Ex-Im Bank subsidizes DL overhauls of Gol engines

[WorldTraveler]

http://www.bizjournals.com/atlanta/news/2012/04/05/ex-im-bank-loans-84m-to-gol-for-delta.html?ana=yfcpc

Looks like DL Tech Ops is benefitting from an $84M subsidy being given to Gol airlines of Brazil for 2 years of a $200M plus contract for DL to overhaul more than 200 engines in ATL.
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Notably, DL has criticized the subsidies foreign airlines receive from the Ex-Im bank compared to US carriers.
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Looks like DL is figuring out how to turn the tables to benefit from the foreign subsidies.
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Gol's maintenance base is in Belo Horizonte (CNF), a city not currently served by DL but which has been rumored as a potential destination.

 

[WorldTraveler]

another round of Gol engine overhauls by DL Tech Ops gets financed via the Ex-Im bank....


SAO PAULO, Sept. 27, 2012 /PRNewswire/ -- GOL Linhas Aereas Inteligentes S.A. (NYSE: GOL and BM&FBOVESPA: GOLL4), (S&P: B, Fitch: B+, Moody's: B3), the largest low-cost and low-fare airline in Latin America, hereby informs that issued the second series Guaranteed Notes ("Guaranteed Notes") totaling US$22.7MM, and pricing was based on capital market operations with interest rate of 0.85% p.a.. This operation represents the financing for engine maintenance guaranteed by Export-Import Bank of the United States (Ex-Im Bank) totaling US$84.8 million. The first series Guaranteed Notes announced on July 2, 2012, summed up US$39.1MM, and priced with interest rate of 1.00% p.a..
The financing guaranteed by Ex-Im bank has two-year term and will support services for maintenance of CFM56-7B engines carried out by Delta TechOps, maintenance division of Delta Air Lines, in addition to reinforce even more the strategic partnership established between the companies in early 2011.
For further information, access the website: www.voegol.com.br/ir

 

[whatkindoffreshhell]

DL is wise to take advantage of fed government subsidies for a Brazilian airline.

Certainly the folks at WN should be looking at such opportunities. Especially now that they are an 'international' carrier.

However, I know a thing or two about these loan guarantees. It is not like the feds are giving DL $84.8 mil. Just subsidizing the loan.

 

[WorldTraveler]

The irony is that DL criticized the Ex-Im bank for subsidizing aircraft purchases by foreign airlines. DL lost its attempt to reduce that but then turned around and found a way to use the same system to subsidize maintenance work done for foreign airlines done by US workers in US shops.
Yes, Gol is still paying the bill but in a country where the cost of borrowing money is a lot higher than the 1% per year that Gol is paying for this loan, it makes sense for them to go w/ DL Tech Ops who probably can still provide the best price and then also reduce the cost to Gol thru lower interest rates.

And DL does own about 4% of Gol - the investment was worth about $100M IIRC so DL has regained a good part of its investmest in just the Tech Ops contact.

The Gol-DL maintenance contract is a good example of using DL's global route network to bring aircraft engines to ATL and gain insourcing revenue in many cases with partners where Tech Ops is part of a larger strategic initiative by DL in the region.