A turbulent year for Brazilian commercial aviation and the acquisition of floundering flag carrier Varig hit hard at Gol’s bottom line as the airlines Gol Linhas Aereas Inteligentes parent reported an 82% plunge in full-year profit to BRL102.5 million ($58.6 million) from the BRL569.1 million earned in 2006, plus an operating loss.
The company attempted to put a positive spin on the result, calling 2007 “a year of strategic investment and growth,” adding, “The fact that [Varig] was acquired during a difficult year. . .proves we are ready and prepared to manage growth despite occasional adversity.” It said it invested BRL2.2 billion last year on the acquisition of Varig (now operating as VRG), fleet expansion, technology and other upgrades.
Full-year revenue rose 29.9% to BRL4.94 billion against a 60% surge in costs to BRL4.96 billion as the average number of operating aircraft climbed 76.8% to 88.6. Operating result sank to a BRL23 million loss from the BRL701.5 million profit reported in 2006.
Gol also cited the regulatory restrictions in place at Sao Paulo Congonhas, the late delivery of seven 767s that delayed international route launches and difficulties with Brazil’s air traffic controllers as contributors to the poor results. It said the government has “worked to restore credibility to the Brazilian aviation sector,” an effort it said “will generate effective results and necessary improvements in both the medium and long term.”
Gol and Varig flew 22.67 billion RPKs in 2007, up 53% year-over-year, against a 69.5% increase in capacity to 34.35 billion ASKs. Load factor slipped 7.1 points to 66%. Yield declined 16.6% to BRL0.201 and operating RASK dropped 23.4% to BRL0.145. Unit cost improved 5.6% to BRL0.144, or 3.6% to BRL0.089 excluding fuel.
Gol took delivery of eight aircraft in the fourth quarter and said it suffered as a result of the new regulations at Congonhas, reporting a net loss of BRL24.2 million compared to a profit of BRL92.7 million in the final three months of 2006. Operating result swung to an BRL85.4 million loss from a BRL112.3 million profit.
Gol and Varig operated a combined fleet of 106 aircraft at year end. The company has 161 aircraft on order. By the end of 2008 it will be flying 111, with all 27 737-300s leaving the fleet and 29 737-800s and three 767s arriving. It expects 2008 traffic to rise approximately 37% year-over-year while ASKs are forecast to increase at around the same rate.
