Brazil’s Gol made a second-quarter loss of R3.9 billion ($700 million) as an unfavourable exchange rate hit the company’s earnings, and passenger capacity fell, denting revenues.
However, the Sao Paulo-based airline said on 15 August that on an adjusted basis, excluding the impact of exchange rate fluctuations, as well as other financial expenses, including R336 million from the Chapter 11 bankruptcy protection process it is currently undertaking, its loss during the period was R1 billion.
Nonetheless, even taking the financial adjustments into account, Gol’s performance was worse than the same period of 2023 when it posted a net profit of R556 million, or R416 million on an adjusted basis.
Second-quarter revenue came in at R3.9 billion, down 5% from last year, while operating expenses remained flat at R3.6 billion.
Capacity as measured in available seat kilometres (ASKs) fell 7.2% during the quarter, the company says, leading to a fall in passenger revenues of 6.5% to R3.4 billion.
Like its competitor Azul, Gol also struggled with the closure of Salgado Filho International airport – which serves the city of Porto Alegre – in the state of Rio Grande do Sul after floods in May, resulting in cancellations of scheduled flights.
To mitigate the impact and continue meeting customer demand, Gol instead began flying to nearby Canoas air base, in addition to increasing the frequency of flights to the cities of Caxias do Sul and Pelotas, it says.
“Gol continues to closely monitor the situation and is working in close collaboration with airport and aviation authorities to resume operations as soon as safely possible,” the company says. The airport plans a partial reopening in late October.
The carrier estimates the flood impacted its operating result by around R100 million – a R120 million reduction in revenues offset by approximately R$20 million in reduced costs due to the lower number of flights operated.
Despite the lower overall capacity, international ASKs rose by 14.4% in the quarter and 21.1% in the first half of 2024, compared witih the same period of the previous year.
Gol added one Boeing 737 Max 8 aircraft to its fleet during the quarter, and returned two older-generation 737NGs. As of the end of June, Gol had a total fleet of 141 all-leased Boeing aircraft, of which 47 were Max versions, 88 737NGs and six 737-800BCF freighters.
The airline gives little update on its Chapter 11 proceedings, but says that it “currently expects that any proposed plan of reorganisation will include, among other things, mechanisms for the resolution of claims against the company and treatment of the company’s current creditors and shareholders”.
That said, it adds that there is “no guarantee” that the court will accept its plan.
“Any proposed plan of reorganisation will be subject to negotiation before submission to the bankruptcy court, based on discussions with the company’s creditors and other interested parties, and subsequently, in response to interested party objections and the confirmation requirements of the bankruptcy code and the bankruptcy court’s confirmation.”
Gol says it is renegotiating aircraft leases, and in June began signing some amendments to those agreements.
In May, the company submitted a five-year financial plan to a US court as part of its bankruptcy process that calls for refinancing $2 billion in debt, an equity raise, and new deals for lessors.
The financial plan is “expected to serve as the foundation” for the Sao Paolo-based carrier’s reorganisation, it disclosed on 27 May.
Gol filed for Chapter 11 bankruptcy protection in a US court in January. It is the fourth Latin American carrier to pursue the process in the wake of the disruption of the Covid-19 crisis. In 2020, Aeromexico, Avianca and LATAM Airlines all restructured their finances under the Chapter 11 rules.
