Fast-growing Brazilian low-cost carrier Gol yesterday announced a new firm order for 30 Boeing 737-800 jets. List price for the deal is...
Fast-growing Brazilian low-cost carrier Gol yesterday announced a new firm order for 30 Boeing 737-800 jets. List price for the deal is $1.85 billion, though Gol will have received a substantial but undisclosed discount.
The 177-seat planes will be specially modified to allow landing and takeoff from very short runways, such as the one Gol uses at the Santos Dumont airport in downtown Rio de Janeiro.
Carolyn Corvi, vice president in charge of Boeing commercial-jet production, said engineers are finalizing the design improvements that will meet Gol’s requirements. Flight tests on the modified 737s will begin at the end of this year or beginning of 2006, she said.
Gol now has 60 new 737s on order, and options to buy 41 more. In Renton yesterday, Gol Chief Executive Constantino de Oliveira Jr. said the airline would likely take those options.
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He said Gol plans to have 70 in its fleet by 2009.
The contract was signed yesterday in Renton by Oliveira’s father, Constantino de Oliveira Sr., the airline’s chairman. Having made his fortune in the trucking business in Brazil, Oliveira Sr. steered two of his sons into the airline business.
Gol Linhas Aéreas Inteligentes is Brazil’s third-biggest airline and Latin America’s first successful low-cost carrier.
To serve the huge country’s handful of cities with dense concentrations of population and wealth, but also reach its many more remote destinations, Gol has modified the successful low-cost model pioneered by Southwest in the U.S. and Ryanair in Europe.
It flies high-frequency point-to-point flights between major cities but also adopts a bus-line approach to connect remote locations, flying routes with multiple stops and rapid turnaround at each airport.
Oliveira Jr. calls this the “tropicalization” of the low-cost model.
Founded in 2001 with a strategy of undercutting more expensive rivals, Gol offers Web check-in and very low prices. It is expanding routes across Brazil and South America, with plans to offer international flights to Santa Cruz de la Sierra, Bolivia; Montevideo, Uruguay; and Asunción, Paraguay this year.
Viação Aérea Rio-Grandense, or Varig, Brazil’s biggest airline, filed for bankruptcy protection last month with $2.8 billion of debt. Brazil’s second-largest airline, TAM, is an all-Airbus carrier.
Oliveira said the airline has profit margins approaching 20 percent, comparable to industry leader Ryanair.
Gol expects to increase its Brazilian market share to more than 30 percent in 2005 from 26 percent in June.
“They see good demand in Brazil, but they’re also trying to seize an opportunity that comes from the weakness of competitors,” said Tomas Awad, an analyst at Itaú Corretora de Valores in São Paulo. “They see space there and they want to take it.”
The new orders are scheduled for delivery between 2006 and 2012, and the options are exercisable between 2007 and 2012, the company said. Gol now operates 35 Boeing 737 aircraft, of which 10 are 737-800s.
Gol made an initial firm order for 15 of the 737-800 jets in May 2004, and had doubled that to 30 planes with additional purchases during the past year.
Dominic Gates: 206-464-2963 or email@example.com