Brazil: GOL has the all clear to purchase MAP Transportes Aéreos

During the last business day of 2021, GOL Linhas Aéreas informed to the Brazilian Stock Exchange that the General Superintendence of the Administrative Council of Economic Defense (CADE) had approved the acquisition of MAP Transportes Aéreos.

As per the applicable legislation, the acquisition approval decision will be made final within 15 calendar days from the date of publication, and there will be no appeal or third party recourse by the CADE Court.

As announced by GOL last June, the agreement to acquire MAP, a Brazilian domestic airline with routes to regional destinations and São Paulo’s Congonhas Airport, reflects the Company’s continued commitment to expanding Brazilian demand for air transportation, in line with what its management considers a distinctive opportunity for rational consolidation in the local market as the country’s economy recovers from Covid-19.

«We have consistently emphasized throughout the past year that GOL was well-positioned for growth in the post-pandemic cycle, due to cautious financial management and our efficient operating model, which differentiate us in the market,» said Paulo Kakinoff, CEO.

«This acquisition is a significant step in our network and capacity expansion strategy, as we aim to revitalize demand for leisure and business air travel. Therefore, the company is investing even more in the regional air transport market, with an additional emphasis on the Amazon region, supporting local economic development and reinforcing our operations at Congonhas Airport,» the CEO added.

Established in 2011, at the time of the acquisition announcement, MAP was the fifth largest Brazilian airline, with a fleet of seven 70-seat ATR aircraft operating routes in the Amazon region from Manaus airport and in the south and southeast regions from Congonhas, the country’s largest domestic airport.

This operation will reinforce GOL’s position at two of its main bases, with growth at Congonhas of approximately 10%, through the incorporation of 26 daily flights. The company will thus be able to serve new destinations, connecting South America’s largest city with historically underserved domestic markets as pandemic-related restrictions are reduced or eliminated.

GOL highlights that it is preserving its single fleet strategy to serve these new routes in a sustainable and cost-effective manner, and has additional flexibility to evaluate new aircraft types or partnerships that can serve these regional markets more cost-effectively, without any future obligation to MAP’s current fleet.

Kakinoff added, «We believe that the acquisition of MAP is, at this time, the only viable opportunity for rational consolidation in the Brazilian aviation market. In the future, we will continue to focus on our organic growth strategy, stimulating demand for expansion of our network.»

GOL sees three main benefits to this transaction:

1- Expansion to new routes

The Company intends to offer new destinations and complementary routes to its current network at Congonhas Airport, which will provide a wider variety of flight options and more convenience for customers.

«We believe that GOL’s network is the most attractive option for customers, both business and leisure, in terms of cost, service, and flight frequency,» said Edu Bernardes, Vice President of Sales & Marketing.

2- Increasing seat density to historically underserved markets

Besides expanding into new routes, the Company will make available substantially more seats per flight than MAP currently offers to these markets. The ATRs will be replaced by larger, more efficient aircraft, continuing GOL’s regional strategy of operating with Boeing 737-700 aircraft, a model with the potential to be replaced by an even more efficient aircraft type in the future.

«By operating with larger and more modern aircraft on these routes, the Company will increase the supply of flights and seats in one of the country’s main markets,» said Celso Ferrer, Vice President of Operations.

3- Improving operational efficiency

Having some of the lowest unit costs in the world, GOL will offer greater efficiency with these new operations at Congonhas. These reduced costs will allow the Company to charge more competitive fares than any other carrier in Brazil, which typically serves these markets with smaller and less efficient aircraft, providing high benefits to operations.

«The acquisition is yet another example of the Company’s continued readiness to resume its continued sustainable growth and investment in Brazilian air transportation, supported by operating costs substantially lower than those of its competitors,» added Richard Lark, Chief Financial Vice President.

The acquisition of MAP is for R$28 million in cash and shares, payable upon fulfillment of all precedent conditions, consisting of 100,000 GOLL4 shares at R$28 per share and R$25 million in cash payable in 24 monthly installments. At closing, the Company will assume up to R$100 million of MAP’s financial commitments.