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SAO PAULO (Reuters) – Shares in Brazilian airline Gol fell on Monday after local newspaper Folha de S. Paulo reported the company was considering filing for Chapter 11 bankruptcy coverage in the United States until next month.
Gol’s inventories fell as much as 13% in the report before paring some industry losses by 8. 8%. The airline was the biggest loser in Brazil’s benchmark Bovespa inventory index, which trades nearly flat.
Gol, Brazil’s second-largest airline in terms of passengers transported, has been struggling with high debt and last month hired Seabury Capital to assist it in a broad capital structure review.
Folha, citing sources familiar with the matter, reported that Gol was still looking to negotiate an out-of-court settlement, but that this option was deemed unfeasible given that multiple stakeholders were involved in the talks.
The airline, which has also recently struggled with delays in aircraft deliveries through Boeing, said in a statement to Reuters that efforts were underway to improve profitability and strengthen its balance sheet.
“Gol is in discussions with its monetary shareholders about several features that would provide it with greater monetary flexibility, adding more capital to finance its operations,” the airline added.
Sales-side analysts and rating agencies say Gol is posting strong operating effects amid healthy air demand in Brazil, but high lease and interest expenses have put pressure on its cash flow and weighed on its debt profile.
“We expect a negative market reaction to this news,” Itaú BBA analysts led by Gabriel Rezende said of Folha’s report, “as it will prompt considerations of possible additional dilution for shareholders. “
Its peer LATAM Airlines emerged in 2022 from a pandemic-related bankruptcy process with an $8 billion reorganization plan. Azul also restructured its debt last year, but negotiates with lenders, brands and bondholders.
(Reporting via Gabriel Araujo; editing by Louise Heavens and Mark Porter)