Auditors for Brazil's Gol raise concern about airline's ability to weather COVID crisis

FILE PHOTO: The logo of Brazilian airline Gol Linhas Aereas Inteligentes SA is seen inside an airplane at Augusto Severo International Airport in Natal, Brazil November 23, 2018. Picture taken November 23, 2018. REUTERS/Paulo Whitaker

SAO PAULO (Reuters) - Brazil's largest domestic airline, Gol Linhas Aereas Inteligentes GOLL4.SA, said on Tuesday in a regulatory filing that it will "probably" receive a warning from its independent auditors saying there is doubt whether the company will survive the coronavirus crisis.

The so-called “going concern” warnings are used by independent auditors when, in their view, there is substantial risk that a company many not exist a year from now.

Gol did not immediately respond to a request for comment.

Gol rivals Avianca Holdings AVT_p.CN and LATAM Airlines Group LTM.SN have already received "going concern" warnings from their independent auditors. Avianca and LATAM, the region's two largest airlines, filed for bankruptcy protection in the United States last month.

That auditors would say three of Latin America’s top airlines run a significant risk of disappearing underscores how the coronavirus crisis has hit carriers in the region harder than anywhere else in the world.

To be sure, the region’s airlines were already weaker than their peers before the crisis hit. But the United States and some European nations have moved to bail out their airlines while Latin American governments have been reluctant to do the same.

Brazil’s government has shown willingness to lend money, but airlines including Gol have balked at the conditions. Gol and state bank BNDES have been negotiating a loan for months now.

Gol also said in its filing with the U.S. Securities and Exchange Commission that auditors had raised issues with “the effectiveness” of Gol’s “internal control over financial reporting,” although it did not elaborate.

Gol added it will not be able to file its 2019 annual report with the SEC for 15 days as it resolves these issues with its auditors.

Reporting by Marcelo Rochabrun; Editing by Chizu Nomiyama and Steve Orlofsky