Gol Linhas Aéreas Inteligentes S.A. Preferred Stock

How does this company make money?

GOL collects money from passengers buying tickets on scheduled routes. Its GOLLOG unit charges cargo shippers to move freight on those same flights. The SMILES program brings in cash when Brazilian retail and banking partners buy miles in bulk to give to their customers as rewards. On top of those, GOL charges extra fees for things like choosing a specific seat or checking a bag.

What makes this company hard to replace?

SMILES is woven into the reward systems of Brazilian banks and retailers at hundreds of locations, so members earn miles through everyday spending, not just flying. Accumulated mileage balances and frequent flyer status take time to rebuild from scratch at a competing airline. And because Congonhas slots are fixed, no competitor can simply match GOL's São Paulo departure schedule — the routes and times that customers have built their travel habits around are not available elsewhere.

What limits this company?

Congonhas Airport is hemmed in by the city around it. No new runways can be built. The total number of slots is frozen. GOL cannot add more flights to São Paulo than its current slot block allows, and neither can anyone else. That ceiling on departures is also a ceiling on how much passenger volume GOL can generate — and therefore a ceiling on how much partners will pay for SMILES miles.