Brazilian airline Gol Linhas Aereas Inteligentes has the flexibility to reduce its fleet from 130 Boeing 737 planes to 100 by letting leases expire, executives said on Tuesday while discussing steps to cope with impact of the coronavirus outbreak.
The struggles of Gol, Brazil’s largest domestic carrier, which has grounded all but 10 planes and is flying just 50 flights a day, are typical of a wider industry crisis as travel bans linked to the pandemic have shriveled up global demand.
But the airline, now negotiating for a potential credit line from Brazil’s national development bank, entered the crisis with significant accumulated losses.
Gol Chief Executive Paulo Kakinoff said on a conference call that its reduced network does not burn cash on the flights themselves and the company had slashed all sorts of costs. Payroll expenses are down by half, with a mix of pay cuts and 5,400 workers on unpaid leave.
Gol has also negotiated to defer lease payments with aircraft lessors with a grace period of six months, according to a securities filing on Tuesday.
The measures have lowered spending by nearly half to about 350 million reais ($66.82 million) per month, executives said, but there was little in the way of revenue to offset that.
The reduced spending rate is set to last until May 3 but executives said it could be extended as they did not foresee significant changes to their flight schedule later in May.
Kakinoff valued the potential credit line from Brazil’s state development bank BNDES at 3 billion reais ($574.64 million)…