Brazil’s GOL pays $300mn loan with helping hand from Delta

GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) has managed to pay off a USD300 million debt, plus accrued interest, guaranteed by its former partner Delta Air Lines (DL, Atlanta Hartsfield Jackson), the Brazilian carrier revealed in a securities filing on September 1. Delta had guaranteed the five-year term loan, contracted in August 2015, to help GOL obtain a better interest rate. If it had not paid by the end of August, Delta would have had to honour it – a potential additional burden for the US airline, which like GOL has also been wrestling with the impact of the coronavirus pandemic. But GOL said in the filing that the debt had been settled the previous day, on August 31, 2020. Following the repayment, the company’s average long-term debt maturity, excluding aircraft leases and perpetual notes, is now around four years, the statement elaborated. “Going forward, we have no significant debt maturities until 2024,” said Richard Lark, chief financial officer. “This is a reflection of the company’s commitment to strengthening its balance sheet over the last four years.” GOL concluded the filing by saying that it closed August with about BRL5.7 billion reais (USD1 billion) of total liquidity including deposits and unencumbered assets, including BRL2.1 billion (USD386 million) of liquidity in cash and receivables, after this debt payment. As previously reported, in June, GOL was compelled to deny reports alleging it had been in negotiations to delay repaying the loan. However, late on September 2, Reuters reported that Delta had assisted GOL in refinancing the loan, citing an internal memo distributed to the US carrier’s employees that it had seen. Delta confirmed the existence of the memo but declined to provide further details.