Struggling Brazilian LCC Gol places its financial fate in the hands of bondholders

Brazil's political unrest and severe economic deterioration have essentially closed off credit markets to companies based in the country. One of its largest airlines, Gol, was fighting losses as Brazil's economy started its slow downward trajectory, beginning in 2012. By mid-2015 Gol was forced to undertake a restructuring that included equity injections, renegotiating with suppliers, and, more recently, an attempt to restructure unsecured bonds, which the company stresses is crucial for completing all the facets of its restructuring.

Aside from attempting to create a reasonable financial foundation to weather the economic crisis, Gol continues to cut its capacity and has suspended eight routes in its network. However, Gol argues that its smaller Brazilian competitors have continued to expand their capacity, which has offset the benefits of capacity reductions undertaken by Brazil's largest airlines - TAM and Gol.

Gol has suffered on all fronts from Brazil's economic crisis, which shows no signs of improving for at least two more years. It is tough to predict the composition of Brazil's aviation industry at that time, but Gol, with some help from its partner Delta, is working feverishly to ensure that it retains its leadership position in the market once the recovery begins.