Delta Invests in GOL

Airline business insights

Delta Invests in GOL

In a significant strategical move for a US carrier, Delta Air Lines has announced that it will be investing up to USD100m for a minority stake in Brazilian hybrid Low Cost carrier Gol. GOL has already signed a binding agreement involving the transaction with Delta.

This signals a move away from the traditional US major airline thinking, for Delta and will in fact could become a step that will further solidify Delta’s strong financial performance in recent years. Delta has already invested in Mexican national carrier Aeromexico.

Gol, while surrounded by some safety issues a few years ago, has however been growing very successfully and purchased the Brazilian national carrier Varig sometime ago.

Present Brazilian regulations do not allow a foreign company to own more than 20% of a Brazilian airline – but a new amendment increasing this limit to 49% is pending.

In the news of this move which will likely strengthen both Delta’s and Gol’s long term stability, the share values of both airlines increased by 1.65% and 5.26% respectively.

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