Gol Replaces CFO Amid Restructuring; Director Departs After Raid

  • Former executive Lark to take over negotiations with creditors
  • Henrique Constantino steps down after ViaRondon-related probe

Gol Linhas Aereas Inteligentes SA Chief Financial Officer Edmar Lopes is stepping down, a key departure amid the struggling airline’s effort to gain solid footing through negotiations with suppliers and creditors.

Richard Lark will replace Lopes, taking over the task of helping the airline survive Brazil’s toughest recession in at least a century. Lopes was unable to persuade enough investors last month to accept an exchange offer for $780 million in dollar-denominated debt. The offer was deemed a crucial part of the company’s efforts to survive in Brazil’s shrinking air travel market.

Lark takes Lopes’s place leading negotiations with aircraft lessors to return 20 Boeing 737s from its 143-plane fleet by the end of the year. The company is also talking with Banco do Brasil SA and Banco Bradesco SA about the terms of 1.05 billion reais ($319 million) in local-currency bonds. The banks already waived a convenant.

Lark has the benefit of additional breathing room due to the real’s gains since the beginning of the year, making up ground after last year’s dramatic drop. The Brazilian currency is the best performer among major currencies, with a 22 percent increase against the dollar this year, according to Bloomberg data. That reduces expenses for the airline, which has 60 percent of its costs linked to the dollar, including fuel and leasing, while more than 80 percent of its sales are in reais. However, air travel dropped in June for the 11th consecutive month, and the trend isn’t expected to end this year, meaning more pressure on Gol’s revenue.

Lark was CFO from 2003 to 2008, when he joined the board while running a private equity firm.

“While we admire Mr. Lopes and are disappointed to see him relinquish the role, we believe Mr. Lark understands well the challenges Gol faces having served as CFO previously and as a member of the board since,” Raymond James Analyst Savanthi Syth wrote in a report to clients after the announcement. “While the outlook for Gol has improved from the beginning of the year (with significantly lower risk of bankruptcy), we believe the path to meaningful profitability is still unlikely until 2018 at the earliest as corporate demand remains depressed.”

Gol shares rose 3.1 percent to 5.07 reais at 10:42 a.m. in Sao Paulo. The stock price has doubled this year.

Director Departs

Gol board member Henrique Constantino is also stepping down, to be replaced by Anna Constantino, who works in analysis and research at Bloomberg Intelligence in New York. She is the daughter of Gol Chairman Constantino de Oliveira Jr. and is part of the family that controls Gol. Bloomberg Intelligence is a unit of Bloomberg LP, the parent company of Bloomberg News.

The home of Henrique Constantino, the chairman’s brother, was raided by federal police in early July due to investigations related to a corruption probe. The probe was related to another company, ViaRondon Concessionaria de Rodovias SA, and had no connection with Gol, according to Gol and ViaRondon press officers.

Lark, who will also replace Lopes as Gol’s investor relations officer, will step down as Gol’s independent board member and as the financial expert in the company’s audit committee.

Lopes will remain with the group in a new position to be announced soon, according to a statement sent by Gol late Thursday. Andre Janszky, managing partner at law firm Milbank, Tweed, Hadley & McCloy, will replace Lark as a board member.

The announcement came a day after Smiles SA, the frequent-flier unit of Gol, announced the exit of CFO Flavio Vargas.

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