Shares of the Brazilian airline Gol plummeted almost 6% this Monday on the Bovespa, after the local newspaper Folha de Sao Pablo reported that the company was considering filing for Chapter 11 bankruptcy protection in the US next month. The stock collapsed by up to 13%, however it later managed to cut its losses at the end of the round.
The company was the biggest loser on the Bovespa, Brazil’s benchmark stock index, which closed up 0.4%.
Goal, the second largest airline in Brazil in terms of passengers transported, was struggling with high debt and last month hired Seabury Capital to help with a broad capital structure review.
Goal: extrajudicial agreement, increasingly unviable
Folha, citing sources familiar with the matter, reported that Gol was still trying to negotiate an out-of-court agreement, but the possibility was considered increasingly unviablesince multiple stakeholders participated in the conversations.
The airline, which has also recently faced delays in aircraft deliveries from Boeing, said in a statement to Reuters that it was making efforts to improve profitability and strengthen your balance sheet.
“Gol is in talks with his financial shareholders about several options that would provide you with greater financial flexibility, including additional capital to finance operations,” the airline added.
At an event with investors held last month, Gol confirmed that it was negotiating mainly with landlords to restructure its debtbut that he also expected bondholders and shareholders to contribute.
Analysts and rating agencies say that Gol presents solid operating figures in a context of strong demand for air transport in Brazilbut high lease and interest expenses have been putting pressure on its cash flow and affecting its debt profile.
“We expect a negative market reaction to this news,” Itau BBA analysts led by Gabriel Rezende said of the Folha report, “as it will raise concerns about potential additional dilution for shareholders.”
Peer LATAM Airlines in 2022 emerged from pandemic-related bankruptcy proceedings with an $8 billion reorganization plan. Azul also restructured its debt last year, but through agreements with lessors, manufacturers and bondholders.
Source: Ambito
