Delta and GOL in talks to delay $300mn loan payment

A deal is expected soon to allow GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) to delay payments related to a USD300 million loan for which Delta Air Lines (DL, Atlanta Hartsfield Jackson) is the guarantor, two unnamed sources have told Bloomberg without giving further details. The loan is due to mature in August 2020. Victor Mizusaki, an analyst at Sao Paulo-based investment firm Banco Bradesco BBI SA, said in an email to clients dated June 5, seen by Bloomberg, that he expects the discussions to “conclude soon” and that this should alleviate GOL’s cash position. The Brazilian carrier took out the five-year loan in August 2015, paying annual interest of 6.5%. Voting shares issued by Smiles SA, the airline’s mileage scheme, were used as collateral, according to a statement GOL issued at the time. However, Delta commented in its first-quarter results published on April 22 that there is an increased risk related to GOL’s ability to repay the loan. “GOL has a USD300 million five-year term loan facility with third parties maturing in August 2020, which we have guaranteed. Based on market value at March 31, 2020, approximately 50% of our guaranty is secured by GOL’s ownership interest in Smiles, GOL’s publicly traded loyalty program,” Delta explained in the report.