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Profitability in Brazilian domestic market plummets as yields drop

Analysis

Intense competition in the Brazilian domestic market led to a sharp drop in yields in 2Q2011 and is expected to have a major impact on profitability throughout the Brazilian airline sector for the remainder of the year. Gol, which is primarily a domestic operator, has particularly been impacted by the suddenly unfavourable market conditions with a BRL359 million (USD221 million) net loss incurred in 2Q2011. TAM also has been impacted but has the benefit of a large profitable international operation, allowing it to remain in the black in 2Q2011.

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