GOL Airlines Cuts Debt by $2.5 Billion in Chapter 11 Restructuring

GOL Linhas Aéreas Inteligentes (G3) and its parent company, Abra Group, have announced a support agreement that will allow the Brazilian airline to reduce its debt by approximately $2.5 billion during its Chapter 11 financial reorganization in the United States. The debt reduction will be accomplished through a combination of converting a significant portion of the debt into equity, extinguishing certain liabilities, and replacing some debt with new, more favorable terms.

As part of the Chapter 11 process, for which GOL has requested a deadline extension, the airline aims to deleverage up to $1.7 billion in pre-bankruptcy debt by converting it into equity or eliminating it completely, alongside $850 million in other obligations, according to an SEC filing.

Abra Group, which owns GOL, Avianca Group, and Wamos Air, claims GOL owes it $2.8 billion but has agreed to accept approximately $950 million in new equity and $850 million in take-back debt. Of this debt, $250 million is set to convert into equity if specific conditions are met within 30 months after GOL emerges from bankruptcy, expected by late April 2025.

General unsecured creditors will receive up to $235 million in equity, with potential increases depending on the resolution of other financial matters.

To support its exit financing plan, GOL anticipates raising up to $1.85 billion in new capital, primarily through secured debt, which will pay off its $1 billion Debtor-in-Possession (DIP) financing and assist its post-bankruptcy strategy.

The DIP loan, along with $375 million in new financing from lessors, has enabled GOL to reinvest in its fleet, returning most previously out-of-service aircraft to operation. Currently, GOL’s fleet consists of 135 aircraft, including thirteen B737-700s, forty-nine B737-8s, sixty-seven B737-800s, and six B737-800BCFs.

“Reaching this agreement is another important step in our efforts to strengthen our financial position and drive GOL’s long-term success,” stated GOL CEO Celso Ferrer. Adrian Neuhauser, CEO of Abra Group, emphasized that GOL would emerge from Chapter 11 with improved liquidity, a deleveraged balance sheet, competitive unit costs, and a strong network. He also noted the potential for synergies among GOL, Avianca, and Wamos.

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Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com