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GOL Airlines Files For Bankruptcy in the U.S.
The airline files for Chapter 11 bankruptcty amid delivery issues and increased costs.
GOL Airlines — a Brazilian low-cost carrier — recently filed for Chapter 11 bankruptcy in a United States Bankruptcy Court, according to a press release issued by the airline.
The airline stated that it plans to continue “safe and reliable air transportation” with no scheduled interruptions. All flights will operate, and it will continue to honor all existing reservations.
The airline’s filing announced that its holding company, Abra Group, has committed to providing financing of USD 950 million, which the company will attempt to secure through court approval.
Celso Ferrer, GOL’s Chief Executive Officer, stated that “GOL has undertaken significant efforts to provide the best travel experience” for its customers while continuing to improve its “profitability and financial position.”
Abra Group is the holding company for Avianca Colombia, which went through Chapter 11 during the COVID-19 pandemic. Other significant airlines still in service, including LATAM, United Airlines, Delta Air Lines, and Aeroméxico among others, have all undergone this process.
The company stated that this process “is in the best interest of its stakeholders, including employees and customers,” while promising a reliable flight schedule and “best-in-class service.”
Ramifications of the Pandemic
GOL is not the only carrier feeling the continued effects of the COVID-19 pandemic. As mentioned, the airline is following the example of fellow Latin American airlines such as LATAM and Avianca with the Chapter 11 process.
The decision to file for bankruptcy is not a shock, as the airline has been facing issues with aircraft delivery throughout 2023. Ferrer stated in December 2023 that Boeing’s delay with their 737 MAX aircraft has been its “main challenge,” which will continue to affect the airline in the new year with the new restrictions facing Boeing’s production lines.
With these delays, Ferrer added that the airline is “not able to grow at the pace” that it planned to, keeping Gol’s capacity offering below pre-pandemic levels.
Analysts and rating agencies agree that the airline has “strong operating figures,” with the airline posting a historic net operating revenue record in Q3 of 2023. However, because of its capacity strain, the airline faces multiple issues balancing increasing expenses without increasing cash flow. The airline holds a 33% market share in Brazil, only second to LATAM Brasil, making it a vital part of the Brazilian air network.
The airline is confident that this move will secure a brighter future for the airline, helping to pay off existing debts while strengthening its financial base. With capacity issues looming, GOL will need delivery of its new aircraft sooner rather than later to keep competing with LATAM Brasil and providing low-cost services nationwide for Brazilians.
Editor’s Note: This story was updated on Friday, Jan. 26, 2024 at 8:45 a.m. ET to correct a grammatical error.
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