© Reuters. FILE PHOTO: FILE PHOTO: A Boeing 737-700 airplane of Brazilian airlines GOL Linhas Aereas prepares to land at Santos Dumont airport in Rio de Janeiro, Brazil March 21, 2019. Picture taken March 21, 2019. REUTERS/Sergio Moraes/File Photo
By Gabriel Araujo
SAO PAULO (Reuters) -Brazilian airline Gol on Thursday said it is filing for Chapter 11 bankruptcy protection in the United States, with a $950 million financial commitment from its holding company Abra Group.
Abra also controls Colombian carrier Avianca, though the two airlines operate separately.
The move makes Gol the latest Latin American carrier to seek bankruptcy protection after a pandemic-related crisis, following the path of its sister company Avianca, Mexico’s Aeromexico and Chile-based LATAM Airlines (OTC:).
The decision was somewhat expected after media reports earlier this month said Gol was considering the move, even as the company maintained it sought a “consensual” restructuring in discussion with creditors.
Gol said it will use the bankruptcy protection to “restructure (its) finances and strengthen business operations for the long term, while continuing to operate as normal.”
Sell-side analysts and rating agencies say Gol has strong operating figures amid healthy demand for air travel in Brazil, but that high leasing and interest expenses had been pressuring its cash flow and adversely affecting its debt profile.
The company has also faced capacity issues with delayed aircraft deliveries from Boeing (NYSE:), which Gol’s chief executive said prevented it from growing at the pace it would like to, and maintenance pressure due to engine supply issues.
Gol had a 33% market share in Brazil’s aviation industry last year, second only to LATAM Brasil, as defined by revenue passenger kilometers, which measures traffic.
The carrier last month hired Seabury Capital to assist it in a capital structure review that included addressing liability management, financial transactions and other measures to enhance its liquidity.