Brazil's GOL files for US Chapter 11 bankruptcy protection

GOL Linhas Aéreas Inteligentes (G3, São Paulo Congonhas) announced on January 25 that it is voluntarily filing for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York. Commercial flight operations are still continuing, however.

The Brazilian budget carrier is entering the legal process with a financing commitment for USD950 million in new debtor-in-possession financing from members of the Ad Hoc Group of Abra bondholders, as well as other Abra bondholders. GOL is a member of the Abra Group, a holding company that also owns avianca airlines (a Colombian carrier that underwent its own Chapter 11 process between 2020 and 2021).

“GOL has undertaken significant efforts to provide the best travel experience for our customers, while improving our profitability and financial position,” said Celso Ferrer, the airline’s Chief Executive Officer. The company will use this process to restructure its near-term financial obligations and strengthen its capital structure.

A total of 13 companies filed for the Chapter 11 bankruptcy process namely:

• GOL Linhas Aereas Inteligentes S.A.;
• GOL Linhas Aereas S.A.;
• GTX S.A.;
• GAC, Inc.;
• Gol Finance (Luxembourg);
• Gol Finance (Cayman);
• Smiles Fidelidade S.A. (GOL's loyalty program);
• Smiles Viagens e Turismo S.A.;
• Smiles Fidelidade Argentina S.A.;
• Smiles Viajes y Turismo S.A.;
• Capitania Air Fundo de Investimento Multimercado Credito Privado Investimento no Exterior (a foreign investment company);
• Sorriso Fundo de Investimento em Cotas de Fundos de Investimento Multimercado Credito Privado Investimento no Exterior (a foreign investment company administered by BNY Mellon Serviços Financeiros); and
• Gol Equity Finance.

In a filing seen by ch-aviation, the company listed the 30 largest unsecured claims at the moment of filing its Chapter 11 process, namely:

• The Bank of New York Mellon: Senior Notes due 2025 of USD353.8 million;
• Comando da Aeronautica: Trade debt of USD222.5 million;
• The Bank of New York Mellon: Perpetual bonds of USD142.1 million;
• Vibra Energia S/A: Trade debt of USD91.4 million;
• The Bank of New York Mellon: Senior notes due 2024 of USD42.9 million;
• Boeing Commercial Airplanes: Unliquidated trade debt of USD15.2 million;
• Empresa Brasileira de Infraestrutura: Trade debt of USD15.0 million;
• CFM International: Unliquidated trade debt of USD13.5 million;
• Florianopolis administrator: Unliquidated trade debt of USD11.9 million;
• The Securities and Exchange Commission: Tax liability of USD9.3 million;
• Brazil's ministry of finance: Unliquidated tax liability of USD7.3 million;
• Sabre Airline Solutions: Trade debt of USD5.6 million;
• AlmapBBDO: Trade debt of USD4.0 million;
• Honeywell Aerospace: Unliquidated trade debt of USD2.5 million;
• Jeppesen Sanderson, Inc: Trade debt of USD2.4 million;
• Jeppesen Systems Ab: Trade debt of USD2.3 million;
• KLM Royal Dutch Airlines: Trade debt of USD2.3 million;
• Master Freight: Trade debt of USD2.3 million;
• Safran Landing Systems MRO: Unliquidated trade debt of USD2.3 million;
• Rent a Car: Trade debt of USD2.1 million;
• Inframerica: Unliquidated trade debt of USD2.1 million;
• Banco do Brasil: Trade debt of USD1.8 million;
• RIOgaleão: Unliquidated trade debt of USD1.6 million;
• Pallas Operadora Turistica: Trade debt of USD1.5 million;
• Intelsat Inflight LLC: Unliquidated trade debt of USD1.5 million;
• AKAD Seguros S.A: Trade debt of USD1.4 million;
• Rm Servicos Auxiliares De Transporte Aereo: Trade debt of USD1.4 million;
• Delta Air Lines: Unliquidated trade debt of USD1.3 million;
• Goodyear: Trade debt of USD1.2 million;
• Mathex Solucoes Tecnologicas: Trade debt of USD1.2 million.

Bloomberg reported this week that GOL’s short-term debts, including leases and borrowings, reached BRL2.9 billion reais (USD576 million) in September 2023, and cash holdings were only BRL1 billion (USD203 million). However, the airline also posted a net operating revenue record during 2023’s third quarter, reaching BRL4.7 billion (USD955 million), a 16.4% growth compared to the same period last year.

In December 2023, the company engaged Seabury Capital to assist in a broad review of its capital structure, and pursue ongoing negotiations with aircraft lessors as it looks to achieve a consensual restructuring of its fleet obligations. The ch-aviation fleets data module shows that 132 aircraft in GOL’s fleet are leased from 24 lessors. The airline’s total fleet comprises 142 aircraft: sixteen B737-700s, forty-five B737-8s, seventy-five B737-800s, and six B737-800(BCF)s.

Recently, the Brazilian government was reportedly looking into a BRL3 billion (USD605 million) financial aid package for local airlines.