BRASILIA (Reuters) – Brazil’s government said on Friday it had reached an agreement with the country’s two biggest airlines, Gola and Azula, to settle some outstanding tax liabilities totaling 7.5 billion reais ($1.22 billion).
The state provided carriers with significant discounts and enabled them to pay in installments.
WHY IT’S IMPORTANT
The deal could make it easier for companies financially. Latin American airlines are facing financial hurdles following the COVID-19 pandemic and have been forced to restructure liabilities as they struggle with heavy debt.
Gol has been under Chapter 11 bankruptcy protection in the U.S. since early 2024, while Azul recently entered into agreements with lessors to waive liabilities in exchange for equity and bondholders to obtain new financing.
BY THE NUMBERS
Gol will pay 880 million reais in up to 120 installments to settle liabilities of about 5 billion reais, the government said in a statement, adding that it will also retain 49 million reais from the company that are currently deposited in a court account.
Azul, meanwhile, will pay 36 million reais immediately and an additional 1.1 billion reais in up to 120 installments to settle more than 2.5 billion reais in debt.
KEY QUOTATIONS
Mariana Vieira, an official at Brazil’s attorney general’s office, said the agreements were “a significant step toward resolving tax issues exacerbated by the pandemic and contributing to the regrowth of the industry.”
Gol said in a separate statement that the agreement resolves tax obligations and will not affect its net financial debt.
MARKET REACTION
Shares of Sao Paulo-traded Gol rose 1.5% on Friday, adding to gains of more than 5% in the previous session, when the company hinted at a tax deal in a securities filing.
Azul shares rose 0.8%, after rising 2.8% on Thursday.
(1 USD = 6.1507 reais)
