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GOL expects double-digit operating margin, domestic growth in 2011; yield and CASK to remain stable

6-Jan-2011

GOL, Brazil’s largest airline by market value and the nation’s largest LCC, stated it expects to report another year of double-digit operating margins in 2011, of between 11.5% and 14.5%, following an anticipated operating margin of 10 to 13% in 2010. Yields and CASK are expected to remain stable in relation to 2010 levels while passenger numbers are expected to reach up to 36 million with an average load factor of around 70% in 2011.

Domestic demand to increase by 10-15% in 2011

GOL stated it expects domestic air demand to increase by 10-15% in 2011, driven by a buoyant Brazilian middle class and increased tourism in South America and the Caribbean. This following anticipated growth of 14-21% in 2010.

GOL noted that Brazil presents high potential for growth fueled by adding direct services between destinations located in the country's south, north and north-east regions, increasing flight frequency on existing routes and adding routes to regions with population density above 1 million within a radius of approximately 200km.

GOL to add four new aircraft in 2011

The LCC plans to add four new aircraft during 2011, for a total fleet of 115 aircraft. The carrier noted that it plans to repeat the efficient management of its seating capacity that it performed in 2010 and aims to increase its capacity at a proportionally lower rate than the growth in demand in its route network. Capacity is, however, expected to exceed 2010 levels.

The main drivers of this expansion will be the additional of four aircraft in 2011 which will supplement the additional capacity crated by the addition of three aircraft in 3Q2010. Capacity will further be driven by a higher share of B737-800 equipment in the operational fleet mix and improved aircraft utilisation - from around 13 block hours per day in 2010 to above 13 hours in 2011. 

GOL fleet plan: 2010 to 2014

The carrier expects the average price of oil to trade between USD82 and USD93 a barrel this year, higher than the USD77-82 anticipated for 2010.

GOL 2011 guidance

Currency: USD

Worst case scenario

Best case scenario

Operating margin (EBIT) (%)

11.5%

14.5%

Passengers (m)

33

36

Domestic demand growth (% RPKs)

10%

15%

Supply growth vs GDP

0.75x

1.0x

Capacity (ASKs) (bn)

48.0

51.5

Traffic (RPKs) (bn)

32.0

35.0

Fleet (end of period)

115

115

Yield (cents)

11.73

12.63

Departures (000)

315

340

Cost per ASK (ex fuel) (cents)

5.35

5.11

Fuel cost per litre

1.10

0.96

WTI average (USD per barrel)

93

82

Fuel litres consumed (bill)

1.50

1.65

Average exchange rate (BRL/USD)

1.80

1.70

Brazilian GDP growth

4.0%

5.0%

GOL 2010 guidance

Currency: USD

Worst case scenario

Best case scenario

Operating margin (EBIT) (%)

10%

13%

Passengers (m)

31.5

36.5

Domestic demand growth (% RPKs)

14%

21%

Supply growth vs GDP

2.5x

3.0x

Capacity (ASKs) (bn)

45.0

47.2

Traffic (RPKs) (bn)

31.5

33.0

Fleet (end of period)

111

111

Yield (cents)

11.73

12.63

Departures (000)

290

300

Cost per ASK (ex fuel) (cents)

5.35

5.11

Fuel cost per litre

1.02

0.95

WTI average (USD per barrel)

82

77

Fuel litres consumed (bill)

1.45

1.47

Average exchange rate (BRL/USD)

1.85

1.72

Brazilian GDP growth

6.0%

7.0%


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