(Adds details, stock price)
By Marcelo Rochabrun
SAO PAULO, April 7 (Reuters) – Brazilian airline Gol Linhas Aereas Inteligentes has the flexibility to reduce its fleet from 130 Boeing 737 aircraft to 100 by allowing the lease to expire, executives said Tuesday when discussing steps to tackle the effects of the coronavirus outbreak. .
Gol Struggle, the largest domestic airline in Brazil, which has flown all but 10 planes and only flies 50 flights a day, is typical of a wider industrial crisis because travel bans related to the pandemic have shrunk global demand.
But the airline, which is currently negotiating for potential credit lines from the Brazilian national development bank, is entering a crisis with significant accumulated losses.
Chief Executive Gol Paulo Kakinoff said at a conference call that the reduced network did not burn cash on the flight itself and the company had cut all costs. Payroll costs dropped by half, with a mixture of salary deductions and 5,400 unpaid leave workers.
Gol has also negotiated to postpone lease payments with the aircraft lessor with a grace period of six months, according to securities submission on Tuesday.
The steps have reduced spending by almost half to about 350 million reais ($ 66.82 million) per month, the executive said, but there was little income to offset it.
The reduction in spending levels will last until May 3, but executives said it could be extended because they did not see significant changes to their flight schedules later in May.
Kakinoff assessed the potential credit lines of the Brazilian state development bank BNDES of 3 billion reais ($ 574.64 million).
He said it would be paid in full for five years, with payments only beginning in the third year.
But what is still pending is interest rates and an agreement on share prices for warrants in return for loans.
Gol’s stock price has fallen more than 70% this year. On Tuesday, shares rose 7.5%, while the broader Brazilian Bovespa index was 6% higher.
Press reports say Brazilian airlines are debating with BNDES over whether warrants will be based on current stock prices or before the crisis hit.
“The management of this company will not determine the price of debt instruments based on the share price yesterday, today or tomorrow,” said Chief Financial Officer Gol Richard Lark. “This will not happen.” ($ 1 = 5.2207 reais) (Reporting by Marcelo Rochabrun; Additional reporting by Carolina Mandl; Editing by Jonathan Oatis and Bernadette Baum)
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