Brazil airline Gol eyes restructuring just months after last overhaul
Gol Linhas Aereas Inteligentes plans to restructure its balance sheet yet again as it buckles under a heavy debt load and the high costs of operating an airline in Brazil. Gol hired Seabury Capital to help review its debt and other financial obligations, and free up cash by renegotiating its deals with lessors, the company said in a filing Friday. The move triggered a downgrade to CCC- from CCC+ by S&P Global Ratings, which warned of room for a further cut amid refinancing risks. The hiring follows a string of corporate actions that have raised questions about the Sao Paulo-based low-cost carrier’s ability to navigate an air travel industry that was upended by the Covid-19 pandemic. The company avoided bankruptcy protection as many of its peers went through Chapter 11 reorganizations. But it has been forced to carry out 10 liability management processes or capital raises since early 2020, the company said in March. Gol’s latest move could “prompt a broader discussion of the company’s capital structure, given weak prospects for cash flow generation and the dependence on refinancing in the next two years,” S&P analysts Amalia Bulacios and Luisa Vilhena wrote in a note Tuesday. This year, it announced a debt restructuring with Abra Group, a holding firm created to control operations of Gol and Avianca Group International. All that’s done little to reassure investors: Gol’s dollar bonds due in 2025, which trade for about 41 cents on the dollar, have handed investors a 2.6% loss this year. Debt from other carriers in the region on average have seen returns of more than 18%, according to a Bloomberg bond index. The latest announcement “suggests that the carrier still faces significant financial challenges,” Citigroup Inc. analyst Stephen Trent wrote in note. The company’s entrance into the Abra structure “was no panacea,” he added. While shares have gained 13% this year, they have underperformed returns for competitor Azul SA by roughly 30 percentage points.<br/>
https://portal.staralliance.com/cms/news/hot-topics/2023-12-06/unaligned/brazil-airline-gol-eyes-restructuring-just-months-after-last-overhaul
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Brazil airline Gol eyes restructuring just months after last overhaul
Gol Linhas Aereas Inteligentes plans to restructure its balance sheet yet again as it buckles under a heavy debt load and the high costs of operating an airline in Brazil. Gol hired Seabury Capital to help review its debt and other financial obligations, and free up cash by renegotiating its deals with lessors, the company said in a filing Friday. The move triggered a downgrade to CCC- from CCC+ by S&P Global Ratings, which warned of room for a further cut amid refinancing risks. The hiring follows a string of corporate actions that have raised questions about the Sao Paulo-based low-cost carrier’s ability to navigate an air travel industry that was upended by the Covid-19 pandemic. The company avoided bankruptcy protection as many of its peers went through Chapter 11 reorganizations. But it has been forced to carry out 10 liability management processes or capital raises since early 2020, the company said in March. Gol’s latest move could “prompt a broader discussion of the company’s capital structure, given weak prospects for cash flow generation and the dependence on refinancing in the next two years,” S&P analysts Amalia Bulacios and Luisa Vilhena wrote in a note Tuesday. This year, it announced a debt restructuring with Abra Group, a holding firm created to control operations of Gol and Avianca Group International. All that’s done little to reassure investors: Gol’s dollar bonds due in 2025, which trade for about 41 cents on the dollar, have handed investors a 2.6% loss this year. Debt from other carriers in the region on average have seen returns of more than 18%, according to a Bloomberg bond index. The latest announcement “suggests that the carrier still faces significant financial challenges,” Citigroup Inc. analyst Stephen Trent wrote in note. The company’s entrance into the Abra structure “was no panacea,” he added. While shares have gained 13% this year, they have underperformed returns for competitor Azul SA by roughly 30 percentage points.<br/>
