Brazil's Azul, Gol secure credit lines for engine maintenance; shares rise

Brazilian airlines Azul and Gol have secured access to around $200m each in financing to fund engine maintenance plans, as carriers try to maintain capacity to meet strong demand for air travel. Planemakers and airlines around the world are facing major engine supply hurdles, limiting aircraft deliveries and capacity growth while pressuring maintenance teams and increasing costs. Azul said late on Tuesday it had received approval to access a $200m government-backed credit facility to finance engine maintenance for its Embraer and Airbus fleet, with services provided by GE Celma. Rival Gol earlier said it been given a green light to access a government credit insurance policy for lines of up to $209m to fund engine maintenance by GE. Shares of both companies rose around 1% on Wednesday, among the top gainers on Brazil's Bovespa stock index, which was little changed overall. "We believe that this new credit facility will enable us to optimize our liquidity position and streamline our fleet engine maintenance process," Azul CFO Alex Malfitani said. Gol, which flies Boeing 737 aircraft, said maintenance efforts would be focused on its CFM56-7B engines. Both Azul and Gol complained about engine supply issues earlier this month. Azul CEO John Rodgerson called it a "major issue for every manufacturer," while Gol head Celso Ferrer said the firm's maintenance backlog had been under pressure amid delayed Boeing deliveries. President Luiz Inacio Lula da Silva's administration this month cut a deal with airlines under which Azul and Gol agreed to cap the prices of millions of domestic tickets in exchange for government measures including a federal guarantee for credit operations.<br/>