American Airlines Invests In Brazil's GOL Airlines Which Has Interline Agreement With Cubana de Aviacion. OFAC Permits This Type Of Non-Controlling Investment
/Fort Worth, Texas-based American Airlines, Inc. (2019 revenues approximately US$45.7 billion) has purchased for US$200 million a 5.2% shareholding in Sao Paulo, Brazil-based GOL Linhas Aereas Inteligentes S.A. (2019 revenues approximately US$2.7 billion). LINK To Media Release
In December 2015, GOL reported including Jose Marti International Airport (HAV) in the Republic of Cuba among destinations. HAV is not currently listed among GOL destinations.
On the Internet site of GOL:
“Interline: GOL has partnerships with many airlines that can issue your tickets and allow you to make one or more connections without you having to check-in or check your bags again. Learn about the partner airlines with which we have this agreement known as an interline agreement:
Cubana de Aviacion”
On 4 March 1994, the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury in Washington DC issued an opinion which stated that a United States business or individual subject to United States jurisdiction may make a secondary market investment in a third-country business which has commercial dealings within the Republic of Cuba provided that the investment does not result in control-in-fact of the third-country business by the United States investor and the third-country company does not derive a majority of its revenues from business activity within the Republic of Cuba. Secondary market investment that falls short of a controlling interest in such a business is not prohibited.
About GOL Linhas Aéreas Inteligentes S.A.: “GOL serves more than 36 million passengers annually. With Brazil's largest network, GOL offers customers more than 750 daily flights to over 100 destinations in Brazil and in South America, the Caribbean and the United States. GOLLOG’s cargo transportation and logistics business serves more than 3,400 Brazilian municipalities and more than 200 international destinations in 95 countries. SMILES allows over 16 million registered clients to accumulate miles and redeem tickets to more than 700 destinations worldwide on the GOL partner network. Headquartered in São Paulo, GOL has a team of approximately 14,000 highly skilled aviation professionals and operates a fleet of 127 Boeing 737 aircraft, delivering Brazil's top on-time performance and an industry leading 20-year safety record. GOL has invested billions of Reais in facilities, products and services and technology to enhance the customer experience in the air and on the ground. GOL's shares are traded on the NYSE (GOL) and the B3 (GOLL4). For further information, www.voegol.com.br/ir.”
São Paulo, September 15, 2021 - GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL and B3: GOLL4), (“GOL” or “Company”), Brazil’s largest airline, has agreed to expand its commercial cooperation with American Airlines Group Inc. (NASDAQ: AAL) (“American”) through an exclusive codeshare agreement (“Agreement”) for the next three years that will deepen the relationship between the two airlines. As part of the Agreement, GOL will receive an equity investment of US$200 million (R$1.05 billion) from American.
Through its exclusivity, the Agreement expands beyond the terms of the existing codeshare partnership between GOL and American, enhancing the travel opportunities for their passengers, the customer experience and the competitive position of GOL on routes connecting North and South America. In place since February 2020, the existing codeshare already represented the largest route network in the Americas, enabling the Company’s customers to travel seamlessly to more than 30 destinations in the U.S. The partnership flights currently operate in GOL’s hubs in São Paulo (GRU) and Rio de Janeiro (GIG), integrating 34 options of Brazilian and international routes, such as Montevideo, in Uruguay.
The completion of the Agreement and equity investment is subject to conditions, including the execution and delivery of definitive documentation and other customary closing conditions.
Exclusive Codeshare
“The exclusive codeshare agreement between two of the leading airlines in the Americas combines highly complementary route networks to offer customers a superior travel experience, due to the largest number of flights and destinations in North and South America,” said GOL CEO Paulo Kakinoff. “We believe that this will bolster GOL’s presence in international markets, accelerate our long-term growth, and maximize value for our shareholders. It adds to our confidence in the Company’s growth as the economy reopens and travel demand increases.”
GOL’s network services 63 destinations in Brazil as well as 140 international through codeshare agreements. The Company recently confirmed that Cancun (Mexico) and Punta Cana (Dominican Republic) will be its first international routes to reopen since the beginning of the Covid-19 pandemic. GOL will begin to operate flights on those routes by mid-November 2021.
Over the last 10 years, American has flown more than 14 million passengers between Brazil and the U.S., representing more than twice as much traffic as the next largest U.S. carrier. The combination of GOL’s leading network in Brazil and American’s leadership in the U.S.–Brazil market will maximize revenues through the increased connectivity and improved route options for Customers.
American Airlines President, Robert Isom, stated: “American has long been the leading U.S. carrier to South America and our exclusive partnership with GOL solidifies that leadership position. Our long-haul network marries seamlessly with GOL’s strong domestic network in Brazil and together, we will be able to offer customers flying to, through and from Brazil, access to the largest network with the lowest fares and the Americas’ biggest and best joint travel loyalty program.”
GOL’s Smiles and American’s AAdvantage loyalty programs will be partners in the largest frequent flyer program in the Americas with enhanced benefits coming in early 2022. This will include access for loyalty members to several benefits such as priority check-in, priority security, priority boarding, a larger checked baggage allowance, lounge access and preferred seats on both airlines. Customers may earn and redeem frequent flyer miles on both airlines.
The partnership between GOL and American also enables Customers to purchase connecting flights on both airlines using one reservation, in addition to creating a seamless ticketing, check-in, boarding and baggage check experience throughout an entire journey.
Equity Investment
American will invest US$200 million in 22.2 million newly issued preferred shares of GOL in a capital increase, for a 5.2% participation in the Company’s economic interest at a price of US$9.00 per preferred share (“PN” or “GOLL4”), equivalent to R$47.03 per PN as of 9/14/21 BRL/USD exchange rate. GOLL4’s closing price on 9/14/21 and average trading price during the second semester of 2019 were R$19.28 and R$35.68, respectively.
Richard Lark, GOL’s CFO added: “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.”
All holders of the Company’s preferred shares, including in the form of ADRs, will be able to exercise their preemptive rights to subscribe for a portion of the newly issued shares proportionate to their existing shareholdings.
The detailed terms and conditions of the capital increase are expected to be approved by the Board of Directors of GOL and disclosed in due course, including the final amount in Brazilian reais of the capital increase, issuance price, the record date, and the periods and procedures for the exercise of preemptive rights by the shareholders of the Company.
The equity investment described herein is subject to certain terms and conditions set forth in a letter of intent and a term sheet entered into on the date hereof between GOL and American. The right to proportionally subscribe for preferred shares according to the preemptive rights referred to in this release has not been registered with the U.S. Securities and Exchange Commission and will not be offered or extended absent registration or an applicable exemption from registration requirements.
São Paulo, September 1, 2021 - GOL Linhas Aéreas Inteligentes S.A. (“GOL” or “Company”), (NYSE: GOL and B3: GOLL4), under the Article 12 of CVM Instruction 358/2002, hereby in forms its shareholders as well as the market that Capital International Investors (“CII”), the independent investment division of Capital Research and Management Company, a company under the laws of the USA, headquartered at 333, South Hope Street, Los Angeles, California 90071, United States of America, having JP Morgan SA Distribuidora de Títulos e Valores Mobiliarios, registered under CNPJ/ME nº 33.851.205/0001-30 and Citibank Distribuidora de Títulos e Valores Mobiliários S.A, registered under CNPJ/ME nº 33.868.597/0001-40, as legal representatives in Brazil, has increased its interest in preferred shares ("PN Shares") and American Depositary Receipts ("ADRs") representing PN Shares issued by the Company. CII held 15,390,994 of the Company's PN Shares, corresponding to 4.90% and now it holds 17,500,994 of the Company's PN Shares and ADRs, equivalent to 5.57%. This is a minority investment that does not change the capital stock of the Company's control or management structure. The original release is available on the following address: www.voegol.com.br/ir.
