(By Balaseshan) Gol Linhas Aereas Inteligentes SA (NYSE: GOL) said it will lay off around 850 employees in the process of winding up the activities of its subsidiary Webjet and the discontinuation of its brand.
Webjet has an operational model based on a fleet that mostly consists of aging Boeing 737-300 aircraft that are technologically out of date and consume large amounts of fuel. Given the Brazilian sector's new cost standards, this model is no longer competitive.
As a result of the winding up of operations, around 850 employees, including flight and cabin crew and maintenance personnel, will be laid off.
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Webjet's clients and passengers will be fully served by GOL and their flights will be guaranteed. As of this date, GOL will be responsible for all air transport and associated services for these passengers.
As a result of this decision and its consequences, the company expects a non-recurring increase in costs in the fourth quarter of 2012, which will be disclosed to the market opportunely. However, the measures will improve operational efficiency as of 2013.
In relation to Webjet's Boeing 737-300 fleet, GOL estimates that it will return all 20 aircraft by the end of the first half of 2013, 16 of which in the first quarter.
GOL expects to lower its domestic supply (ASK) by between 5 percent and 8 percent year-on-year in the first half of 2013, underlining its commitment to recovering its operating margins and the sustainability of the business.
GOL is trading up 2.86 percent at $4.67 on Friday. The stock has been trading between $3.77 and $9.21 for the past 52 weeks.