SPONSORED GUIDE: Case Study: GOL

GOL Linhas Aereas Inteligentes (GOL) is one of the largest airlines in South America, with a fleet of 110 aircraft, annual revenues of over US$2.5 billion and over 700 daily flights to 60 destinations. GOL initiated its risk management strategy and program in 2003, creating policies and procedures t...

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Bibliographic Details
Published in:LatinFinance 2008-06
Main Author: Lark, Richard
Format: Magazinearticle
Language:English
Subjects:
Airlines
American dollar
Case studies
Cash flow forecasting
Costs
Derivatives
Enterprise risk management
Evaluation
Foreign exchange rates
Forward exchange
Hedging
Interest rate risk
Interest rates
Jet fuel prices
Management
Market prices
Pricing policies
Risk assessment
Risk management
Volatility
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Summary:GOL Linhas Aereas Inteligentes (GOL) is one of the largest airlines in South America, with a fleet of 110 aircraft, annual revenues of over US$2.5 billion and over 700 daily flights to 60 destinations. GOL initiated its risk management strategy and program in 2003, creating policies and procedures to assess, manage and control market risks. GOL conducted a company-wide risk assessment to assess the size of the opportunity presented by strategic risk management. The assessment confirmed that the focus should be on risks arising from the variability of FX rates, jet fuel prices, and interest rates. As the possibilities of risk mitigation through diversification or through passing cost increases on to customers are limited, the company started very early to use derivative instruments to hedge its exposure to market variables. An important aspect of GOL's hedge program is its disclosure to investors.
ISSN:1048-535X