Brazilian low-cost carrier Gol has filed for Chapter 11 bankruptcy protection in the USA to “address ongoing challenges” created by the Covid-19 pandemic.
“Gol has undertaken significant efforts to provide the best travel experience for our customers, while improving our profitability and financial position,” the airline’s chief executive Celso Ferrer said on 25 January. “We have made outstanding progress to date and believe that this process will allow us to fully address the challenges caused by the pandemic while we maintain our high standard of service to our customers.”
He adds that the restructuring process will “enable GOL to further expand our position as a leading Latin American airline”.
The airline says it will use court-sanctioned oversight to “restructure its near-term financial obligations and strengthen its capital structure for long-term sustainability”. During the process, all passenger service, Gollog cargo flights, its loyalty programme and other operations will continue as normal, the company adds.
Gol says it plans to emerge from the process with a “significant investment of new capital”, including $950 million in new debtor-in-possession (DIP) financing from bondholders of its parent, holding company ABRA. It will request access to these funds during a first court hearing “in the coming days”.
”The financing is subject to court approval and, along with cash generated from ongoing operations, will provide substantial liquidity to support operations in the normal course during the Chapter 11 process,” Gol says.
Gol joined with Colombia’s Avianca in May 2022 in forming ABRA, which was touted as an opportunity for the airlines to better compete in international long-haul and cargo markets and to launch new flights. Under the agreement, both carriers maintain their individual brands, strategies and teams – a move intended to create long-term stability in the post-coronavirus environment.
The structure is controlled by the principal shareholders of Avianca and the majority shareholder of Gol, and led by Latin American airline veterans. Adrian Neuhauser, formerly chief executive of Avianca, ascended to the ABRA CEO position at the beginning of 2024.
As recently as last week, Gol said it was considering options on a capital restructuring effort. The carrier had launched a review – aided by Seabury Capital – of its capital structure in December 2023, “with the objective of raising resources to fulfil [the business’s] financial commitments”, the airline said in a 16 January stock exchange statement.
Brazilian newspaper Folha de S.Paulo suggested on 14 January that Gol was considering a Chapter 11 bankruptcy protection filing in the USA. At that time, however, Gol said “there is, at this date, no definition on the form of [the restructuring’s] implementation”.
In the early days of the Covid-19 pandemic in mid-2020, three Latin American carriers – Chile’s LATAM Airlines Group, Aeromexico and Avianca – filed for Chapter 11 bankruptcy protection in the absence of industry-specific financial support from their respective governments. All three emerged from the process several years later.
