Gol and Azul aircraft

Azul prepares offer to buy Gol carrier, says reports

Brazilian airline undergoes financial restructuring in US court with billion-dollar debt

Azul Linhas Aéreas is preparing an offer to take over rival Gol, which has been in bankruptcy since January.

According to reports from Brazilian newspaper Valor and Bloomberg, the airline founded by David Neeleman hired Citigroup and Guggenheim Partners to explore potential proposals for Gol shareholders.

Among the options would be taking over 100% of the struggling carrier, but Azul is also considering not taking the project forward.

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During the coronavirus pandemic, both Gol and Azul avoided bankruptcy by reaching agreements with their creditors, but the recovery since then has been slow.

Leasing contracts

Gol, however, saw its finances deteriorate to the point where it had debt estimated at more than US$4 billion. One of the most complicated points concerns the leasing contracts for almost 140 Boeing 737 aircraft.

Many of them expire in the short term, forcing the airline to seek renegotiation to avoid having to return them.

Gol Boeing 737-800 (Rafael Luiz Canossa)

In this scenario, Gol decided to file a financial restructuring process with the New York Bankruptcy Court, following “Chapter 11”, on January 25th.

United States bankruptcy law is considered safer and includes aircraft lease agreements, providing more predictability for the recovery plan.

Even so, some lessors such as AerCap may demand the return of planes from March 25th, when the deadline for Gol to seek renegotiation of contracts expires.

Offer for LATAM during bankruptcy

Azul’s interest in Gol is not surprising given that the Brazilian air travel market is dominated by the two and by LATAM Brasil, a division of the Chilean group.

At the time it was under Chapter 11, LATAM also had to fend off an aggressive proposal from Azul, which harassed the company’s shareholders and creditors seeking to take over its operations.

Azul E195-E2 (Azul)

In the end, the carrier based in Santiago de Chile managed to approve a plan and left bankruptcy.

In addition to Azul, Gol has also been under pressure from LATAM itself, which announced its interest in leasing Boeing 737 jets, which it does not operate, one day after joining Chapter 11.

Gol and Azul shares rose on Monday, March 4, after the publication of the reports. The companies, however, did not comment on the matter.


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