In a move widely expected by aviation analysts, Brazilian low-cost airline GOL Linhas Aéreas Intelligentes (GOL) has announced that it has voluntarily filed for Chapter 11 bankruptcy protection in a US court. The filing was made in the United States Bankruptcy Court for the Southern District of New York. The carrier has declared that, despite the filing, commercial flight operations will continue as planned.
This new move is the most recent in a series of debt restructurings initiated by GOL, which has suffered heavily due to a fall in traffic resulting from the pandemic, compounded by ongoing delays in deliveries of new aircraft from Boeing
The carrier, which ended 2023 with around BRL20 billion ($4.07 billion) of gross debt, stated that it was entering the Chapter 11 process with the backing of a firm commitment for $950 million in new debtor-in-possession financing from bondholders in its holding company, the Abra Group.
This latest filing makes GOL the latest Latin American carrier to seek bankruptcy protection following the COVID pandemic. Another Abra Group airline, Avianca, plus AeroMéxico and LATAM Airlines, have all taken the Chapter 11 route in recent years. Colombian airline Avianca underwent its own Chapter 11 process between 2020 and 2021.
“The major goal is to deleverage the company,” Celso Ferrer, the airline’s Chief Executive Officer Ferrer said. “GOL has undertaken significant efforts to provide the best travel experience for our customers while improving our profitability and financial position. The company will use this process to restructure its near-term financial obligations and strengthen its capital structure, and there are no plans to reduce the airline’s operations,” he added.
GOL’s Sao Paulo-listed shares closed down 3.2% to 6.44 reais each at the close of business on Thursday, January 25, 2024. Shares in local Brazilian rival Azul leapt 6% on the same day.
Analysts told Reuters that GOL’s Chapter 11 filing has not come as much of a surprise. The carrier has been struggling to reach agreements with its aircraft lessors and other creditors for some time, giving rise to speculation that a filing was imminent.
GOL’s short-term debts, including leases and borrowings, reached BRL2.9 billion reais ($576 million) in September 2023, according to Bloomberg, while cash holdings were only BRL1 billion ($203 million). However, the airline also posted a net operating revenue record during 2023’s third quarter, reaching BRL4.7 billion ($955 million), a 16.4% growth compared to the same period last year.
In December 2023, the company engaged Seabury Capital to assist in a broad review of its capital structure, as well as to take over already protracted negotiations with aircraft lessors, while it looks to achieve a consensual restructuring of its fleet obligations. It has also been widely reported that the Brazilian government may be considering a BRL3 billion ($605 million) financial aid package for struggling airlines in the country.
According to ch-aviation, GOL currently operates a fleet of 142 Boeing 737s (which includes six 737-800BCF freighters). 132 of these are leased, from a total of 24 lessors. It also has a further 62 737 MAX 8s on order.