Brazil’s Gol Airlines Hits Record Low After Capital Increase Proposal

Shares of Gol Linhas Aereas Inteligentes SA plunged to a record low on Friday following a proposed capital increase aimed at pulling the Brazilian airline out of Chapter 11 bankruptcy protection.

Stock Plummets to All-Time Low

Gol’s shares sank 40% at the market open in São Paulo, trading at just 0.71 reais—its lowest price since going public in 2004. The steep drop followed the airline’s announcement of a massive capital increase plan.

Capital Increase Plan Details

The airline is proposing to raise between 5.34 billion and 19.2 billion reais (approximately $3.4 billion) through the issuance of new shares. The plan includes issuing between:

• 3.64 trillion to 13.1 trillion common shares

• 430.3 billion to 1.55 trillion preferred shares

The issuance price has been set at 0.0002857142 reais per common share and 0.01 reais per preferred share. The company’s board has approved the proposal, with shareholder review scheduled for a meeting on May 30.

Ongoing Restructuring Efforts

This capital increase is part of Gol’s broader restructuring strategy. In November, the airline reached a $2.5 billion deal with its major lender, Abra Group Ltd., aimed at exiting Chapter 11. Gol expected to raise $1.85 billion in exit financing to repay its existing debts.

Despite posting better-than-expected results in the final quarter of 2024, Gol continues to face tight liquidity. Bloomberg Intelligence analyst Philip Brendel noted on April 24 that cash lease and interest payments are likely to consume most of Gol’s projected Ebitdar, limiting its ability to generate cash.

Financial Struggles Amid Pandemic Fallout

Gol filed for Chapter 11 in January 2024 as it struggled to recover from pandemic-related losses. The airline, one of South America’s largest, is burdened by heavy debt and persistently high interest rates in Brazil, compounded by a slow rebound in air travel.

Conclusion

Gol’s record share price decline underscores the challenges it faces despite aggressive financial restructuring efforts. The upcoming shareholder vote on May 30 will be a critical step in determining the airline’s future trajectory.

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