Earlier this week, the Brazilian carrier GOL and Castlelake secured financing for a Boeing 737 MAX order. The financing will be worth up to $600 million and will allow the airline to finance the acquisition of new 737 MAX 8 aircraft.
The Brazilian carrier GOL is currently in the midst of renewing its Boeing 737 fleet. As of January 2022, the airline has 133 aircraft, including 22 Boeing 737-700s, 89 737-800s, and 22 737 MAX 8s. In order to keep increasing its fleet, GOL signed financing of up to $600 million with Castlelake LP to finance the acquisition of 12 additional MAX aircraft.
The transaction will consist of 10 finance leases and two sale-leasebacks, said GOL in a statement. Moreover, the delivery of these additional 12 Boeing 737 MAX aircraft will begin this month, allowing GOL’s plan to accelerate the transformation of its fleet, and have half of its aircraft under finance leases by 2026.
Paulo Kakinoff, GOL’s CEO, said: “The financing for these 737 MAX aircraft initiates a new cycle of value creation in our fleet. With favorable market conditions for new MAX aircraft and our strong partnership with Boeing, as one of its largest customers, these aircraft further advance our market leader position.”
The fine print
According to the Brazilian airline, the interest rate for the finance leases is approximately 6 percent per aircraft. This represents a reduction when compared to operating lease costs of existing aircraft in GOL’s fleet.
The $600 million secured with Castlelake will fully cover the acquisition cost of the new aircraft, plus provide resources that GOL will redirect to obligations and return costs on its 737 NG fleet.
In 2022, GOL expects to return up to 18 Boeing B737NG aircraft. By 2025, the airline plans to return a total of 34 Next-Generation aircraft, allowing the carrier to further reduce unit costs.
Celso Ferrer, GOL’s COO, added: “Accelerating our fleet transformation to the 737 MAX position us more competitively for growth through greater flexibility in our capacity management.”
It also enables the company to add new routes and destinations, and be “highly efficient at meeting fluctuations in travel demand.” Moreover, the new aircraft will reduce GOL’s average fleet age from 11 to seven years.
Finally, Richard Lark, GOL’s CFO, added that the airline is in an advantageous position, which allows it to better optimize its capital structure. GOL has access to financing sources via export credit agencies, capital markets, and operating leases. “This latest aircraft transaction further establishes the financial sustainability of our fleet management and enhances the Company’s value for all stakeholders through the increased efficiencies that we will achieve,” he added.
GOL in 2021
Until November 2021, GOL had a 49.7% recovery in terms of passengers carried, according to data provided by Brazil’s Civil Aviation Authorities. Between January and November 2021, GOL had carried 16.3 million travelers versus the 32.7 million it had in the same period in 2019.
Among Brazil’s top three airlines, GOL had the worst recovery overall. Azul had carried 20.5 million travelers, an 84% recovery compared to 2019; meanwhile, LATAM had 17.7 million travelers, a 53.1% recovery.
Daniel Martínez Garbuno is a Mexican journalist. He has specialized in the air industry working mainly for A21, a Mexican media outlet focused entirely on the aviation world. He has also published on other sites like Simple Flying, Roads & Kingdoms, Proceso, El Economista, Buzos de la Noticia, Contenido, and Notimex.