Brazil reaches agreements with airways to settle its tax obligations

BRASILIA (Reuters) – Brazil’s authorities stated on Friday it had reached agreements with two of the nation’s largest airways, Gol and Azul, to settle some excellent tax obligations totaling 7.5 billion reais ($1.22 billion ).

The federal government gave vital reductions to carriers and allowed them to make installment funds.

WHY IT IS IMPORTANT

The deal may present monetary assist to companies. Latin American airways have confronted monetary hurdles within the wake of the COVID-19 pandemic and have been compelled to restructure their bonds as they battle with excessive debt ranges.

Gol has been below Chapter 11 chapter safety in america since early 2024, whereas Azul not too long ago reached agreements with lessors to get rid of its bonds in alternate for an fairness stake and with bondholders to acquire a brand new financing.

IN NUMBERS

Gol can pay 880 million reais in as much as 120 installments to settle obligations of round 5 billion reais, the federal government stated in an announcement, including that it might additionally preserve 49 million reais from the corporate at present deposited in a courtroom account .

Azul, in the meantime, can pay 36 million reais instantly and one other 1.1 billion reais in as much as 120 installments to settle greater than 2.5 billion reais in debt.

KEY QUOTES

Mariana Vieira, head of Brazil’s solicitor common’s workplace, stated the agreements had been an “essential step in the direction of resolving tax issues aggravated by the pandemic and contributed to the resumption of progress within the sector.”

Gol, in a separate assertion, stated the deal resolves tax obligations and wouldn’t impression its internet monetary debt.

MARKET REACTION

Sao Paulo-traded Gol shares rose 1.5% on Friday, including to positive factors of greater than 5% the earlier session, when the corporate previewed the tax deal in a securities submitting.

Azul shares rose 0.8%, following a 2.8% rise on Thursday.

($1 = 6.1507 reais)

(Reporting by Isabel Versiani and Ricardo Brito; writing by Gabriel Araujo; modifying by Paul Simao)