Brazil’s Largest Carrier GOL, Filed For Bankruptcy Protection in The United States

Tuesday, May 28, 2024

Brazilian airline Gol Linhas Aéreas Inteligentes (“Gol”) outlined a comprehensive $1.5 billion restructuring plan to exit Chapter 11 bankruptcy proceedings. The plan, unveiled in a recent securities filing, details a capital injection through new share issuance and $2 billion in debt refinancing.

Transparency and Risk Management: Gol acknowledges the potential dilution of existing shareholder value upon emergence from bankruptcy. To mitigate this risk, a competitive process will commence in June to evaluate financing proposals from various equity and debt capital sources. This approach aims to secure the most favourable terms for Gol and finalize the restructuring by the third quarter of 2024.

Strategic Growth and Profitability: The plan extends beyond financial restructuring. Gol outlines a five-year strategic plan targeting operational excellence. This includes fleet expansion to 169 jets by 2029, significantly exceeding the current 142 aircraft. This aligns with their goal of regaining pre-pandemic domestic capacity levels by 2026. Notably, this growth strategy coincides with a recent codeshare agreement with Azul, Brazil’s third-largest carrier.

Profitability remains a central focus. While EBITDA margins are projected to decline slightly in 2024 (23% vs. 27% in 2023) due to restructuring efforts, Gol anticipates a swift rebound. Their plan incorporates a $193.8 million annual cost-saving program, aiming to propel EBITDA margins to 29% in 2025, 30% in 2026, and a robust 34% by 2029.

Market Position and Competition: As Brazil’s second-largest airline by revenue passenger kilometres, Gol holds a significant 30% share of the domestic market. This plan aims to solidify Gol’s position, potentially challenging LATAM’s current 40% dominance. The Brazilian aviation landscape remains fiercely competitive, with Azul also vying for a larger market share. Gol’s successful execution of this restructuring plan will be critical in determining its future competitiveness.

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