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Brazil's Gol to receive $200 million from American Airlines as codeshare agreement upgraded

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Key Points
  • Brazilian airline Gol announced an exclusive codeshare agreement with American Airlines valid for three years, adding it will receive a $200 million equity investment as part of the deal, according to a securities filing on Wednesday.
  • American Airlines' investment in Gol is expected to happen via the sale of 22.2 million recently issued preferred shares by the Brazilian airline, taking the U.S. firm's stake in Gol to 5.2%.

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Brazilian airline Gol announced an exclusive codeshare agreement with American Airlines valid for three years, adding it will receive a $200 million equity investment as part of the deal, according to a securities filing on Wednesday.

Gol said the new agreement builds on a previous codeshare arrangement between the two companies, and will increase options for Gol travelers on South and North American routes.

American Airlines' investment in Gol is expected to happen via the sale of 22.2 million recently issued preferred shares by the Brazilian airline, taking the U.S. firm's stake in Gol to 5.2%.

"We believe it will further strengthen Gol's presence on international markets, accelerate our long-term growth and maximize value for our shareholders," Gol Chief Executive Officer Paulo Kakinoff said.

Analysts at J.P. Morgan said in a market report that they welcome the additional liquidity provided by American Airlines' investment in Gol, as it should further enhance the Brazilian company's financial flexibility, even though they remain cautious with the airline industry in Latin America.

"Today's announcement represents a further evolution in the American-Gol partnership, in our view, rather than anything revolutionary," J.P. Morgan said, adding that American's right to appoint one member to Gol's board may imply a desire by the U.S. company to exert as much influence as possible.