Brazil airline Gol’s shares soar after unexpected Q4 net profit

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SAO PAULO (Reuters) – Brazilian airline Gol Linhas Aereas Inteligentes SA on Wednesday reported an unexpected fourth quarter net profit, reversing a multi-billion-real loss seen a year earlier on the back of higher yields and positive tourism demand.

The surprisingly strong figures sent shares in the company soaring more than 12% in Sao Paulo morning trading, with analysts highlighting improving operating figures and strong revenue trends.

The firm’s shares had already jumped roughly 30% in the previous two sessions after rival carrier Azul SA (NYSE:AZUL) predicted bluer skies ahead, driving travel-related stocks in Brazil up.

Gol, which said the results were preliminary as some auditing work was still left to be done, posted a net income of 230.9 million reais ($44.48 million) in the period, up from a 2.8 billion-real loss in the previous year.

Analysts polled by Refinitiv had forecast a net loss of 484.75 million reais.

“Despite fuel costs still being one of the main factors affecting revenues in the sector, Gol showed a strong operational improvement even against a complex macroeconomic backdrop,” Guide Investimentos analyst Mateus Haag said.

Gol said the results reflected a strong recovery in demand for air travel in “all segments,” leading it to the highest net operating revenue ever as well as the highest operating margin since the COVID-19 pandemic hit.

Quarterly net revenue totaled 4.7 billion reais, up 61.7% and above analysts’ forecasts of 4.46 billion. The average yield per passenger jumped 24.8%, also hitting an all-time high.

“The beat came in mainly on the back of higher than expected unit revenues, which were only partially offset by a slight increase in unit costs,” analysts at Goldman Sachs (NYSE:GS), which has given Gol a “buy” rating, said in a note to clients.

Gol’s Chief Revenue Officer Eduardo Bernardes said the firm expects the recovery of the corporate market in the fourth quarter to continue to intensify during 2023, contributing to the expansion of the aviation market in general.

Gol also slightly reviewed estimates for the year, saying the annual average load factor is now forecast to reach about 81%, up from 80% in the previous estimate.

Full-year net revenue expectations were reduced by 500 million reais to about 19.5 billion reais, but diluted earnings per share in the full year were kept at 0.3 real, the airline added.

($1 = 5.1910 reais)