Webjet staff ask CADE to de-authorise Gol's acquisition

Madrid
Source:
This story is sourced from Pro
See more Pro news »

Pilots from Brazilian carrier Webjet, which will be shut down by Gol, are petitioning the country's competition watchdog CADE to reconsider its earlier decision to allow Gol to acquire Webjet.

Gol announced on 23 November that it will close Webjet in phases and lay off 850 staff. Gol's acquisition of Webjet was approved by CADE in October.

Gol's decision to shut down Webjet so soon after CADE's approval has led to anger among Webjet employees, who are calling for CADE to relook its approval of the acquisition.

A Webjet source says: "We believe that CADE made its decision based on incorrect information. In consequence, we believe that it must withdraw its authorisation and force Gol to re-establish Webjet."

A source in CADE says he is aware of the concerns of Webjet's employees, but indicates that the watchdog is not likely to re-evaluate its decision.

"There are only two conditions under which CADE can re-open a case on which it made already a final ruling. One, if it can be proven that the interested party has provided wrong data to influence the CADE decision process fraudulently to its benefit. Two, if the conditions imposed by CADE are not complied with after the merger or acquisition," he says, adding that there are no indications so far that either has happened.

Gol announced its intentions to acquire Webjet in July 2011. Originally valued at more than 524 million Brazilian reals ($260 million) including debt, the final purchase price was reduced by about $130 million.

Gol has a history of challenging acquisitions as it acquired Varig out of bankruptcy, only to close down its long haul operations a few months after relaunching the airline. It has now acquired Webjet, only to eliminate the low-cost competitor and obtain some highly-valued slots in Sao Paulo and Rio de Janeiro. Gol has also cited the incompatibility of Webjet's fleet of Boeing 737-300s and Brazil's slower domestic market growth rate as other reasons behind its decision.

Gol operates 737-700s and -800s.