GOL announces 2Q11 results

GOL Linhas Aéreas Inteligentes has reported its results for the second quarter of 2011 (2Q11), including a net loss of R$358.7 million, compared with a net loss of R$51.9 million in 2Q10 and net income of R$110.5 million in 1Q11.

The airline attributes the loss mainly to the highly competitive scenario in the Brazilian market, which led to a 2.3% decline in passenger revenue in 2Q11 and “pressured” operating costs (fuel, salaries, wages and benefits, landing fees, expenses from aircraft returns. and other expenses).

Net revenue totalled R$1,566.3 million, 1.5% down on the R$1,590.9 million reported in 2Q10 and 17.4% less than the R$1,895.7 million posted in 1Q11. The year-on-year decline, says GOL, reflected heightened competition in the Brazilian market which, due to 14.4% expansion in the industry’s supply (21.6% excluding GOL), pushed yields down by 13.8%. Owing to these highly competitive fares, overall domestic demand grew by 26.5% (34.7% excluding GOL) and the load factor in the domestic market, increased by 5.9 percentage points. However, the reduction in net revenue was partially offset by a 4.2% upturn in ancillary revenues.

GOL reported an operating loss (EBIT) of R$270.8 million versus operating income of R$57.3 million in 2Q10. Second-quarter EBITDAR was a negative R$67.6 million versus a positive R$274.2 million in 2Q10.

Constantino de Oliveira Jr, CEO of GOL, commented, “On 28 July 2011, the company announced a revision of its 2011 guidance due to the maintenance throughout the entire second quarter of a highly competitive scenario in which an excessive increase in Brazilian market supply led to a reduction in fares. Given that fuel costs are expected to remain at high levels and certain costs were higher than expected in 2Q11, the company is implementing an additional cost reduction plan, focusing on ex-fuel costs.

“These measures have already begun and will be fully effective throughout 2012. Once they are all in place, the company expects to reduce expenses by around R$650 million in the latter year. These initiatives are in line with GOL’s determination to keep costs appropriate with its business model while maintaining its commitment to safety and quality.

“GOL remains committed to its low-cost, low-fare strategy, and will continue to work in order to maintain its position as the best airline company to fly with, work for and invest in,” de Oliveira concluded.

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