Government-Backed Credit Line for Airlines in Brazil

By Luciana Magalhaes

SAO PAULO (Reuters) – A Brazilian government-backed credit line for struggling airlines is expected to be ready by early 2025, helping the industry weather challenges for major carriers, according to Ports and Airports Minister Silvio Costa Filho.

Gol Linhas Aereas, currently negotiating its exit from bankruptcy protection, and Azul, which recently renegotiated debts to attract capital, are both engaging with the government regarding the credit line, Costa Filho stated.

"Our expectation is to have these operations no later than in the first three or four months," the minister added, mentioning that final details of the program might clear the lower house of Congress as early as next week.

The aid package, currently estimated at 4 billion reais ($690 million), would utilize resources from the National Civil Aviation Fund for loans distributed by the state development bank, BNDES.

Azul confirmed its ongoing discussions with the government regarding the credit line, while Gol did not provide an immediate comment.

Gol reached a restructuring agreement this month that will likely lead the company out of Chapter 11 next year. In contrast, Azul secured a deal with creditors to raise up to $500 million, making it the only major Brazilian carrier to avoid Chapter 11 since the onset of the coronavirus pandemic.

Costa Filho emphasized that government support has been necessary since the pandemic, stating, "Unlike other countries, Brazil did not immediately assist the airlines."

He addressed rumors about a potential merger between Gol and Azul, remarking that he sees no concrete developments on that front.

However, Azul confirmed ongoing discussions regarding a potential business combination, while Gol did not immediately comment.