GOL’s new 737 MAX-8 deal will allow it to add one ‘new international destination every quarter over the next two years’

Brazilian carrier GOL Linhas Aereas is to accelerate its fleet renewal programme after signing a lease deal with Avolon to introduce an additional 11 Boeing 737 MAX-8s into its fleet in the second half of 2019. The accelerated fleet renewal will not alter its planned capacity, as it will simultaneously return and/or sell current 737NG equipment that are under operating and finance leases. However, the additional range and better performance from the MAX will allow it to extend its international network.


Summary:

  • GOL Linhas Aereas is to accelerate its fleet renewal programme after signing a lease deal with Avolon to introduce an additional 11 Boeing 737 MAX-8s in 2H2019;
  • The accelerated fleet renewal will not alter its planned capacity, as it will simultaneously return and/or sell current 737NG equipment as new aircraft arrive;
  • The range and better performance from the MAX will allow GOL to extend its international network: it plans to add a new international destination every quarter.

GOL launched operations with the 737 MAX-8 in Jun-2018 and says the type has delivered “impressive results” delivering 15% fuel consumption savings versus the NG models. According to the CAPA – Centre for Aviation Fleet Database it currently has five aircraft in operation with one or two more expected before the end of the year. The type’s arrival has allowed GOL to further diversify its route network and to begin operating flights to North America with its Brasilia-Orlando route said to be the longest commercial 737 flight in history.

“The 737 MAX exceeds the expected performance on every count,” says Paulo Kakinoff, CEO of GOL. “We’ve been very impressed with the MAX’s superior range, fuel efficiency and reliability. By accelerating our fleet renewal plan to this new technology, we will be able to further reduce our costs and open up more international destinations for our customers.”

In addition to the four new international destinations GOL has already announced – Miami, Orlando, Quito and Cancun – the additional 737 MAX-8s will allow the airline “to launch a new international destination every quarter over the next two years,” it says. GOL has an order in total for 135 Boeing 737 MAX aircraft to be delivered through 2028 and is currently the largest 737 customer in Latin America and among the largest operators of the type in the world.

The MAX-8s are initially being deployed on route from Brasilia and Fortaleza to Miami and Orlando and to support GOL’s international expansion, but the type will become more common across its network as additional aircraft arrive. They will be complement by the larger MAX-10 from 2022 with GOL holding orders for 30 aircraft.

CHART – GOL is among the largest customers for the 737 MAX with plans to replace all its Next-Generation’ aircraft with the new versionSource: CAPA – Centre for Aviation Fleet Database

GOL believes that recent economical and political uncertainty in Brazil should pass and it has an optimistic outlook. Brazil’s far right president-elect Jair Bolsonaro may have been a controversial candidate, but he is widely viewed as business friendly, and the recently concluded election removes a level of uncertainty for airlines operating in Latin America’s largest aviation market.

The airline is well placed. CFO Richard Lark recently commented that in terms of CASK ex fuel, GOL has “around a 25% cost advantage versus Brazilian competitors”. He added: “Passengers are sensitive to fares and low costs, which creates a buffer beyond which our competition cannot lower its fares further in a sustainable manner”.

Latest traffic figure reinforce the airline’s standing. In Nov-2018 passenger traffic was up +4.7% year-on-year with +4.6% growth in domestic and +7.0% in international demand. The international growth has seen RPKs outside Brazil rise by almost a third (+30.8%) versus Nov-2017, while average load factors have increased 1.3ppts to 82.6% with growth on both domestic (+1.5ppts to 83.7%) and international (+1.9ppts to 76.0%) flights.