Webjet

Gol outlook brightens as Brazilian yields start to show signs of improvement

Despite a slower growth for Brazil’s economy, Gol is bullish on its outlook for 2012 as domestic yields, which dropped significantly earlier this year, are beginning to recover. Gol also expects to benefit in 2012 from a new cost reduction initiative, its recent acquisition of smaller low-cost carrier Webjet and its expanded partnership programme with other carriers. After incurring losses in 2Q2011 and 3Q2011, Gol will likely be back in the black in 4Q2011 and remain profitable throughout 2012.

Oct-2011 figures show Gol’s domestic yields are again tracking higher than 2010 levels. Gol executives told analysts last month during the carriers’ 3Q2011 conference call that yield improvements are expected to continue through 4Q2011 and into 2012 because the Brazilian airline industry overall have become more rational with fares and more disciplined with capacity.

Sao Paulo dominates Brazil's busiest domestic and international routes

Sao Paulo Guarulhos International Airport is Latin America's busiest international hub, but ranks only 57th in the world by international seats per week (or 24th by ASKs). Guarulhos is also Latin America's biggest domestic hub, ranking 35th in the world by domestic seats per week. Guarulhos is one of seven Brazilian airports among the world's top 100 domestic airports (by seats) but is the only Brazilian airport in the international top 100. This shows Brazil's market still remains very much a domestic-dominated market – similar to China.

Profitability in Brazilian domestic market plummets as yields drop

Intense competition in the Brazilian domestic market led to a sharp drop in yields in 2Q2011 and is expected to have a major impact on profitability throughout the Brazilian airline sector for the remainder of the year. Gol, which is primarily a domestic operator, has particularly been impacted by the suddenly unfavourable market conditions with a BRL359 million (USD221 million) net loss incurred in 2Q2011. TAM also has been impacted but has the benefit of a large profitable international operation, allowing it to remain in the black in 2Q2011.

More rapid growth for Brazil's domestic aviation market

Brazil’s domestic market continues to chalk up impressive growth rates, driven by expansion at both low-cost and full-service carriers. Newly released traffic figures from Brazil’s ANAC shows domestic RPKs were up 21.4% for 1H2011, which follows equally impressive growth of 23.5% in 2010.

Webjet acquisition improves Gol's position in world's fourth largest domestic market

Consolidation in the fast-growing Brazilian market has taken another major step with Gol agreeing to acquire smaller low-cost carrier Webjet for BRL96 million (USD61 million). The deal follows several moves over the last two years by Gol’s archrival TAM as Brazil’s two largest airline groups battle for the distinction of domestic market leader.