Delta's timing to invest in distressed South American and European airlines was very unlucky.
Brazilian airline Gol faces cash crunch as coronavirus losses add up
REUTERS 9:15 AM ET 7/31/2020
Symbol Last Price Change |
| DAL | 24.94 | 0 (0%) | | QUOTES AS OF 07:00:00 PM ET 07/30/2020 |
By Marcelo Rochabrun
SAO PAULO, July 31 (Reuters) - Brazil's Gol Linhas Aereas Inteligentes on Friday said its daily cash burn could rise by as much as four times in the next three months compared to the second quarter, adding to 2020 losses already totaling 4.3 billion reais ($823.3 million).
Brazil's largest domestic carrier, like almost all airlines around the world, is reeling from the impact of the coronavirus crisis on travel. It reported a net loss of 2 billion reais in the second quarter.
Gol's own forecasts show it could face a liquidity crunch soon. The airline is scheduled to repay Delta Air Lines(DAL) in September for a loan valued at $300 million. If that happens, Gol could burn through more cash than is currently available to it in cash and cash equivalents.
The airline has 416 million reais, or some $80 million, of cash and cash equivalents, although it says its total liquidity is much higher, at about 3.3 billion reais.
"The continued support from GOL's stakeholders is critical to ensuring the Company maintains the sufficient required months of cash-on-hand to see the Company through this crisis," the company said.
Regional rivals Avianca Holdings and LATAM Airlines Group filed for bankruptcy in May, in part because of debt coming due in the short-term that they were ill-equipped to afford.
Gol's cash burn would go up, however, whether it repays Delta or not.
The airline said it burned through 3 million reais a day in the second quarter, and would burn through 12 million reais per day in the next three months if it repays Delta. If it does not repay Delta, its daily cash expenditures would still double to 6 million reais a day.
Gol executives said Brazil's government could give the airline some extra liquidity soon, although that help has already been postponed several times since the coronavirus crisis hit Latin America hard in March.
($1 = 5.1720 reais) (Reporting by Marcelo Rochabrun; Editing by John Stonestreet and Paul Simao) |
