BY Fraser Tennant
In a move that reflects the lingering challenges Latin American airlines face from the coronavirus (COVID-19) pandemic era, Brazilian low-cost carrier GOL filed for Chapter 11 bankruptcy.
The company intends to use the Chapter 11 process to restructure its short-term financial obligations and strengthen its capital structure for long-term sustainability.
GOL’s Chapter 11 filing makes it the latest Latin American carrier to seek bankruptcy protection after the global pandemic, following sister company Avianca, Mexico's Aeromexico and Chile-based LATAM Airlines.
Despite challenges to its capital structure and lower aircraft availability, GOL’s operational performance remains strong. In the third quarter of 2023, the company delivered one of the best operating results for airlines in Latin America, and the fourth consecutive quarter of high and consistent operating margins.
The airline has stated that its business will continue as normal during the oversight process conducted by the US court and the company will honour commitments to business partners and suppliers for the goods and services provided on or after the date of the Chapter 11 filing.
“GOL has been making significant efforts to offer the best travel experience to customers, while improving its profitability and financial position,” said Celso Ferrer, chief executive of GOL. “We have made notable progress so far and we believe that this process will allow us to address the challenges generated by the pandemic, while maintaining the high standard of services we offer to customers.”
The company expects to emerge from the Chapter 11 process with a significant capital investment, including the new $950m in debtor in possession (DIP) financing, giving it the opportunity to expand its position as a leading airline in Latin America.
“With the support of the court-supervised process and the additional liquidity of DIP financing, our passenger and cargo flights, the Smiles loyalty programme and other company operations continue normally,” continued Mr Ferrer. “GOL will continue to offer safe, reliable and low-cost air travel services, providing the best experience to customers, who will be able to organize their trips in the way they always have.”
One of the leading airlines in Brazil and part of the Abra Group, since its founding in 2001 GOL has been the company with the lowest unit cost in Latin America, which has enabled the democratisation of air transport.
Mr Ferrer concluded: “We are confident that the measures being taken will allow GOL to continue offering lower fares with exceptional travel experiences to Customers on an increasing number of routes, including improving accessibility, the travel experience and customer choice.”
News: Heavily indebted Brazilian airline Gol files for bankruptcy in US