Gol Brazilian Airline Vows to Hike Investments Despite Slowdown

Brazilian Airline Gol Brazilian airline Gol announced that it expects domestic air travel in Brazil to grow 6% next year due to a slowdown of the economy. The company anticipates a 8.5% growth in 2008.

The company says that despite the crisis it intends to raise investments from 950 million Brazilian reais (US$ 428 million) in 2008 to 1.15 billion reais (US$ 518 million) next year. as it continues to renew its fleet with next-generation Boeing 737-700s and 737-800s, which are more fuel efficient.

Gol is in the final phase of its plan to replace its 737-300 and 767-300 aircraft with 737-700s and 737-800s for operations on short- and medium-haul routes. These aircraft have lower operating costs, are more fuel efficient, and will reduce the fleet's average age.

The 737-700 NG aircraft provide 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 be entirely comprised of Boeing 737 NGs, reducing average fleet age to 5.5 years. At the end of 2012, 65% of the fleet, says Gol, will be comprised of 737-800 SFP aircraft, maintaining the average age at 5.5 years.

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. Forecasts for the coming year, however, are of expansion ranging from 5% to 9%.

TAM Airlines has signed a contract with IBM for the management of its service desk. The solution includes installation, help desk and field support of TAM's information technology (IT) infrastructure.

The project's goal is to help solve challenges associated with the check-in system, software used by employees to sell airline tickets and reserve seats on flights, and server reliability.

IBM has mobilized a team of 90 onsite professionals to support many of TAM's departments and back office. IBM's Hortolândia Service Center, located in São Paulo, will also have a team dedicated to help desk services for TAM's IT users.
The agreement, signed in August 2008, is the second large contract between TAM and IBM. The first one, dating from 2007, involved application development services.

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. With the commercial agreements signed with regional companies that total goes up to 79 different destinations in national territory.

TAM's market participation among Brazilian airline companies operating international lines was 82.1% in September. Its overseas operations include direct flights to 16 destinations in the United States, Europe and South America.

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