GOL Airlines Files Chapter 11 Reorganization Plan

Brazilian low-cost airline GOL Linhas Aéreas Inteligentes SA (GOL) has announced its intention to file an initial proposed Chapter 11 plan of reorganization with the US Bankruptcy Court. This significant move follows a Plan Support Agreement (PSA) reached in November 2024 between Abra Group, GOL’s majority shareholder, and several of the airline’s main creditors. The PSA outlines comprehensive details on how different groups of GOL creditors will be treated during the Chapter 11 process.

GOL, the largest independent low-cost carrier in Brazil, operates a fleet of 139 Boeing 737 aircraft. The airline first filed for Chapter 11 bankruptcy protection in January 2024 in the United States Bankruptcy Court for the Southern District of New York. This filing was prompted by escalating losses and burdensome aircraft leases that threatened to collapse the budget carrier. The Chapter 11 protection aims to provide GOL with the necessary time to restructure its finances without the immediate threat of legal actions from creditors, which could have potentially grounded the airline permanently.

In October 2024, GOL sought a 150-day extension to the protection period, citing ongoing progress in its debt restructuring efforts and the need for additional time to finalize the process. Despite the bankruptcy filing, Abra Group reported that GOL has continued to operate normally throughout the Chapter 11 proceedings. During this period, GOL has secured additional liquidity and successfully negotiated with lessors for 139 aircraft leases and 58 engine leases, aligning with the objectives set in its long-term business plan filed with the court. Additionally, GOL has worked closely with key stakeholders within Abra Group to reduce the airline’s debt load.

Abra Group emphasized the importance of the Plan Support Agreement, stating, “The filing of the Plan Support Agreement 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.”

Key elements of the PSA include significant deleveraging of GOL’s balance sheet by converting debt into equity or writing off up to US$1.7 billion of debt and up to US$850 million of other financial obligations. Furthermore, Abra has agreed in principle to inject approximately US$950 million of new equity into GOL, with the potential for additional investments. Abra will also assume US$850 million of GOL’s debt, with US$250 million mandatorily convertible into new equity after 30 months from GOL’s emergence from Chapter 11, contingent upon GOL meeting certain valuation metrics.

The PSA also includes ongoing efforts to restructure aircraft leases with lessors, which have already been negotiated and agreed upon as part of the Chapter 11 process. The primary objective of the latest filing is to enable GOL’s creditors, who have the right to vote on the PSA, to make an informed decision on whether to accept or reject the agreement. The court will then assess whether the restructuring plan is fair and reasonable, ensuring that the interests of GOL, its shareholders, and its creditors are adequately represented and protected.

If the restructuring plan is approved by the Bankruptcy Court, GOL will initiate the process of soliciting votes on the PSA from its creditors to secure the necessary approvals for confirmation. Following this, GOL will seek the Bankruptcy Court’s approval to begin the final voting stage on the PSA during a scheduled hearing on January 15, 2025.

Abra Group, a UK-based investment firm, remains one of the largest air transport groups in Latin America. In addition to GOL, Abra owns Avianca (Colombia) and holds a strategic investment in Spanish charter airline Wamos Air. The group employs nearly 30,000 staff across its airlines and controls a fleet of over 300 aircraft, serving more than 130 destinations in 25 countries.

GOL’s proactive restructuring efforts under Chapter 11, supported by Abra Group’s significant investment and strategic negotiations with creditors and lessors, aim to stabilize the airline’s financial standing and ensure its continued operation as a leading low-cost carrier in Brazil. The successful implementation of the PSA and the subsequent restructuring plan are crucial steps toward GOL’s recovery and long-term sustainability in the competitive aviation market.

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