Gol files for judicial recovery in the United States

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According to the airline, flights are operating as scheduled and air tickets and reservations remain valid. The company has debts estimated at R$20 billion. Gol plane prepares to land at Santos Dumont airport, in Rio de Janeiro. Reuters/Sergio Moraes Gol announced this Thursday (25) that it filed for judicial recovery in the United States. The measure applies to the company and its subsidiaries. According to the company, the objective of the process is to restructure its short-term financial obligations and “strengthen its capital structure for long-term sustainability.” The company’s debts are estimated at R$20 billion. In a statement released to the press, Gol informed that all flights are operating as scheduled and all air tickets and reservations remain in force. The statement was reinforced by the company’s CEO, Celso Ferrer, in an interview with journalists. “The process aims to optimize Gol to sustain growth. We should not reduce the number of aircraft in service. The focus is to address liabilities during this period and organize the flow from now on,” he stated. According to the company, the Smiles program will also not change and will continue to be available. Debt restructuring In practice, the company activated a legal instrument in the United States known as “Chapter 11” (similar to Brazilian judicial recovery), used by companies to suspend the execution of debts and carry out financial and operational restructuring. The filing was filed in the U.S. Bankruptcy Court for the Southern District of New York. According to Gol’s CEO, Celso Ferrer, the process was carried out in the North American Court following a recommendation from the company’s lawyers in the country. Even with the measure, the company can operate normally. Gol also reported that it secured US$950 million in financing to support its business, in the debtor-in-possession modality (debtor in possession, in free translation) — a type of loan made in a judicial recovery environment. “The company will seek access to this financing as part of the First Day hearing with the US Court, scheduled for the next few days,” Gol said in a note. Financing is subject to court approval. According to Celso Ferrer, the expectation is that the US$950 million will be available soon, as the first stages in court progress. The financing will be done by a group of investors “who already know the company”, said Ferrer. They are members of the Ad Hoc Group of Bondholders (investors who hold debt securities) of Abra — the holding company that controls Gol —, in addition to other Abra Bondholders. “Along with the cash generated by ongoing operations, [o financiamento] will provide substantial liquidity to support operations, which continue normally during the financial restructuring process”, concluded, in a note, the airline. What led Gol to request recovery? According to analysts, Gol has solid operational numbers in light of the good demand for air travel in Brazil. High leasing and interest expenses, however, have pressured its cash flow and affected its debt profile. The company has also faced capacity issues amid delays in deliveries of Boeing aircraft — which, according to the company’s chief executive, prevented Gol from growing at the pace it would like. Gol held a 33% market share in the Brazilian aviation industry last year, second only to Latam Brazil — as defined by passenger revenue per kilometer, which measures traffic. *With information from Reuters

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