Due to the impact of the COVID-19 pandemic, GOL Linhas Aereas has rejected the leasing contracts of several airplanes and reduced its standing B737 MAX order with Boeing. The airline is adjusting its size to demand, according to GOL’s executives during 2021’s first-quarter results. But how many leased aircraft could GOL reject? Let’s investigate further.
A shrinking airline
GOL has a fleet of 127 Boeing 737 planes, plus a sizeable order with the OEM for new MAX units. Nevertheless, the COVID-19 pandemic has been relentless in Brazil, and the company is operating an average of 47 aircraft per day. Therefore, GOL’s management has been adjusting the size of its fleet going forward.
Paulo Kakinoff, GOL’s CEO, stated during the company’s first-quarter investor call,
“Compared to the first quarter of 2021, our operations are currently (in the second quarter) at between 185 to 200 flights per day, using 47 aircraft. Our current capacity planning scenario assumes a 39% reduction in the second quarter of 2021.”
Between January and March, GOL transported 45 million customers, a 46% year-on-year reduction. Additionally, the airline is not flying any international routes (except for a few charter operations) due to heavy travel restrictions against Brazil.
Domestically, the airline has also been hit by a second, deadlier COVID-19 wave and was forced to closed nine bases in cities like Uberlandia, Londrina, and Campina Grande.
Some 737 NG are leaving
From the beginning of the COVID crisis until the end of April 2021, GOL has rejected 17 Boeing 737 aircraft leasing contracts. As of March 31, GOL had 23 B737-7 NG and B 737-8 NG.
This year, the airline has rejected one 737 NG leasing contract. Nevertheless, it expects to reduce its fleet more by rejecting five more aircraft in the second quarter alone, said Kakinoff. Like many airlines worldwide, GOL was already planning to phase out its 737 NG fleet. The pandemic just accelerated that trend.
Last year, the airline said it planned to return up to 48 B737 NGs between 2020 and 2022. While the final tally may change, GOL is on track so far. This year, the carrier plans to return up to eleven operational aircraft, with the flexibility to reject even more leasing contracts, if necessary.
The 737 MAX slashed order
Originally, GOL signed an order for 135 Boeing 737 MAX aircraft. Following both the 737 MAX crisis and the COVID-19 pandemic, GOL renegotiated with the OEM. It reduced its original buy to 95 aircraft.
Additionally, “we have reduced our 737 MAX deliveries, scheduled for 2021 and 2022 by 33 planes,” said Kakinoff during the investor’s call.
Starting in 2022 and beyond 2024, GOL has aircraft commitments for 21,857 million reais (nearly USD$4 billion).
How did GOL fare in 2021’s 1Q?
Let’s take a quick look at GOL’s first-quarter results.
The airline reported a net loss of 891.9 million reais (US$164 million) due to the impact of the COVID-19 pandemic.
The airline’s net operating revenue continues highly depressed. For instance, passenger revenues were 51.8% down compared to the previous year. Meanwhile, cargo and other revenues also remain 26.7% below its pre-pandemic numbers.
Despite that, GOL has managed to control its debt and financial obligations. Richard Lark, Chief Financial Officer, said,
“Even in an atypical year, GOL stands out among few airlines in the world that have amortized more than 4.1 billion reais (US$755 million) of debt since the beginning of 2020, by its disciplined liquidity management and the extraction of value from its current assets.”
What do you think of GOL’s fleet plan? Let us know in the comments.