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GOL Linhas (GOL) to Obtain $200M From American Airlines (AAL)

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In order to expand liquidity and meet higher air-travel demand, Brazil-based airline Gol Linhas Aéreas Inteligentes S.A. GOL agreed to expand its commercial deal with American Airlines Group Inc. AAL through an exclusive codeshare agreement for the next three years.

As part of the upgraded agreement, GOL will receive an equity investment of $200 million (R$1.05 billion) from American Airlines. The latter will invest $200 million in 22.2 million newly-issued preferred shares of GOL Linhas for a 5.2% participation in the company's economic interest at $9.00 per preferred share. The carrier’s chief financial officer, Richard Lark, stated, “The investment represents recognition by a major U.S. airline carrier of the company’s value as the largest airline in Brazil with the best product. Further, the investment, when combined with the R$2.7 billion of long-term capital raised in 2Q21, brings the total long-term capital raised to over R$3.7 billion in the last six months, including over R$2.0 billion of new equity capital. This additional liquidity further enhances GOL’s financial flexibility while minimizing dilution to shareholders”.

The extended deal enhances travel opportunities for passengers by connecting more North and South American routes for GOL Linhas. With this, the agreement expands beyond the terms of the existing codeshare partnership (since February 2020) between the carriers. Gol Linhas announced that Cancun (Mexico) and Punta Cana (Dominican Republic) will be its first international routes to reopen (by mid-November 2021) since the beginning of the pandemic.

Gol Linhas’ Smiles and American Airlines’ AAdvantage loyalty programs will be partners with enhanced benefits, commencing early 2022. This will provide loyalty members with priority check-in, priority security, priority boarding, a larger checked baggage allowance, lounge access and preferred seats on both airlines.

The extended deal enables passengers to purchase connecting flights on both airlines using one reservation, in addition to seamless ticketing, check-in, boarding and baggage check experience throughout the entire journey.

 Zacks Rank & Stocks to Consider

Gol Linhas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Transportation sector are Knight-Swift Transportation Holdings Inc. KNX and Herc Holdings Inc. HRI. Knight-Swift carry a Zacks Rank #2 (Buy), while Herc Holdings sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected earnings per share (three to five years) growth rate for Knight-Swift and Herc Holdings is pegged at 15% and 49.2%, respectively.

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Gol Linhas Aereas Inteligentes S.A. (GOL) : Free Stock Analysis Report
KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report
American Airlines Group Inc. (AAL) : Free Stock Analysis Report
Herc Holdings Inc. (HRI) : Free Stock Analysis Report
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