Brazil’s GOL Linhas Aéreas Evaluates Chapter 11 Bankruptcy Filing Amid Financial Challenges

GOL Linhas Aéreas Inteligentes, one of Brazil’s leading airlines, is reportedly contemplating filing for Chapter 11 bankruptcy protection in the United States within the upcoming month. This consideration comes as the airline faces challenging negotiations with various financial stakeholders, according to sources cited by Reuters and the Brazilian newspaper Folha de S. Paulo.

Recently GOL acknowledged its ongoing discussions with financial stakeholders regarding numerous strategies to enhance financial flexibility. This includes the possibility of raising significant additional capital to support its business operations. The airline emphasized that any decision made will aim to optimally position GOL for long-term success.

As per the ch-aviation fleets advanced module, GOL’s current fleet consists of 141 aircraft. This includes sixteen Boeing 737-700s, forty-four 737-8s, seventy-five 737-800s, and six 737-800(BCF)s. Out of these, 132 aircraft are dry-leased from a total of 25 lessors. Additionally, the airline has placed orders for sixty-one 737-8s and twenty-five 737-10s.

GOL reported a net loss of BRL 1.3 billion reais (approximately USD 267 million) in the third quarter of 2023, despite achieving record income. Mario Liao, the Executive Vice President and Chief Financial Officer, highlighted during an investor’s earnings call that the company is grappling with a challenging scenario, primarily driven by volatile fuel costs that have offset previous gains.

On December 1, GOL appointed Seabury Capital to conduct a comprehensive review of its capital structure. This review encompasses liability management, financing transactions, and other measures to enhance the company’s liquidity while reprofiling its fleet and financial obligations.

Notably, GOL is part of the Abra Group, which also includes avianca airlines. However, Avianca has clarified that it operates independently from GOL and is not impacted by GOL’s current financial predicament. A spokesperson for Avianca confirmed to ch-aviation that both airlines function autonomously with separate administrations, brands, and fleets. It’s important to note that Avianca underwent its own Chapter 11 restructuring process between 2020 and 2021.

This situation underscores the challenges faced by airlines in the current economic climate, where volatile costs and market pressures can lead to significant financial strains, compelling carriers like GOL to consider drastic measures such as Chapter 11 bankruptcy to reorganize and stabilize their operations.