factor up a sizable 160 bps to 82.6%. This ratio was much better than Gol's trailing 18-month average of 79.6% and on par with the busy December-January holiday season.

The charts below, on a total company basis, provide further details. Notice the encouraging rebound in RPK growth in the most recent month (left graph).

Source: DM Martins Research, using data from company reports

Although by a long stretch the smallest of Gol's segments, at about 10% of total RPK on average, the international business performed well beyond what I could have projected (see graph on the right below). After taking a worrisome turn for the worse in October, flights to and from foreign destinations saw a 32% increase in traffic on capacity that rose 30%.

It may be a bit too early to credit the improvement

Note from the author: I have recently concluded a study on the U.S. airline sector, and shared my findings first - along with my working Excel file containing all the details - with my Storm-Resistant Growth group. To access all the premium material and dig deeper into how I have built a risk-diversified portfolio designed and back-tested to generate market-like returns with lower risk, join the Storm-Resistant Growth community. Take advantage of the 14-day free trial, read all the content written to date and participate in the discussions.

This article was written by

DM Martins Research profile picture
Tracking Economic Inflection Points To Guide Your Asset Allocation Strategy

Daniel Martins is a Napa, California-based analyst and founder of independent research firm DM Martins Research. The firm's work is centered around building more efficient, easily replicable portfolios that are properly risk-balanced for growth with less downside risk.

- - -

Daniel is the founder and portfolio manager at DM Martins Capital Management LLC. He is a former equity research professional at FBR Capital Markets and Telsey Advisory in New York City and finance analyst at macro hedge fund Bridgewater Associates, where he developed most of his investment management skills earlier in his career. Daniel is also an equity research instructor for Wall Street Prep.

He holds an MBA in Financial Instruments and Markets from New York University's Stern School of Business.

- - -

On Seeking Alpha, DM Martins Research partners with EPB Macro Research, and has collaborated with Risk Research, Inc.

DM Martins Research also manages a small team of writers and editors who publish content on several TheStreet.com channels, including Apple Maven (thestreet.com/apple) and Wall Street Memes (thestreet.com/memestocks).

Analyst’s Disclosure: I am/we are long AZUL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.