Another major airline strikes deal to exit bankruptcy
The carrier's stock immediately reacted to the news.
With more than $3.8 billion in debt, Brazil's GOL Linhas Aéreas (GOL) ended up filing for Chapter 11 bankruptcy protection in January 2024.
The airline commonly referred to by the shortened name of GOL is currently the third-largest in South America — together with fellow Brazilian carrier Azul (AZUL) , GOL transported just over 57 million passengers in 2024 — and so saw significant interest from investors willing to help turn it around.
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GOL says investors agreed to buy $1.25 in debt (here is what that means)
Brazilian news outlets first reported that United Airlines (UAL) , American Airlines (AAL) and Lufthansa (DLAKF) were among the airlines that had been in potential acquisition talks with GOL leadership over the last year.
On March 24, GOL announced that it has struck a deal in which a coalition of investors agreed to buy up to $1.25 billion in debt instruments — a major step toward being able to exit bankruptcy. GOL's stock saw a brief jump when the news was announced but closed March 24 down 3% at $0.32.
Related: Another low-cost airline files Chapter 11 bankruptcy plan
The available funds will be used primarily to pay back debtor-in-possession (DIP) debts and are part of a larger $1.9 billion investor package to turn the airline around.
The initial bankruptcy emergence plan that GOL announced at the end of 2024 included converting $1.7 billion of debt into equity and raising $1.85 billion of new financing from investors. Approximately $950 million in new equity will be transferred to GOL parent holding company Abra in exchange for it erasing $2.8 billion in debt.
Further details of which investors would be buying debt instruments have not yet been revealed. Shutterstock
'We have successfully renegotiated agreements with our lessors': GOL
"Since the beginning of this process, GOL has continued to operate without interruptions, demonstrating solidity in executing our commercial strategy and cost management," GOL CEO Celso Ferrer said in an update on the bankruptcy process in May 2024. "We have successfully renegotiated agreements with our lessors for most of our aircraft and are investing in our engines and expanding our operational fleet."
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GOL started accruing debt while waiting for deliveries of Boeing (BA) aircraft that were delayed as the aircraft manufacturer faced its own string of recalls and safety investigations; as a result of the delays, GOL was unable to run a series of routes it needed to bring in traffic.
"With resolution of these issues, the debtors will be well-positioned to begin raising the necessary exit capital required by their business plan and engaging with their other creditor constituencies," GOL said further. "The filing of the Plan represents an important milestone toward the successful completion of GOL's financial and operational restructuring and implements a significant investment of new capital to support GOL's business," GOL said in an expanded statement in December 2024.
Most recently, GOL said that other alternatives that it was exploring as ways to get itself out of bankruptcy include issuing additional debt and trying to bring in new investors. The immediate plans allow GOL to continue on its path to get out of bankruptcy without having to curb operations; the latter is something which it has been bringing up as a point of pride since starting out on this timeline.
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