Weighed down by VRG, Gol swings to first-quarter loss
Friday May 2, 2008
Gol reported a first-quarter net loss of BRL3.5 million ($2.1 million), reversed from a profit of BRL116.6 million in the year-ago period, as last year's acquisition of Varig and its subsequent integration with Gol weighed heavily and led to sinking load factors.
The company noted that it is reorganizing the renamed VRG's loss-making international network, dropping service to Frankfurt, London and Rome in March and planning to end Madrid and Mexico City flights during the current quarter. VRG's nine 767-300ERs will be eliminated from its fleet this year, as will Gol/VRG's 28 737-300s. Both carriers will operate only 737NGs by year end (108 total) and their networks will be focused on domestic and South American flying. Gol claimed these measures will allow it to return to profitability by the third quarter.
Revenue rose 54.3% to BRL1.61 billion, though the company cautioned that year-over-year comparisons show misleadingly large increases/decreases because last year's results do not include VRG. Expenses climbed 77.7% to BRL1.63 billion, producing an operating loss of BRL21.4 million, reversed from a BRL125.1 million profit in the year-ago quarter.
Traffic grew 39.7% to 6.84 billion RPKs on a 57.7% jump in capacity to 11.06 billion ASKs, producing a load factor of just 61.8%, down 8 points. Yield lifted 10% to 21.93 BRL cents as RASK fell 2.2% to 14.53 BRL cents and CASK climbed 12.8% to 14.73 BRL cents. CASK ex-fuel increased 10.2% to 8.72 BRL cents.
President and CEO Constantino de Oliveira Junior said the move to an all-737NG fleet by year end will allow Gol to keep operating costs down and offer "demand-stimulating" low fares that will help it return to profitability.
by Aaron Karp
ATWOnline
