Brazil's largest domestic airline, GOL has entered into an agreement to acquire MAP Transportes Aéreos (MAP), a Brazilian domestic airline with flight routes to regional destinations and São Paulo's Congonhas Airport. GOL states that the acquisition reflects its “on-going commitment to expanding the demand for passenger air transportation in Brazil and what its Management perceives to be an unparalleled market opportunity for rational consolidation in the Brazilian aviation market, as the country's economy recovers from Covid-19”.
MAP will be acquired for R$28 million (approx.. US$5.6 million) in cash and stock, to be paid upon satisfaction of all closing conditions, comprised of 100,000 GOLL4 shares at R$28 per share and R$25 million in cash to be paid in twenty-four monthly instalments. At closing, the Company will assume up to R$100 million of MAP's financial obligations. The Transaction closing is subject to certain conditions precedent, including approvals and confirmations by Brazil's National Civil Aviation Agency (ANAC) and by Brazil's Administrative Council for Economic Defense (CADE).
"Over the past year, we have consistently emphasized that GOL is well-positioned for growth in the post-pandemic cycle, due to prudent financial management and proven efficient operating model, that differentiates us in the market," said Paulo Kakinoff, CEO. "This add-on acquisition is a significant step in our strategy of expanding network and capacity, as we look to revitalize air travel demand among leisure and business passengers. Thus, the Company is investing even more in the regional air transportation market with an emphasis on Brazil's Amazon region, supporting local economic growth and strengthening our operations at Congonhas Airport."
Founded in 2011, MAP is the fifth-largest Brazilian domestic airline, with a fleet of seven 70-seat ATRs that operate on routes in the Amazon region from the Manaus Airport and Brazil's South and Southeast regions from Congonhas, the country's largest domestic airport.
Once complete, GOL states that this acquisition will reinforce its “leading positioning in two of its main bases, with growth of approximately 10% at CGH via the addition of 26 daily flights”, enabling the company to serve new destinations connecting South America's largest city to historically underserved domestic markets.
GOL adds that will maintain its single-fleet fleet strategy – the airline has a fleet of 23 737-700s – to service these new routes. GOL intends to substitute the MAP ATR fleet for its larger 737s but notes that it has the “additional flexibility to evaluate new aircraft types or partnerships that can service these regional markets more cost efficiently, with no future obligation as it relates to MAP's current fleet”.
Kakinoff added: "We believe the acquisition of MAP is the only viable opportunity for rational consolidation in the Brazilian aviation market at present. Going forward, we will continue to focus on our organic growth strategy, stimulating demand to expand our network."
GOL sees three core benefits of the transaction: the expansion of new routes, the ability to offer a higher seat density to historically underserved markets, and it will enhance cost-efficient operations.
By leveraging its low unit costs, GOL states that it can offer greater efficiency in Congonhas and offer more competitive ticket prices than any competitor in Brazil to markets typically serviced by competitors with smaller and less efficient aircraft, providing benefits of scale from GOL's operations.
"The transaction is another example that the company is ready to resume its sustainable growth and investment in Brazilian air transportation, supported by substantially lower operating costs than the competition," added Richard Lark, CFO.