Brazilian airline Gol is poised to emerge from Chapter 11 bankruptcy proceedings with a comprehensive financial overhaul involving a $1.5 billion capital injection through the issuance of new shares and the refinancing of $2 billion in debt. 

This was revealed in a securities filing on Monday, outlining the company’s strategy to stabilize its finances and revitalize its operations.

Gol, one of Brazil’s major carriers, sought bankruptcy protection in the United States earlier this year. The company was grappling with significant debt and delays in aircraft deliveries from Boeing. 

The company’s anticipated restructuring is part of a broader five-year strategic plan to expand its fleet and enhance operating margins.

Despite the strategic outlook, the announcement led to a decline in Gol’s Sao Paulo-traded shares, which dropped as much as 3.5%. The company warned that its shares are ‘highly likely’ to reach ‘minimal value upon emergence’ from bankruptcy, reflecting investor concerns about the dilution and financial uncertainty involved in the restructuring process.

Gol plans to commence a competitive process in June to evaluate proposals for financing its bankruptcy exit. This process is expected to extend until at least the end of the third quarter. 

To support its exit strategy, the airline will explore “any viable, competitive alternative transactions,” including potential equity and debt capital sources. However, Gol cautioned that these efforts are not guaranteed to result in successful transactions.

The strategic plan also includes a significant fleet expansion, with Gol aiming to grow its fleet from 142 jets to 169 by 2029. The airline operates Boeing 737 aircraft and intends to return to pre-pandemic domestic capacity levels by 2026. 

Gol’s earnings before interest, taxes, depreciation, and amortization (EBITDA) margins are projected to dip to about 23% in 2024, down from 27% in the previous year. However, the company forecasts a rebound to 29% in 2025, 30% in 2026, and 34% by 2029, driven by a one billion-real ($193.80 million) annual profit improvement program designed to keep costs competitive.

Earlier this month, Gol and its Brazilian rival Azul announced a codeshare agreement, linking their networks and frequent flyer programs. This move has rekindled speculation about a potential merger between the two carriers, although no formal merger plans have been announced.

Gol holds approximately 30% of Brazil’s domestic market share in terms of revenue passenger kilometers, a key industry metric. This places it behind LATAM, which commands 40% of the market and is on par with Azul.