GOL Brazilian Airline Hikes Investments

Salvador,

Brazilian airline GOL announced that it expects domestic air travel in Brazil to grow 6% next year due to a slowdown of the economy. This company anticipates an 8.5% growth in 2008. GOL is trying to keep up with their leading competitor TAM in the process.  The company says that despite this crisis it intends to raise investments from 428 million in 2008 to 518 million next year. It continues to revamp its fleet with the next-generation Boeing 737-700s and 737-800s.  These aircraft have lower operating costs and are more fuel efficient than ever before.  The 737-700 NG aircraft provides GOL with more flexibility to operate in airports with operating restrictions and to offer more direct flights to medium-sized cities with lower traffic volumes. The 737 NGs are also equipped with winglets, a technology that improves aircraft performance during takeoff, allows longer non-stop flights and reduces fuel costs by more than three percent per year. By the end of 2008, it is expected that the airline's fleet will be mostly comprised of Boeing 737 NGs, reducing the average age of the fleet to 6.8 years. By the end of 2009, the fleet should consist of Boeing 737 NGs. GOL offers nearly 800 daily flights to 49 destinations connecting the most important cities in Brazil and ten major destinations in South America. GOL's main competitor, TAM is also expecting slower growth. TAM anticipates domestic air travel to expand between 8% and 12% in 2008. TAM has teamed up with IBM to help solve challenges with the check-in system, purchasing airline tickets and reserve seats on flights.  TAM has been leading Brazil's domestic market since July 2003 and has ended this September with 52.8% market share. The company flies to 42 destinations in Brazil and 79 different destinations in national territory. Its overseas operations include direct flights to 16 destinations in the United States, Europe and South America. Can GOL airlines keep up with TAM in the long run?

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