Fitch cuts GOL Linhas, subsidiaries

Fitch Ratings said it downgraded GOL Linhas Aereas Inteligentes SA’s (GOL) long-term foreign and local currency issuer default ratings to CCC from B-, long-term national rating to CCC(bra) from BBB-(bra) and $200 million perpetual bonds to CCC-/RR5 from B-/RR4.

The agency also downgraded subsidiary VRG Linhas Aereas SA’s long-term foreign and local currency issuer default ratings to CCC from B- and long-term national rating to CCC(bra) from BBB-(bra).

In addition, Fitch lowered GOL Finance’s $225 million ($84 million outstanding) of senior unsecured notes due 2017 to CCC-/RR5 from B-/RR4 and $300 million ($154 million outstanding) of senior unsecured notes due 2020 to CCC-/RR5 from B-/RR4.

Finally, it dropped GOL LuxCo SA’s $200 million ($35 million outstanding) of senior unsecured notes due 2023 to CCC-/RR5 from B-/RR4 and $325 million of senior unsecured notes due 2022 to CCC-/RR5 from B-/RR4.

Fitch said the downgrades reflect expectations of continued deterioration in GOL's credit profile driven primarily by weak operational results under Brazil's macro and business environment. The agency considers trends in GOL's critical areas such as net revenues, cost expenses, and capital expenditures (capex) will lead to negative free cash flow generation and liquidity deterioration during 2016.

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