The job losses at Gol will certainly be painful, but transitioning to more efficient aircraft as Gol erases the Webjet brand makes sense in the long run.
Gol Linhas Aereas Inteligentes SA, Brazil’s second-biggest airline, will eliminate about 850 jobs and return 20 Boeing Co. 737 jets to lessors as it shutters the newly acquired Webjet unit.
Domestic flight capacity will fall by as much as 8 percent in the first half, Gol said today in a U.S. regulatory filing. Sao Paulo-based Gol said it expects unspecified one-time costs in the fourth quarter before the moves “improve operational efficiency as of 2013.”
Webjet’s fleet “mostly consists of aging Boeing 737-300 aircraft that are advanced age, technologically out of date and consume large amounts of fuel,” Gol said. “Given the Brazilian sector’s new cost standards, this model is no longer competitive.”
Unloading the planes extends Gol’s push to return to profit after adjusted losses in five of the past six quarters. The airline has been paring flights and jobs and swapping smaller jets for larger models so it can fill a larger share of seats on each flight.
“The deteriotation in our earnings made Gol start a process of rationalization,” Chief Executive Officer Paulo Kakinoff said on a conference call. Passengers booked on Webjet flights will be accommodated on Gol planes, he said.
Gol rose 1.9 percent, the most since Nov. 6, to 9.86 reais at the close in Sao Paulo. That pared the stock’s decline this year to 21 percent.
The 96 million reais ($45.8 million) acquisition of closely held Webjet Linhas Aereas SA won Brazilian regulatory approval last month after being announced in July 2011. All of Webjet’s planes were leased, according to Ascend Online Fleets data compiled by trade publication Aviation Daily.
The 20 planes will be returned in the first half, with 16 of those coming in the first quarter, according to Gol, which didn’t identify the lessors.
Boeing’s single-aisle, twin-engine 737-300 entered service in 1984 and was delivered through 1999, according to the planemaker’s website. That model has since been supplanted by larger, more fuel-efficient versions. Gol’s 114-plane fleet consists of newer 737-700s and 737-800s, according to the airline’s website.
Kakinoff, who became CEO in July after founder Constantino de Oliveira Jr. stepped down, agreed last month to buy 60 of the 737 Max variant in a deal valued at $6 billion at list prices.
–With assistance from Denyse Godoy in Sao Paulo. Editors: Ed Dufner, Adriana Arai
To contact the reporters on this story: Telma Marotto in Sao Paulo at [email protected]; Karen Eeuwens in London at [email protected]
To contact the editor responsible for this story: Ed Dufner at [email protected]
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