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Brazil’s GOL Secures $600 Million For New Boeing 737 MAX Jets

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Brazil’s GOL has announced it has secured $600 million in financing with Castlelake to support the acquisition of 12 new Boeing 737 MAX 8 aircraft. The aircraft under this arrangement will start in January 2022 and will come out of the GOL order book. However, as part of this arrangement, GOL will continue to accelerate its fleet transformation in favor of the modern 737 MAX family.

GOL B737 MAX
GOL has signed with Castlelake, giving it a $600 financing agreement to secure 12 Boeing 737 MAX jets. Photo: Getty Images

GOL secures financing

GOL announced that it has closed a financing agreement of up to $600 million with Castlelake LP to finance 12 deliveries of Boeing 737 MAX aircraft. The transaction includes 10 finance leases and two sale-leaseback transactions of new Boeing 737 MAX 8 aircraft from GOL’s order book with Boeing.

Paulo Kakinoff, CEO of GOL, stated the following on the update:

“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 leadership position.”

The funds will completely cover the acquisition cost of the new aircraft. Delivery of these 12 Boeing 737 MAX aircraft will begin this month. The announcement comes after GOL signed for 26 additional MAX 8 aircraft in the third quarter of 2021.

Brazil’s GOL Secures $600 Million For New Boeing 737 MAX Jets
The Boeing 737 MAX is a big part of GOL’s plans. Photo: Getty Images

GOL’s fleet transformation continues

As GOL comes out of the crisis, it is working on a major fleet transition plan The airline is looking to move away from Boeing 737 Next Generation aircraft in favor of the Boeing 737 MAX. The airline expects to return up to 18 Next Generation 737s in 2022. By the end of 2025, the company expects to return a total of 34 Next Generation aircraft.

The latest deal will allow for GOL to pursue that trajectory. It will also provide it with resources to fund the return cost and other obligations of the existing Next Generation planes that will exit the fleet, while also enabling the introduction of the new 737 MAX fleet family.

The 737 MAX family is also a big part of GOL’s environmental goals. The airline plans to reach carbon neutrality by 2050. Compared to previous generation aircraft, the MAX, according to GOL, consumes 15% less fuel and produces 16% fewer carbon emissions. This also helps provide it a beneficial tailwind for lowering unit costs.

Brazil’s GOL Secures $600 Million For New Boeing 737 MAX Jets
GOL expects the aircraft to benefit from both a unit cost and environmental perspective. Photo: GOL

GOL sets itself up for the future

GOL is setting itself up to continue to capitalize on the recovery. The Brazilian carrier is very strong in the domestic network, but the MAX could allow it to do so much more, especially considering the airline’s various partnerships.

One of the big partnerships is with American Airlines. In 2021, the two airlines announced plans to create an expanded exclusive codeshare and loyalty program. American is GOL’s sole codeshare partner in the US, while GOL is American’s sole codeshare partner in Brazil. Together, the two airlines also expanded their loyalty partnership.

However, what makes the MAX an attractive part of this partnership is that American and GOL are looking at strengthening their commercial cooperation, where allowed by regulatory and contractual limitations. American also announced plans to invest $200 million in GOL. Together, this could set GOL up for growth.

Brazil’s GOL Secures $600 Million For New Boeing 737 MAX Jets
GOL’s partnership with American Airlines will help propel much of the carrier’s growth. Photo: American Airlines

GOL’s US network is relatively limited. However, the MAX could open up a host of new route options between Brazil and the United States. As the airline’s Chief Operating Officer, Celso Ferrer, noted:

“Accelerating our fleet transformation to the 737 MAX positions us more competitively for growth through greater flexibility in our capacity management and enables the expansion of routes and destinations, which will ensure we are highly efficient at meeting fluctuations in travel demand. Furthermore, adding these new aircraft will reduce the average age of GOL’s fleet from 11 to seven years.”

As the Brazilian market is expected to become more competitive, GOL is looking to position itself as a leading airline on costs and expand its footprint in a disciplined manner. This would almost certainly include looking at new opportunities between the US and Brazil that could form under the strength of the airline’s partnership with American and robust network back at home.

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