GOL Linhas Aéreas Inteligentes Grapples with $2.7 Billion Debt Amid Chapter 11 Filing
GOL Linhas Aéreas Inteligentes, a leading airline based in Sao Paulo, Brazil, is facing a daunting financial challenge with near-term liabilities amounting to USD 2.7 billion due within the next 12 months. This financial revelation was part of the airline’s presentation during the initial hearing of its Chapter 11 bankruptcy process in the United States Bankruptcy Court for the Southern District of New York.
The breakdown of GOL’s impending financial obligations underscores the breadth of the airline’s fiscal challenges:
- Air Traffic Liabilities: USD 647 million
- Suppliers: USD 413 million
- Smiles loyalty program obligations: USD 365 million
- Lease obligations: USD 359 million
- Funded debt: USD 292 million
- Airport taxes and fees: USD 210 million
- Provisions: USD 154 million
- Other obligations: USD 143 million
- Labour obligations: USD 134 million
In an effort to navigate through these financial headwinds, GOL filed for Chapter 11 bankruptcy on January 25, 2024. The move is aimed at restructuring the airline’s near-term debts and fortifying its capital structure amidst a challenging aviation environment.
As part of its restructuring efforts, GOL has secured USD 950 million in new debtor-in-possession (DIP) financing from the Ad Hoc Group of Abra bondholders and other stakeholders within the Abra Group. This crucial lifeline is structured to provide the airline with USD 350 million in immediate funding, with an additional USD 600 million available throughout the bankruptcy proceedings. This financial arrangement is highlighted as the most favorable option under the current circumstances, reflecting the airline’s limited access to more advantageous financing terms given its existing financial condition and capital structure.
GOL’s Chapter 11 filing marks the fourth instance of a major Latin American airline resorting to bankruptcy protection since 2020, following the footsteps of Avianca, LATAM Airlines Group, and Aeroméxico, all of which sought Chapter 11 protection during the peak of the Covid-19 pandemic.
The Abra Group, which owns both GOL and Avianca, has expressed full support for GOL’s strategic decision to file for Chapter 11. The group views this process as a vital opportunity to reinforce the airline’s operational and financial foundation, aiming to transform GOL into a more robust, successful, and sustainable entity in the competitive landscape of Latin American aviation.