Brazil’s Gol Agrees to Buy Webjet to Gain Market Share

Gol Linhas Aereas Inteligentes SA, Brazil’s second-largest airline by market share, agreed to acquire Webjet Linhas Aereas SA for 96 million reais ($61 million), as it seeks to recover market share in Latin America’s biggest economy.

Sao Paulo-based Gol said in a regulatory filing today that the deal valued closely-held Webjet at 310.7 million reais, according to a regulatory filing. Webjet, a low-cost carrier based in Rio de Janeiro and controlled by Guilherme Paulus, is Brazil’s fourth-largest airline, with 5.2 percent of the country’s airline market.

The deal gives Gol access to Webjet’s slots at Brazil’s main hubs and eliminates a low-cost competitor that catered to leisure passengers. Expansion may also help offset a squeeze in margins from higher fuel prices, said Felipe Rocha, an aviation analyst at Banco Fator SA in Sao Paulo.

“Gol is looking for ways to grow and increase its market share,” Rocha said in a telephone interview from Sao Paulo today before the transaction was announced. “Consolidation is inevitable.”

Sao Paulo-based Gol has been losing market share this year, according to Brazil’s aviation authority, known as Anac. The carrier’s market share fell to 35.4 percent in May from 36.5 percent in the previous month and 40.5 percent a year earlier. Tam’s share of the Brazilian market slipped to 44.4 percent in May from 44.5 percent in April, according to Anac.

The airline said on May 10 that rising fuel costs led it to cut the forecast for its 2011 margin on earnings before interest and taxes to a range of 6.5 percent to 10 percent, from 11.5 percent to 14 percent previously.

Today Gol shares rose the most since August in Sao Paulo trading on speculation it would buy rival Webjet. Shares gained as much as 6.4 percent, the most intraday since Aug. 27, and closed 3.5 percent higher at 19.77 reais. O Estado de S. Paulo reported earlier today that Gol would announce the purchase of Webjet. After the report, the company said in a filing it was in talks with Webjet.

In March, Tam SA, the Brazilian airline that agreed to be bought by Lan Airlines SA last year, bought a stake in Trip Linhas Aereas SA to regain domestic market leadership over Gol. Lan, based in Santiago, agreed to buy Tam in August in a $4.1 billion takeover.

Chile’s antitrust tribunal president Tomas Menchaca told newspaper La Tercera today that a ruling probably won’t be delivered until August.

The court, known as TDLC, previously estimated the outcome of its investigation would be made known by the end of this month.

-- Editors: Francisco Marcelino, James Langford.

(Corrects to say Brazil is Latin America’s biggest economy in the first paragraph on story published on July 8.)
    Before it's here, it's on the Bloomberg Terminal.