06-06-2025
Airline Gol Makes International Push to Cut Brazil Risk After Chapter 11
(Bloomberg) -- Brazilian airline Gol Linhas Aéreas Inteligentes SA is ramping up international expansion as part of a strategy to boost growth and reduce dependence on its home market after exiting Chapter 11, Chief Executive Officer Celso Ferrer said in an interview.
The company wants a quarter of its business to come from outside the country to offset risks like currency fluctuations and fuel cost pressures, which led Gol and most of its major peers to seek protection from creditors in past few years. Azul SA, which was looking to merge with Gol, filed just last week.
'If today I'm not finding enough passengers here in Brazil, I'll pick them up in Buenos Aires,' the CEO said. The move will also allow it to tap 'broader demand pools' as high interest rates and inflation limit consumer spending in Latin America's largest economy, he added.
The company currently gets about 20% of its total capacity from 16 international routes, most of which are in Latin America. Gol is expected to begin flying to Caracas, Venezuela in August, according to Ferrer.
Gol filed for Chapter 11 in January 2024, capping its ill-fated efforts to bounce back from the Covid-19 pandemic after completing some 10 liability management exercises or capital raises.
The airline exited the process this week with a leverage of 5.4 times a measure of earnings. That's higher than the 4.7 times in net leverage it reported in the first quarter of 2024. Ferrer acknowledged the number is still elevated, and said Gol has a 'clear plan' to lower that by nearly 50% by 2027.
Gol's plans include improving operations and earnings, and not taking on more debt, he added. The CEO also said the company has a 'robust' liquidity position of around $900 million upon exit, and that it was able to extend its debt maturities in the process.
The carrier's shares have gained around 17% since May 20, after Gol announced it expected to exit Chapter 11 in June.
Fallout from the pandemic, persistent inflation and high interest rates took a toll on Latin American airlines. Major regional carriers Latam Airlines Group, Avianca Holdings SA and Grupo Aeromexico SAB filed for bankruptcy in the US in 2020.
Brazilian carriers were hit particularly hard by a mismatch in revenues in local currencies and dollar-denominated costs like fuel, leases and foreign debt. They also didn't receive any aid from the government.
President Luiz Inacio Lula da Silva pushed for a rescue plan for struggling airlines in 2024. But almost a year and a half later, the 4 billion reais ($715 million) in promised aid hasn't reached the companies. Government officials have said they still expect the money to come through in the next three months.
'Today we've restructured our debt so we don't depend on the government,' Ferrer said, adding that Gol made a point not to take into account any aid in its plan.
If the money is ultimately made available, Gol would be open to swapping out more expensive debt for lower-cost financing from Brazil's national development bank, known as BNDES, he added. After the Chapter 11 process, Gol is eligible to access government financing again.
'What sets Brazil apart, what puts Brazilian airlines at a disadvantage, is the cost of capital,' Ferrer said, adding that Gol is working closely with the government and other carriers through the trade association to make this a 'structural agenda.'
'This needs to be a national policy — fair, transparent, and not favoring one airline over another,' he added.
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