UPDATE 1-Gol may increase Boeing orders after Webjet deal

Mon Jul 11, 2011 12:43pm EDT

* Gol mulls increasing orders as it ponders expansion

* Gol CFO sees Webjet purchase to produce $63 mln savings

* Webjet purchase signals Gol's aggressive growth plan (Updates with comments, details on cost savings, possible Boeing order; adds byline)

By Alberto Alerigi Jr.

SAO PAULO, July 11 (Reuters) - Brazilian airline Gol Linhas Aereas (GOLL4.SA)(GOL.N) is considering increasing its orders for Boeing Co (BA.N) aircraft over the next two years after its purchase of rival Webjet, Chief Executive Constantino de Oliveira Jr said on Monday.

Gol, Brazil's second-biggest airline, would like to replace Webjet's aging 737-300 Boeing jets with 737-700 and 737-800 Next Generation planes, which Gol currently operates, Oliveira told reporters in a conference call. Last year Gol ordered 30 737-800 NG jets that should arrive between 2014 and 2017.

A firm order could help boost the efficiency of Webjet's service at a time when competition is mounting with smaller carriers, Oliveira said.

The purchase of Webjet, announced on Friday, will make Gol the largest carrier in eight of the 10 busiest domestic routes.

"There is the possibility that we increase our Boeing order, but one problem is, should I place such an order today, I would only get those planes by 2016," the Gol CEO said. "That would not resolve the short-term squeeze we are faced with."

Oliveira did not elaborate on the size of the possible, additional order.

Gol will pay 96 million reais ($60 million) to Webjet shareholders and assume about 214 million reais of Webjet debt. Gol Chief Financial Officer Leonardo Pereira estimated that potential cost savings resulting from the merger of the companies could reach 100 million reais.

The price being paid to shareholders is equal to 4.7 percent of Gol's outstanding cash balance at the end of the first quarter, according to Thomson Reuters estimates.

Pereira said Gol plans to stretch out payment terms and lower borrowing costs for Webjet's debt, which has maturities between 2011 and 2015.

"The synergies from the acquisition could be significant, including higher fares, lower modified net debt, as Gol possibly negotiates better lease rates and, or, modernizes Webjet's fleet ... and increased fixed cost dilution from the greater capacity growth," Citigroup transport analyst Stephen Trent said in a note to customers on Monday.

Shares of Gol fell 1.7 percent to 19.43 reais in early-afternoon trading. ($1=1.59 reais) (Additional reporting and writing by Guillermo Parra-Bernal in Sao Paulo; Editing by Gerald E. McCormick and John Wallace)

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