GOL Linhas Aéreas Inteligentes S.A. (
the largest low-cost and low fare airline in Latin America, is
shutting down the operations of its subsidiary, Webjet. The
discontinuation of the brand will lead to a loss of around 850
jobs, including those of flight & cabin crew and maintenance
The company is of the opinion that the fleet of the subsidiary
is no more viable as per the new cost standards of the Brazilian
sector. Webjet's fleet consists mostly of Boeing 737-300
aircraft, which are not only technologically obsolete but also
Announcing the winding up on Friday, GOL stated that from now
on the company will take care of all the air transport as well as
associated services for the passengers of Webjet. The company
will also be responsible for the flights booked for Webjet.
GOL also said that the move will have its impact on the costs
of the company, particularly in the coming quarter, without
affecting the following quarters significantly. The shut down is
also expected to increase the operational efficiency of the
company in the future.
As of date, Webjet had a fleet of 20 Boeing 737-300, out of
which 16 are expected to be returned by the company in the first
quarter of 2013, with the remaining to be returned in the first
half of the same fiscal year.
Now, having to deal with a smaller fleet, the company
anticipates reducing the Available Seat Kilometers (ASK) for its
domestic supply by 5%-8% year-on-year in the first half of 2013,
leading it to reduce costs and increase profitability.
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 #3 (Hold) Rank and
LAN Airlines S.A
) has a Zacks #4 (Sell) Rank.
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