Gol First Quarter Profit Drops 70 Pct

Brazilian airline Gol’s first quarter net profit dropped almost 70 percent as it reacted to a weaker domestic environment by cutting capacity.

Net income for the quarter to end March fell to BRL232.7 million reais (USD$73.5 million) from BRL757.1 million as 1Q16 benefited from the return of leased aircraft and the sale and leaseback of planes.

Net operating revenue for the quarter was down 2.5 percent at BRL2.64 billion, but costs rose 5.3 percent to BRL2.39 billion. Gol reduced its aircraft rental costs by just over a quarter and maintenance by 31.2 percent during the period.

Gol carried 8.2 million passengers, an 8.3 percent drop from last year’s quarter, with RPK (revenue passenger km) traffic edging up 0.7 percent.

The low cost carrier reduced the number of seats it sold by 13 percent and available seat km (ASM) capacity by 2 percent, resulting in a load factor increase of 2.1 percentage points to 79.6 percent.

Yield fell 6.5 percent in the quarter, with CASK (cost per available seat km) rising 7.4 percent.

Chief executive Paulo Kakinoff said the airline “further consolidated its position as Brazil’s number one airline. We are proud that almost 400 million passengers have chosen to fly Gol.”

As the airline cut capacity it reduced the number of aircraft it operates from 143 in 1Q16 to 124 this year. Gol has 60 Boeing 737 MAX 8s on order as it continues to reduce costs.