Brazil’s GOL announces $94.5mn capital increase

GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) will initiate a capital increase of up to BRL512 million reais (USD94.5 million), it revealed in a stock exchange filing on April 28. The announcement came one day before the company posted a net loss of BRL2.53 billion (USD466 million). Its hunt for more cash from investors will be led by its controlling shareholders, the Constantino brothers, who intend to acquire up to about BRL270 million (USD49.7 million) in newly issued shares in the company, representing their pro-rata amount. By the end of the quarter, on March 31, GOL’s available cash and cash equivalents had fallen to BRL400 million (USD73.7 million). It said that travel demand had risen by just 4% in the third week of April compared to the same week in March, and it now expects its capacity in the second quarter to be around 61% of pre-pandemic levels. However, cash burn in the second quarter is expected to be “neutral”, GOL said in an investor update issued on April 29, with cash flow at break-even. “To adapt operating costs to current levels of sales and demand, GOL will operate 63 aircraft in its network, which will represent 70% of the average fleet operated at the end of 4Q20 and 377% higher compared to the same quarter of 2020,” it said. According to the ch-aviation fleets advanced module, 57 of the total fleet size of 126 aircraft are currently active. The fleet includes twenty-two B737-700s, eight B737-8s, and ninety-six B737-800s. With revenues for the second quarter expected to be down by about 35% compared to the first quarter, GOL said it expects to end 2Q21 with BRL4.2 billion (USD773 million) in liquidity and BRL14.8 billion (USD2.72 billion) in adjusted net debt. “We have every confidence in the recovery of the air transportation market and GOL’s leadership in Brazil, which is why we are making an investment in the future of the company,” Constantino de Oliveira Junior, the airline’s chairman, said in the filing announcing the capital increase. “As GOL prepares for the post-pandemic recovery, this capital increase will provide funding for the next phase of growth, with deeper penetration into existing markets as well as new opportunities for expansion.” The equity capital “will help to support both credit-accretive liability management and earnings-accretive aircraft acquisitions,” the statement pledged.