Brazil's Gol airline says bankruptcy exit to involve $1.5 billion capital injection

SAO PAULO (Reuters) -Brazilian airline Gol expects its exit of Chapter 11 bankruptcy proceedings to involve a $1.5 billion capital injection through the issuance of new shares and refinancing of $2 billion in debt, it said in a securities filing on Monday.

Gol, one of Brazil's largest carriers, filed for bankruptcy protection in the United States earlier this year after struggling with heavy debt and delayed deliveries from planemaker Boeing.

The estimates for it to emerge from the restructuring process are part of a broader five-year strategic plan unveiled by the firm, which includes increasing its fleet and boosting operating margins.

Sao Paulo-traded shares of Gol dropped as much as 3.5% after the plan was announced, as the company cautioned that it is "highly likely" that its shares will hit "minimal value upon emergence" from bankruptcy.

Gol said it would hold a competitive process starting in June to evaluate proposals to finance its bankruptcy exit, adding the process should last at least until the end of the third quarter.

The carrier will also study "any viable, competitive alternative transactions, including opportunities presented by potential sources of equity and debt capital" as part of the move, it said.

"While Gol anticipates a successful exit financing process, there can be no assurance that the process will result in any transactions," the company added.

Earlier this month, Gol and Brazilian rival Azul announced a codeshare agreement, connecting their networks and frequent flyer programs in a move that re-ignited speculation about a potential merger.

Gol, which flies Boeing 737 aircraft, said its strategic plan includes growing its fleet to 169 jets by 2029 from the current 142, as it targets returning to pre-pandemic domestic capacity levels by 2026.

Gol's EBITDA (earning before interest, taxes, depreciation and amortization) margins are expected to be depressed in 2024, it said, dropping to about 23% from 27% a year earlier.

But they should rebound to 29% in 2025, 30% in 2026 and 34% by 2029 as the carrier implements a 1 billion-real ($193.80 million) annual profit improvement program to keep costs competitive.

Gol is Brazil's second-largest airline by revenue passenger kilometer, a gauge of traffic. It has around 30% of domestic market share, behind LATAM's 40% share and roughly matching Azul.

($1 = 5.1599 reais)

(Reporting by Gabriel Araujo; Editing by Luana Maria Benedito, Kirsten Donovan, Andrea Ricci and Rod Nickel)