Gol Linhas Aereas Inteligentes, Latin America's leading LCC, is staging a promising turnaround, amid signs that the April 2007 Varig acquisition is at last paying dividends. But much work remains to be done in terms of rebuilding profit margins and repairing the balance sheet. Gol wants to "get back to basics" of being an LCC, while capitalising on the competitive strengths gained through the merger.rnAlthough Gol incurred heavy losses only for a couple of quarters last year (and much of it was due to exchange rate developments), the Varig acquisition, which caused greater problems than the management ever anticipated, took a heavy toll on the company. It damaged the proven, simple, low-cost business model, which had facilitated rapid growth and superior profit margins. It forced Gol temporarily into a contraction mode. And it brought Gol close to a liquidity crunch, with unrestricted cash reserves amounting to only 6% of annual revenues at the end of March 2009.
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