GOL Linhas Aéreas Inteligentes (G3, Sao Paulo Congonhas) has proposed a corporate reorganisation to the minority shareholders of the carrier's SMILES loyalty programme, according to a Material Fact document issued by the airline on December 9. The loyalty scheme has over 16 million registered clients.

The objectives of this reorganisation is to "ensure the group's [made up of SMILES, GOL Linhas Aéreas Inteligentes (GOL) and GOL Linhas Aéreas (GLA)] long-term competitiveness, align the interests of all stakeholders, reinforce a combined capital structure, streamline corporate governance, reduce operating, administrative and financing costs and expenses and increase and combine the liquidity of SMILES common shares and GOL preferred shares for the group's shareholders, as well as provide for a better-coordinated offering of products and services."

The suggested reorganisation, if implemented, will result in the migration of SMILES' shareholder base to GOL. Each common share of SMILES will be entitled to 0.6319 preferred shares of GOL plus BRL16.54 real (USD3.99) or 0.4213 preferred shares of GOL plus BRL24.80 real (USD5.99). The calculation is based on the redemption amount of redeemable shares. In determining the proposed swap ratio, GOL took into account the value of BRL39.25 real (USD9.47) per GOL preferred share and BRL41.34 real (USD9.98) per SMILES common share.

The airline intends to take three steps in the reorganisation process:

  • merger of SMILES common shares by GLA, with GLA's issuance of common shares and redeemable preferred shares to SMILES shareholders;
  • merger of GLA shares by GOL, with GOL's issuance of GLA preferred shares and redeemable preferred shares to GLA shareholders;
  • redemption of GLA redeemable preferred shares and GOL redeemable preferred shares, with payment in cash based on the redemption of GOL redeemable preferred shares to SMILES shareholders to be made on the settlement date of the reorganisation.

GOL suggested that its plans were consistent with recent trends in the airline and loyalty programme markets and cited recent moves by Air Canada (AC, Montréal Trudeau) and Aeroméxico (AM, México City Int'l) to repurchase stakes in their respective programmes. It also says that there have been a number of non-airline loyalty schemes launched in recent years, changing the competitive landscape when compared to 2013 when SMILES was first formed as an independent company.

In terms of timeline, GOL and GLA have asked SMILES' management to hire an appraiser(s) by December 18, the appraisal reports are to be completed by January 23, 2020, in readiness for a general shareholders meeting on March 2, 2020.