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VCEflyboy
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Rumor: GOL May Declare Bankruptcy

Sun Apr 10, 2016 11:58 pm

Unfortunately things are not going well for GOL.
Rumor has it the airline may declare bankruptcy if things do not improve.
This is the status-quo in a few bullet points (Source: Creditsights)

• Management and its advisors begin making the rounds of investors, banks, and lessors.
• Uncertainty of economic rebound and political stability create significant timing risk for GOL stakeholders.
• Best case is bankruptcy avoidance: banks amending and extending; lessors amending and extending; DAL backstopping negative cash flow with government support; public equity significantly diluted; and public bonds probably primed but otherwise left alone—a tremendous outcome for bondholders.
• GECAS has highest lessor exposure (29 aircraft, USD 609 mn Market Value) followed by 20 others.
 
jfk777
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:09 am

This would be an awful development for Brazil since GOL is a symbol of the new middle Class in that country. GOL was created by the owner of a huge bus company whose middle class passengers often traveled 24 hours on awful roads, their passengers were now rich enough to pay one hundred US dollars to buy a plane ticket. The $64,000 question is are there enough of these new Middle class people left for GOL to be viable.
 
klkla
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:15 am

Does anyone here know if Brazilian bankruptcy laws are like the U.S., which allows a company to reorganize while be protected from creditors, or would such a filing just automatically lead to the company being liquidated?
 
questions
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:23 am

Would DL invest more or run?
 
bleudefrance
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:25 am

DL will buy 49% of the company's stokes and will save the company.
 
C010T3
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:33 am

Quoting klkla (Reply 2):
Does anyone here know if Brazilian bankruptcy laws are like the U.S., which allows a company to reorganize while be protected from creditors, or would such a filing just automatically lead to the company being liquidated?

There is an equivalent to Chapter 11, but it is much less flexible and companies that resort to it tend to suffer more, making the emergence from bankruptcy much more difficult. The rumour is that Gol is trying to do is an extrajudicial debt-for-equity swap. It would be interesting if Delta were holding most of the outstanding bonds.
 
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lightsaber
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:36 am

Unfortunately, this is a symptom of what Brazil is going through.

This will be... interesting international press when it happens. But didn't Brazil allow more foreign ownership?

Quoting klkla (Reply 2):
Does anyone here know if Brazilian bankruptcy laws are like the U.S., which allows a company to reorganize while be protected from creditors, or would such a filing just automatically lead to the company being liquidated?

I 2nd that question. What are the rules?

Lightsaber
Winter is coming.
 
C010T3
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:52 am

Quoting lightsaber (Reply 6):
Unfortunately, this is a symptom of what Brazil is going through.

Only in terms. Gol's problems are not comparable to the other three major airlines in Brazil. Gol has all kinds of problems, including its brand, which is perceived as cheap. It would be great if Gol were going for the ULCC market, but it's not.
 
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reffado
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 1:05 am

Quoting C010T3 (Reply 7):
It would be great if Gol were going for the ULCC market, but it's not.

This is the key. Honestly, I'm surprised they've lasted as long as they have. Charging what TAM, Azul and Avianca charge, but with a much poorer service.

Hopefully they won't disappear though. Reorganization would be the best outcome for the consumer, IMO.
 
jfk777
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 1:08 am

Sadly this sounds like the membership committee at a Brazilian club which has not admitted any new members in a long time. The last members were Varig, VASP and Transbrasil. New members not wanted here.
 
bleudefrance
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 3:03 am

Dilma edita medida provisória para salvar a GOL da falência
Dinheiro que será investido pela Delta para ter 49% do capital da companhia brasileira salvará a empresa

(Dilma edit interim measure to save GOL's bankruptcy
Money that will be invested by Delta to have 49% of the capital of the Brazilian company will save the company)

http://www.aviacaopaulista.com/news/2016/marco/020316_1.htm
 
Sightseer
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 3:15 am

Quoting bleudefrance (Reply 10):

That is not a recent story, and AFAIK nothing has come of that report.
 
flylondon
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 10:09 am

- Domestic market shrinking 8-10% yoy
- Significant amounts of USD denominated debt and leases (60% according the article below)
- Large devaluation of the BRL means servicing that debt has increased right as local currency denominated revenue is under pressure

Goal of bankruptcy will likely be to restructure the USD debt. 'Brand', 'ULCC' etc considerations are largely peripheral right now.

http://www.bloomberg.com/news/articl...help-evaluate-options-for-its-debt
 
jfk777
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 10:37 am

Sadly this sounds like the membership committee at a Brazilian club which has not admitted any new members in a long time. The last members were Varig, VASP and Transbrasil. New members not wanted here.
 
steve6666
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 10:41 am

Quoting flylondon (Reply 12):
Goal of bankruptcy will likely be to restructure the USD debt. 'Brand', 'ULCC' etc considerations are largely peripheral right now.

I agree with that in the short term, but in the long(er) term the strategic direction and branding are fundamental to GOL surviving. The incoming president in 2012 was supposed to have addressed that strategy.....

But really, this would not be a surprise, as GOL was always the most exposed of the major competitors - TAM with a strategic alliance, Azul with a smaller cheaper fleet and Avianca with fewer flights to fill. I'm not so sure GOL disappearing or scaling back would be bad for the consumer - there has been an overcapacity issue for quite a few years, even in the height of the Brazilian boom. GOL's modus operandi seemed to be to copy TAM - for example running half hourly Ponte Aereas with 20 pax, or timing their flights to Londrina within 15 minutes of TAM's. Losing GOL would go some way to right sizing capacity, with Azul placed to grow strongly to take up the slack.
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C010T3
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 11:31 am

Quoting flylondon (Reply 12):
'Brand', 'ULCC' etc considerations are largely peripheral right now.

After a long period of market growth, one would think that a company's financials would be in good shape, but that was not Gol's case back when the economic crisis began. That's why Gol's problems are much more than the country's economic situation.
 
G500
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 11:33 am

Silver linings. If Gol goes down, TAM and Azul would flourish with less competition
 
a380787
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 12:28 pm

I guess is also asking DL to come in as a white knight. It would be rather poor customer experience if the connecting feed becomes ULCC. Azul may also aggressively backfill any GOL capacity pull down just to establish themselves as a meaningful player at GRU.
 
PATristar
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 1:11 pm

Quoting C010T3 (Reply 7):
Only in terms. Gol's problems are not comparable to the other three major airlines in Brazil. Gol has all kinds of problems, including its brand, which is perceived as cheap. It would be great if Gol were going for the ULCC market, but it's not.

And you forget that the owners father and head of the group of companies are been investigated of several crimes including murder.
 
bkflyguy
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 1:49 pm

In case anyone hasn't noticed, the Brazilian economy is in a bit of a tailspin right now and is forecast to contract by 8.5% this year. This is double the size of the contraction the U.S. suffered in the great recession of 2008-09. So think about how many U.S. companies (including just about every airline) went bankrupt during that time. I know, it is not an apples to apples comparison, but before anyone blames a "poor brand" or "poor management" it is going to be a difficult time for even the best run companies.

Not to Say GOL doesn't have structural and other issues, but there is much more at work here than just bad management decisions.

It is going to be a very bumpy ride for all of the Brazilian airlines and corporations. And since Brazil is the largest economy in Latin America, there is a good chance this spreads to other area economies as well.
 
VCPJetter
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 2:16 pm

I think this would be also a huge loss for Boeing, once they are the largest 737 customers in the region.

GOL lost their brand identity. They started as LC but didn't keep up with efficiency. Then they became famous for their poor service and horrible seats. Since two year they made a lot to improve their image, refurbishing their jets, brand "lifting" etc.
But once you've lost your reputation it's difficult to recover.

Quoting a380787 (Reply 17):

I guess is also asking DL to come in as a white knight. It would be rather poor customer experience if the connecting feed becomes ULCC. Azul may also aggressively backfill any GOL capacity pull down just to establish themselves as a meaningful player at GRU.

Azul would be ready very fast to step in. Due to their fleet structure they are more flexible. Also Avianca would be happy to fill the gap. Both have major Airbus orders and I think they are currently trying to postpone deliveries due to the economic crisis (my guess).
 
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ghost77
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 3:53 pm

GOL is the 6th largest Boeing 737 operator worldwide:

576...Southwest AL..78
326...Ryanair...78
311...United AL...789
266...American AL...8
159...China Southern...78
144...GOL T.A... 78
138...Air China...78
135...Delta AL... 789
129...Hainan AL..78
122...Alaska AL..789

It wouldn't be so great news for Boeing or lessors.

g77
 
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maartent
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 4:02 pm

Quoting jfk777 (Reply 1):
This would be an awful development for Brazil since GOL is a symbol of the new middle Class in that country.

Actually, the "new" middle class is not middle class as we know elsewhere in the world, but the income class just above minimum. And given the fact that all prices jump by 10% or so each year, this is not an income which allows for regular trips. Income indication : about R$1500 or about 300 - 400 USD PER MONTH.

As a matter of fact, most companies in Brazil suffer, the economic crisis is really deep.
 
chiad
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 6:20 pm

Quoting g500 (Reply 16):
Silver linings. If Gol goes down, TAM and Azul would flourish with less competition

Sounds like Airbus wouldn't mind!
 
Skisandy
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 10:55 pm

GOL calls itself the "Intelligent Airline" and also claims to be the low fare leader.

It is neither, fares are exactly the same as the competition, only the inflight
service is inferior.

They have too many fights, on planes somewhat too large (out of SDU, for example),
and should have cut down on frequencies, considering the crisis.

Any amateur can see this, and could see the crisis coming, as the finances were
bad already when times were good.

What do these airlines pay management for?
 
B757capt
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 11:01 pm

Quoting g500 (Reply 16):

Yes, LATAM has had it rough too. As with any airline battle the strongest will survive. I don't think DL is willing to let them die, they will help with more cash.

Quoting ghost77 (Reply 21):

The 737 resale and release market is just fine. GECAS can find homes for these birds easily.
The views written by this user are in no manner the views of my employer and should not be thought as such.
 
klkla
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RE: Rumor: GOL May Declare Bankruptcy

Mon Apr 11, 2016 11:52 pm

Quoting C010T3 (Reply 5):
There is an equivalent to Chapter 11, but it is much less flexible and companies that resort to it tend to suffer more, making the emergence from bankruptcy much more difficult. The rumour is that Gol is trying to do is an extrajudicial debt-for-equity swap. It would be interesting if Delta were holding most of the outstanding bonds.

Thanks for answer.

Quoting B757capt (Reply 25):
I don't think DL is willing to let them die, they will help with more cash.

I'm sure Delta would help them if there was some path to them becoming profitable again. But does that path exist or are they a basket case?
 
Byrdluvs747
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 12:44 am

Can anyone enlighten me on what valuable assets (gates, slots, routes,...) G3 has that would be useful to JJ/LA? CGH? All I see are 737's flying routes within SA with no real stronghold.
The 747: The hands who designed it were guided by god.
 
C010T3
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 1:21 am

Quoting Byrdluvs747 (Reply 27):
gates, slots, routes

All gates in Brazil are CUTE. Slots and routes cannot be sold.
 
commavia
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 4:16 pm

On a related (and not at all surprising) note, as reported by Aviation Week, Delta's general counsel Peter Carter was quoted at the CAPA Americas conference in Las Vegas as saying, "What do you do in Brazil when you have a nation where their aviation industry is no longer healthy and they don’t have the capital in that country to support that industry? Why shouldn’t Delta be able to buy an airline in Brazil? No other industry has those limitations."
 
C010T3
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 5:35 pm

Quoting commavia (Reply 29):

On a related (and not at all surprising) note, as reported by Aviation Week, Delta's general counsel Peter Carter was quoted at the CAPA Americas conference in Las Vegas as saying, "What do you do in Brazil when you have a nation where their aviation industry is no longer healthy and they don’t have the capital in that country to support that industry? Why shouldn’t Delta be able to buy an airline in Brazil? No other industry has those limitations."

Brazil is surprisingly addressing that issue, but the measure is coming too late and lies in the hands of a departing administration. If the initiative passes Congress despite Rousseff's impeachment, the legislation will allow foreigners to own up to 49% of a Brazilian airline or 100% if Brazilians enjoy the same benefit in that foreign country. It would be only a question of the US allowing.
 
commavia
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 5:51 pm

Quoting C010T3 (Reply 30):
If the initiative passes Congress despite Rousseff's impeachment, the legislation will allow foreigners to own up to 49% of a Brazilian airline or 100% if Brazilians enjoy the same benefit in that foreign country. It would be only a question of the US allowing.

The U.S. will not allow foreign control of U.S. airlines anytime soon, if ever, so if that is how the Brazilian law is written, than the best Delta can hope for is 49%.

Nonetheless, I suspect 49% would still be agreeable for both Delta and GOL - Delta has met with apparent success in other situations where it has large but non-controlling voting equity (e.g., 49% of Virgin Atlantic) and GOL, obviously, just needs the cash.
 
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coronado
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 6:56 pm

One scenario that crossed my mind just now-
If Delta goes for the CSeries, those 19 or 20 Embraer 190's from Boeing Capital (formerly Air Canada) that Delta started listing as 'aircraft on order' on the 12/31/2015 10K, may end up being 'loaned' to Gol at favorabe terms and some of Gols 737 (call it 30 of them) can be moved to Delta. I am sure some of the leasing companies right now would give their proverbial 'left n#t' to reduce their Gol high risk financial exposure and trade it for some Delta exposure. Key for Brazilian airlines now is to cut capacity by 15-20% as they go in to survival mode. The Embraer's would allow Gol to continue to operate some of the higher frequency shuttle type routes. Delta could assume the leases on some of the 738's and would have an interim solution for 20 or 30 of its narrow body replacement plans.

Sure you can pump a few hundred million into Gol for 49% ownership, but more importantly they need to dramatically and quickly. lower ASK's and stop the bleeding. This could be a creative way to support Gol in returning to break even without having to put in as much cash.
The Original Coronado: First CV jet flights RG CV 990 July 1965; DL CV 880 July 1965; Spantax CV990 Feb 1973
 
LawnDart
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RE: Rumor: GOL May Declare Bankruptcy

Tue Apr 12, 2016 9:20 pm

Quoting Coronado (Reply 32):
and some of Gols 737 (call it 30 of them) can be moved to Delta

Hmm... do you know something?  
 
a380787
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RE: Rumor: GOL May Declare Bankruptcy

Wed Apr 13, 2016 2:10 pm

I really wish GOL knew what they were doing. There's looming BK risk, the whole impeachment thing (geopolitical risk), multi-percent GDP shrinkage (recession risk), potential overcapacity domestically (yield trashing risk) .....

So today they announce even MORE flights from GRU and CGH (and the increase seems to be permanent rather than just for Olympics :

airlineroute.net/2016/04/13/g3-grucgh-may16/
 
PATristar
Posts: 135
Joined: Mon Aug 26, 2013 2:19 pm

RE: Rumor: GOL May Declare Bankruptcy

Wed Apr 13, 2016 2:29 pm

Quoting a380787 (Reply 34):
So today they announce even MORE flights from GRU and CGH (and the increase seems to be permanent rather than just for Olympics :

From GRU maybe but from CGH I doubt is permanent because CGH only have available slots for Saturday and Sunday so I think is just because of the Summer Olympics.
 
a380787
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RE: Rumor: GOL May Declare Bankruptcy

Wed Apr 13, 2016 2:30 pm

Quoting PATristar (Reply 35):

From GRU maybe but from CGH I doubt is permanent because CGH only have available slots for Saturday and Sunday so I think is just because of the Summer Olympics.

Most of the expansion published were from CGH, and many are daily services, not weekend only. If they're Olympics only, then the announcement is not clear on that point at all.

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