Air France-KLM announced plans Wednesday to buy a small stake in
Gol Linhas Aereas Inteligentes SA, paying a steep premium to cement
a broader alliance with Brazil's second-largest airline by
traffic.
The European carrier would inject $100 million into loss-making
Gol, taking a nonvoting stake alongside fellow SkyTeam alliance
member Delta Air Lines Inc., which bought into the Brazilian
carrier two years ago.
A slide in Brazil's currency and a weakening economy have dented
Gol, the country's largest domestic carrier, forcing it to seek
waivers on debt covenants and explore other ways to enhance
liquidity, including a possible flotation of its frequent flier
program.
Gol said Air France-KLM would pay $52 million for a 1.5% stake
with a reference price of $12.23 a share. Analysts said that
equates to a premium of almost 170% above the stock's close
Wednesday. The deal would include a capital increase of around 4.2
million shares.
Gol shares closed at 10.93 reals Wednesday.
Air France-KLM also committed to inject the equivalent of $23
million in commercial, training and marketing services, plus
another $25 million over two years if Gol reaches undisclosed
synergy targets. The airlines hope to close the deal within six
months, subject to regulatory approval.
Gol executives said on a call with analysts that the premium was
agreed on the basis of synergies generated by its partnership with
Delta, as well as limited "exclusivity" for the expanded
partnership with Air France-KLM on trans-Atlantic routes.
Delta and Air-France-KLM are longtime members of SkyTeam,
coordinating trans-Atlantic flights, but Gol said it had no plans
to join any of the three global airline marketing alliances. The
U.S. carrier has a 6.1% stake in Gol, and the planned investment by
Air France-KLM is a rare example of two carriers investing directly
in the same partner.
The proposed Gol deal would strengthen SkyTeam and Air
France-KLM on flights between Europe and South America, where they
trail the Iberia arm of International Consolidated Airlines Group
SA. Iberia is a member of the rival Oneworld group, which includes
Brazil's largest airline, Tam, a member of Latam Airlines Group
SA.
Brazil's domestic airline market expanded just 0.8% last year,
according to the International Air Transport Association. That has
forced carriers to cut capacity in an effort to stem losses as the
real's slide has inflated costs.
Gol made a net loss of 705 million reals through the first nine
months of 2013, narrowing its year-earlier deficit, although
analysts don't expect the airline to return to profitability until
2015.
Write to Doug Cameron at doug.cameron@wsj.com
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