GOL Linhas Aéreas Inteligentes (GOL) has voluntarily filed for Chapter 11 in the US Bankruptcy Court for the Southern District of New York.
The Brazilian airline enters the US legal process with a financing commitment for US$950 million in new debtor-in-possession (DIP) financing from members of the Ad Hoc Group of Abra bondholders, as well as certain other Abra bondholders. GOL says that it will seek access to this funding as part of its First Day hearing “in the coming days”. The financing remains subject to court approval and, along with cash generated from ongoing operations, and will provide substantial liquidity to support operations in the normal course during the Chapter 11 process.
With the support of the court-supervised process and the additional liquidity from the DIP financing, GOL states that its passenger flights, GOLLOG cargo flights, Smiles Loyalty program and other company operations are continuing as normal. GOL says it “will continue providing safe and reliable air travel service at a low cost, providing the best travel experience to its customers”. GOL's codeshare and interline agreements will also continue to be available to customers.
"GOL has undertaken significant efforts to provide the best travel experience for our customers, while improving our profitability and financial position," said Celso Ferrer, chief executive officer of GOL. "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. This process will enable GOL to further expand our position as a leading Latin American airline while maintaining our purpose of 'Being the First for All.' We are confident the steps we are taking will allow us to offer the lowest cost fares with exceptional travel experiences to our customers across an increasing number of routes."
GOL plans to use the Chapter 11 process to restructure its near-term financial obligations and strengthen its capital structure. The airline adds that it expects to emerge from this process with a significant investment of new capital, inclusive of the new US$950 million in DIP financing, enabling GOL to expand its position in Latin America.
In the third quarter of 2023, GOL’s net operating revenue reached a historic record of R$4.7 billion, with growth of 16.4% compared to the same period of the previous year, primarily due to the significant contribution of revenues coming from the Smiles and GOLLOG cargo operations, which together grew a total of 65.1% in 3Q23 (vs. 3Q22) and totalled R$412.6 million. In December 2023, the occupancy rate reached 82.7%, an increase of 4.8% compared to the same period of the previous year.
GOL says that it will continue to operate normally during the supervision process and will continued to pay salaries and benefits to employees.
GOL is working with Milbank as legal counsel, Seabury Securities as financial advisor and investment banker, and AlixPartners as financial advisor.