Brazilian airline Webjet's acquisition strategy by Brazilian Gol:
an approach to the Strategic Variance Analysis methodology
DOI:
https://doi.org/10.20401/rasi.6.3.440Keywords:
Strategic Decision., Fusion and Acquisition., Brazilian Airlines., Failure.Abstract
In late 2011, Gol airline company acquired Webjet's total share capital with a view to gaining strategic synergy advantage. In 2012, by contrast, its operating result was negative by R $ 905.5 million. The literature has not been busy investigating the root causes of this negative operating result. This knowledge gap provides the rationale for this article. The research is conducted using the strategic variance analysis (SVA) methodology developed in 2000 by Horngren, Foster and Datar and in 2003 expanded by Sopariwala. The methodology breaks down the variance of each company's income statement into quantity and price effect. The difference in an income statement between two years is called variance. The strategic acquisition decision was found to be satisfactory as revenue increased but was completely overshadowed by variances in operating expense accounts: fuel and lubricants, landing and take-off, and aircraft leasing. This is the first time that the SVA methodology has been applied to Brazilian airlines.
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