GOL Linhas Aéreas Inteligentes S.A.
) announced its plans to segregate the company's Smiles Program.
The program was first initiated to provide the GOL customers with
greater advantage of using the company's services. The membership
of the program entitles the members to accrue mileage points
which they can redeem to avail of certain discounts on the
In October 2012, the Smiles program also launched a new
platform, Smiles Shopping, through which the members can redeem
their mileage points not only to purchase tickets, but also to
introduce around 300,000 new products and services from various
Apart from its flying partners such as Delta, Air France, KLM
and Qatar, the company also has various shopping partners like
Natura, Walmart, Pão de Açúcar, C&A, Editora Abril, Marisa,
Chilli Beans, Kinoplex, Compra Fácil, Tok & Stok, AACD, Telha
Norte, Games to Go, Bebê Store, Netshoes, Assaí and Polishop.
The program, currently managed by the subsidiary, VRG Linhas
Aéreas S.A. ("VRG"), will be conducted by Smiles S.A, a new
formed company operated by GOL. At the end of third quarter 2012,
the program had approximately 8.9 million members.
As announced during the third quarter 2012 earning release,
the company is exploring the possibility of an Initial Public
Offering (IPO) of Smiles. However, it has not been predicted as
yet the estimated time needed for it. Also, it cannot be assumed
that the IPO will eventually be done, as it will depend on
factors like the domestic and international capital market
conditions as well as other formalities regarding an IPO.
Moreover, the company will also have to register Smiles with the
Brazilian Securities and Exchange Commission (CVM).
We currently have a Neutral recommendation on GOL. The stock
also bears a Zacks #3 (Hold) Rank. The company's prime
Copa Holdings SA
) currently has a Zacks #2 (Buy) Rank and
LAN Airlines S.A
) has a Zacks #4 (Sell) Rank.
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