GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) has announced it has completed the terms and conditions of the BRL1.2 billion real (USD225.3 million) debt refinancing of GLA Linhas Aéreas S.A., an operating unit of the company.

The maturity of the loan from local banks is set for 2024, but the transaction is still subject to final approvals and the signing of documents, GOL said in a statement to investors.

The refinancing represents the last stage of GOL's liability management programme, which is to allow the company to return to its lowest level of short-term debt since 2014 - about BRL500 million (USD93.8 million) at the end of 3Q21. In terms of the liability management programme, GOL has used assets from its balance sheet to reduce short-term debt by BRL2.1 billion (USD394 million) in the 12-months ending in June 2021.

In partnership with its aircraft lessors, the company has maintained its lease liabilities at about 45% of its total debts in the same period, with a stable discount rate in IFRS 16 (the International Financial Reporting Standard guiding leases).

GOL said the refinancing of its short-term debt would extend the average term of liabilities to 3.3 years, an increase of more than two years. The funds would be used to refinance:

  • BRL592 million (USD111 million) of the remaining balance of the 7th issue of debentures;
  • BRL528 million (USD99 million) of credit lines for import financing; and
  • BRL165 million (USD30.9 million) of credit lines for working capital.

Following the transaction, the company could now use most of its cash flow on sustainable operating growth, commented executive vice president and chief financial officer, Richard Lark. He said the transaction would also improve GOL's credit metrics, better matching future assets and liabilities, as well as reducing the company's average cost of debt. "We are optimistic that this will help restore GOL's credit rating to B/B+, its pre-pandemic level, by the three major corporate credit rating agencies."

He said the company's disciplined financial management throughout the pandemic had strengthened its balance sheet and had reduced short-term indebtedness, preserving liquidity for the maintenance of operations.

GOL also completed several important initiatives to rebalance its capital structure, such as:

  • the amortisation of a Term Loan B in the amount of USD300 million;
  • the issuance of USD500 million of Senior Secured Notes due in 2026;
  • a capital increase of BRL423 million (USD79.4 million) led by its controlling shareholder;
  • the acquisition of a minority stake in its Smiles loyalty programme.