Brazil’s Azul, Gol secure credit lines for engine maintenance; shares rise By Reuters

By Gabriel Araujo

SAO PAULO (Reuters) – Brazilian airways Azul and Gol have secured entry to round $200 million every in financing to fund engine upkeep plans, as carriers attempt to keep capability to satisfy robust demand for air journey.

Planemakers and airways around the globe are dealing with main engine provide hurdles, limiting plane deliveries and capability progress whereas pressuring upkeep groups and growing prices.

Azul mentioned late on Tuesday it had obtained approval to entry a $200 million government-backed credit score facility to finance engine upkeep for its Embraer and Airbus fleet, with providers supplied by GE Celma.

Rival Gol earlier mentioned it been given a inexperienced gentle to entry a authorities credit score insurance coverage coverage for traces of as much as $209 million to fund engine upkeep by GE.

Shares of each firms rose round 1% on Wednesday, among the many high gainers on Brazil’s inventory index, which was little modified general.

“We consider that this new credit score facility will allow us to optimize our liquidity place and streamline our fleet engine upkeep course of,” Azul Chief Monetary Officer Alex Malfitani mentioned in an announcement.

Gol, which flies Boeing (NYSE:) 737 plane, mentioned upkeep efforts can be centered on its CFM56-7B engines.

Each Azul and Gol complained about engine provide points earlier this month.

Azul CEO John Rodgerson known as it a “main difficulty for each producer,” whereas Gol head Celso Ferrer mentioned the agency’s upkeep backlog had been underneath strain amid delayed Boeing deliveries.

President Luiz Inacio Lula da Silva’s administration this month minimize a take care of airways underneath which Azul and Gol agreed to cap the costs of hundreds of thousands of home tickets in change for presidency measures together with a federal assure for credit score operations.

“The take care of the federal government is bearing fruit,” Genial Investimentos analysts mentioned, including the credit score traces would optimize the companies’ liquidity and operational effectivity whereas supporting the native economic system.