--Brazil's Gol reported to have talked with Qatar Airways about
possible takeover
--Gol declines to comment on "market speculation"
--Brazilian airline reducing flights as it struggles to come out
from under heavy debt burden
(Adds alliance plans in eighth paragraph.)
By Paulo Winterstein
SAO PAULO--Brazilian low-cost airline Gol Linhas Aereas
Inteligentes (GOLL4.BR) jumped in Monday trading after a report
that it was in preliminary talks with Qatar Airways for a possible
takeover of the struggling Latin American airline.
Shares of Gol, Brazil's second-biggest airline by market share,
was up 5.5% to 9.91 Brazilian reais ($4.89) at 2045 GMT in Sao
Paulo trading, after earlier rising as high as BRL10.48.
Veja magazine said over the weekend that Qatar Airways
executives met with Gol officials last week to discuss a possible
takeover. Because Brazil restricts foreign ownership of domestic
airlines, Qatar Airways was seeking to structure the takeover in a
form similar to that used in the takeover of Tam by Chile's Lan to
form Latam Airlines Group (LAN.SN), Veja reported, without saying
where it got the information.
Lan formed a holding company to take control of Tam in June, but
the two companies have kept some operations separate.
When reached by Dow Jones Newswires, Gol said it doesn't comment
on market speculation, and said it would communicate to securities
regulators whenever it undertakes negotiations. Qatar Airways
declined to comment.
"The industry is weak the world over because of the global
economic crisis, and so the stock is taking off on speculation that
Gol could find a partner in Qatar Airways," said Pedro Galdi, chief
analyst at brokerage SLW Corretora in Sao Paulo. "Gol undertook a
series of deep reforms, reducing flights, and the second quarter
showed that improvement would come in the longer term. So anything
that comes up, even if it's speculative like this, will move the
stock."
Qatar Airways and Gol signed a mileage-sharing agreement in June
of this year that allows passengers of both carriers to accumulate
frequent-flier mileage. Gol has said it may sell shares of its
frequent-flier program, Smiles, in an initial public offering,
possibly as soon as next year.
Any potential tie-up with Qatar Airways could complicate the
companies' alliance plans. Qatar Airways could join Oneworld, the
same alliance to which Lan already belongs and to which Gol rival
Tam may move, while Gol has closer links to SkyTeam via a stake
held in the company by Delta Air Lines Inc. (DAL).
Gol had fallen 25% this year--from a close of BRL12.44 on the
last trading day of 2011--before Monday's surge. After rapid
expansion in previous years led to declining profitability, the
company has been cutting down on flights to restore yields. As a
result, the market share of Gol, which is currently in the process
of taking over rival WebJet, fell to 38% of domestic flights, from
43% at the end of last year.
Meanwhile, the company's gross debt jumped 30% on the year to
end the second quarter at BRL5.2 billion, or 16 times Gol's
earnings before interest, taxes, depreciation, amortization and
rent, or Ebitdar.
-Write to Paulo Winterstein at
paulo.winterstein@dowjones.com