Brazil airline Gol taps loyalty program for a $225 million cash advance

FILE PHOTO: A Boeing 737-700 airplane of Brazilian airlines GOL Linhas Aereas prepares to land at Santos Dumont airport in Rio de Janeiro, Brazil March 21, 2019. REUTERS/Sergio Moraes

SAO PAULO (Reuters) - Gol Linhas Aereas Inteligents GOLL4.SA will tap its loyalty program to get a cash advance of 1.2 billion reais ($225.81 million), the company said on Monday, as airlines worldwide continue to struggle financially due to the pandemic.

The deal will work through advanced ticket sales, trips that Gol will then have to provide to the clients of the loyalty program, Smiles Fidelidade SMLS3.SA.

Smiles is a separate company but is controlled by the Brazilian airline.

Gol regularly taps Smiles to get cash advances, but this is likely to be the single largest advanced ticket sale yet.

Smiles is a profitable company and Gol has tried to fully absorb it in the past to avoid splitting the dividends with independent investors. But the transaction has run into strong shareholder resistance and regulatory hurdles.

Reporting by Marcelo Rochabrun