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Delta To Purchase $56 Million In Additional Shares In GOL Airlines

July 13, 2015 - Delta will deepen its existing partnership with GOL Airlines (Linhas Aereas Inteligentes) to enhance the Latin American carrier’s financial position and liquidity. GOL Airlines is the second largest airline in Brazil, after TAM.

Under the agreement, GOL’s controlling shareholder will invest up to $90 million in newly issued preferred shares of GOL, and Delta will invest up to $56 million in newly issued preferred shares of GOL. Delta will also guarantee third-party loans to GOL of up to $300 million.

“GOL plans to borrow the money this year, depending on market conditions, and feels it’s important to bolster the company’s liquidity,” said Edmar Lopes Neto, Chiel Financial Officer of GOL.

Since 2012, GOL has raised funds to add foreign routes and invest in a turnaround strategy after years of loss. According to the most recent number released by GOL, the airline has a cash position of $1.1 billion. Delta and GOL also agreed to extend the terms of their strategic and commercial operating agreements. The stock and loan transactions are subject to the execution and delivery of proper documentation and customary closing conditions, including required regulatory approvals.

Back in 2006, GOl Airlines suffered a major loss when a Boeing 737-8EH, registration PR-GTD, Flight 1907, had departed Manaus, Brazil for Rio de Janeiro when collided in midair with an Embraer Legacy 600 business jet over Mato Grosso, Brazil. All 154 passengers and crew aboard the Boeing 737 died when the aircraft broke up in midair and crashed into an area of dense jungle, while the Embraer Legacy, despite sustaining serious damage to its left wing and tail, landed safely with its seven occupants uninjured.

Because of this accident the Jet Airliner Crash Data Evaluation Centre (JACDEC) rated the company, as the fourth worst safety record in the world. This evaluation is based on number of number of casualties. It should be noted that since GOL Airlines is a relatively young airline with only one hull loss.


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