Brazil’s GOL faces $2.7bn debt in 2024

GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) is facing substantial short-term liabilities amounting to USD2.7 billion in the next 12 months, as revealed in a presentation during the initial hearing of its Chapter 11 proceedings in the United States Bankruptcy Court of the Southern District of New York.

The primary obligations for the Brazilian carrier in the next 12 months include:

• Air Traffic Liabilities: USD647 million
• Suppliers: USD413 million
• GOL’s loyalty program, Smiles, obligations: USD365 million
• Lease obligations: USD359 million
• Funded debt: USD292 million
• Airport taxes and fees: USD210 million
• Provisions: USD154 million
• Other obligations: USD143 million
• Labour obligations: USD134 million

GOL initiated Chapter 11 bankruptcy proceedings on January 25, 2024, with the goal of restructuring its immediate financial obligations and fortifying its capital structure.

The airline entered the reorganization process with USD950 million in new debtor-in-possession financing (DIP Financing) from members of the Ad Hoc Group of Abra bondholders and other Abra Group bondholders. Out of this amount, GOL aims to secure USD350 million in financing immediately, followed by USD600 million throughout the proceedings.

GOL stated that the DIP Financing is the most viable source of financing given its current financial condition, capital structure, and circumstances of the Chapter 11 Cases, as it has been unable to secure more favorable financing terms from other sources.

As the fourth Latin American airline to file for Chapter 11 bankruptcy since 2020, GOL follows Avianca Airlines, LATAM Airlines Group, and Aeroméxico, all of which entered Chapter 11 during the height of the Covid-19 pandemic. The Abra Group, the owner of both GOL and Avianca Airlines, expressed full support for GOL’s decision, viewing the process as an opportunity to strengthen the company for long-term success.