US court accepts Gol’s request to investigate Latam

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Company accuses competitor of taking advantage of the judicial recovery process to look for its pilots and aircraft suppliers. On Friday (9), Gol filed a lawsuit in the USA to seek protection. Gol airline plane lands at São Paulo – Cumbica International Airport (GRU), in Guarulhos. Celso Tavares/G1 A United States court of justice partially accepted on Monday (12) Gol Linhas Aéreas’ request for protection and investigation against the conduct of competitor Latam Airlines during the company’s judicial recovery process. At a hearing in Manhattan, Gol lawyer Andrew Leblanc told US Bankruptcy Judge Martin Glenn that the company would need to investigate whether Latam’s conduct violated US bankruptcy law. “We feel like we are under attack from a competitor in our market,” Leblanc said. Glenn asked Latam to provide documents and make three of its executives available for interviews with Gol’s lawyers. The judge also stated that it was “absurd” to believe that it was a mere coincidence that the company began its process of hiring new employees the day after Gol filed for bankruptcy. g1 contacted the New York Court to find out if the protection request would also be accepted, but did not receive a response until the last update of this report. Chapter 11: understand the mechanism used by Gol in judicial recovery Last Friday (9), the company accused Latam of taking advantage of Gol’s bankruptcy to try to steal its aircraft, hire its pilots and discourage travel agents to book customer flights with Gol. “Immediately after filing the Chapter 11 petition, Gol became aware that Latam was attempting to acquire lessors, planes and pilots,” the company said. Latam, in turn, stated in a note that “it is in permanent contact with all relevant stakeholders in fleet matters (lessors and suppliers of equipment and maintenance) as part of its business.” “The company has been active in the market for several months with the aim of securing the necessary capacity to meet ongoing and long-term needs in the context of global supply chain challenges and aircraft/engine shortages.”, the company also stated . US court accepts Gol’s request for judicial recovery Understand Gol’s judicial recovery The New York Bankruptcy Court accepted Gol’s request for judicial recovery on January 26th. With the decision, creditors are prevented from obtaining assets or properties from the airline. The measure also suspends actions against the company. Gol had announced a day earlier that it had filed a debt restructuring request with the United States Court through Chapter 11, similar to judicial recovery in Brazil. Through the process, the company will have access to financing of US$950 million. (understand more below) According to Gol, 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. Despite the process, Gol reported that all flights are operating as scheduled and all airline tickets and reservations remain in force. The statement was reinforced by the company’s CEO, Celso Ferrer, in an interview with journalists. “The restructuring 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 loyalty 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 company opted for the process in the North American Court after a recommendation from the company’s lawyers in the country. Even with the measure, Gol can operate normally. The airline also reported that it secured US$950 million in financing to support its business, in the debtor-in-possession modality (debtor in possession, in the free translation) — a type of loan made in a judicial recovery environment. With approval this Friday by the US Court, the company will have access to these resources. The credit will be obtained through 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 executive president, prevented Gol from growing at the pace it would like. Other causes of the current situation, according to the company, are the effects of the Covid-19 pandemic — which increased fuel prices and influenced the devaluation of the real against the dollar. Gol held a 33% market share in the Brazilian aviation industry last year, second only to Latam Brasil — as defined by passenger revenue per kilometer, which measures the traffic. *With information from Reuters

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