BRASILIA (Reuters) – The Brazilian government said on Friday it had reached agreements with two of the country's largest airlines, GOL and Azul, to settle some outstanding tax liabilities totaling 7.5 billion reais ($1.22 billion).
The government provided transport companies with significant discounts and allowed them to pay instalments.
Why is it important
The deal may provide financial relief to companies. Latin American airlines are facing financial obstacles in the wake of the Covid-19 pandemic and have been forced to restructure their obligations as they suffer from high debt burdens.
Juul has been under Chapter 11 bankruptcy protection in the US since early 2024, while Azul recently struck deals with lessors to unwind liabilities in exchange for an equity stake and bondholders for new financing.
In numbers
The government said in a statement that Juul will pay 880 million riyals in up to 120 installments to settle obligations amounting to about 5 billion riyals, adding that it will also retain an amount of 49 million riyals from the company currently deposited in a judicial account.
Meanwhile, Azul 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 quotes
Mariana Vieira, an official at the Brazilian Attorney General's Office, said the deals were “an important step towards resolving tax issues exacerbated by the pandemic, and contribute to the resumption of growth in the industry.”
Gul said in a separate statement that the deal resolves tax liabilities and will not affect its net financial debt.
Market reaction
Shares of Gol traded in Sao Paulo rose 1.5% on Friday, adding to gains of more than 5% in the previous session, when the company gave a glimpse of the tax deal in a securities filing.
Azul shares rose 0.8%, after rising 2.8% on Thursday.
($1 = 6.1507 riyals)
