Brazil & Southern Cone - September 2020
Delta helps Gol repay loan
Gol Líneas Aéreas Inteligentes, one of Brazil’s top budget airlines, has managed to repay a critical US$300m loan with some help from the US carrier Delta Airlines.
Airlines around the world are struggling to survive the impact of the coronavirus (Covid-19) pandemic. Latin America’s two largest carriers, Latam Airlines and Avianca, remain in Chapter 11 bankruptcy. Worries over Gol’s ability to ride the storm were heightened because the airline faced a 31 August deadline to repay a US$300m loan contracted with unidentified investors back in 2015. At the time US airline Delta, in a strategic alliance with Gol, acted as guarantor of the debt. The alliance ended earlier this year with Delta instead entering a joint venture with Latam, but the debt guarantee remained in place.
On 1 September Gol said it had managed to repay the debt. A leaked Delta memo obtained by news agency Reuters said that as part of the refinancing the US airline had worked with Gol to “replace the existing loan guarantee with a smaller loan secured with incremental collateral”. The memo also said the deal reduced Delta’s own financial exposure, while giving Gol more time to adjust to the effects of the coronavirus (Covid-19) pandemic. Separately, Gol’s chief financial officer, Richard Lark, said the company now had no significant debt maturities until 2024, reflecting “the company’s commitment to strengthening its balance sheet over the last four years”. It had ended August with around R$5.7bn (US$1bn) in liquid assets, including R$2.1bn (US$386m) in cash and receivables.
IATA says no take-off yet
The International Air Transport Association (IATA) has criticised Latin American governments for delays in reopening air travel routes and accused them of suffocating the recovery with bureaucracy and red tape. Peter Cerda, IATA regional vice president for the Americas, said that six months after the start of the pandemic, 90% of airline routes remain grounded. IATA has highlighted its concerns over Argentina where Latam Argentina has ceased operations and three international carriers (Air New Zealand, Emirates, and Qatar Airways) have said they are permanently dropping the country from their destinations.