(Bloomberg) -- Gol Linhas Aereas Inteligentes SA plans to restructure its balance sheet yet again as it buckles under a heavy debt load and the high costs of operating an airline in Brazil. 

Gol hired Seabury Capital to help review its debt and other financial obligations, and free up cash by renegotiating its deals with lessors, the company said in a filing Friday. The move triggered a downgrade to CCC- from CCC+ by S&P Global Ratings, which warned of room for a further cut amid refinancing risks. 

The hiring follows a string of corporate actions that have raised questions about the Sao Paulo-based low-cost carrier’s ability to navigate an air travel industry that was upended by the Covid-19 pandemic. The company avoided bankruptcy protection as many of its peers went through Chapter 11 reorganizations. But it has been forced to carry out 10 liability management processes or capital raises since early 2020, the company said in March.

Gol’s latest move could “prompt a broader discussion of the company’s capital structure, given weak prospects for cash flow generation and the dependence on refinancing in the next two years,” S&P analysts Amalia Bulacios and Luisa Vilhena wrote in a note Tuesday. 

This year, it announced a debt restructuring with Abra Group Ltd., a holding firm created to control operations of Gol and Avianca Group International Ltd.

All that’s done little to reassure investors: Gol’s dollar bonds due in 2025, which trade for about 41 cents on the dollar, have handed investors a 2.6% loss this year. Debt from other carriers in the region on average have seen returns of more than 18%, according to a Bloomberg bond index.

The latest announcement “suggests that the carrier still faces significant financial challenges,” Citigroup Inc. analyst Stephen Trent wrote in note. The company’s entrance into the Abra structure “was no panacea,” he added. 

While shares have gained 13% this year, they have underperformed returns for competitor Azul SA by roughly 30 percentage points. 

A representative for the company didn’t respond to messages seeking comment.

Compounding pressures, Gol gets the bulk of its revenue in local currency and has some expenses tied to the US dollar. It posted a net loss of 1.3 billion reais ($260 million) for the third quarter and recently lowered its revenue and margins forecasts for the year. 

The debt restructuring this year helped it push back maturities and provided some financial flexibility, S&P wrote in a note in March. Yet, it expects to end this year with a net debt of around 4.0 times earnings before items, higher than Azul’s latest guidance of 3.7 times.

While Gol doesn’t face material debt amortizations in the next 12 months, it “will have difficulties facing high-impact liquidity events without the need of refinancing, while its access to the debt market is limited,” according to S&P. 

Globally, air travel has returned to above 2019 levels, but low-cost carriers have been unable to fill planes. Some of Gol’s peers in the US are dealing with a dimmer outlook, with domestic-focused airlines including Frontier Group Holdings Inc. and JetBlue Airways Corp. facing hurdles next year. 

What Bloomberg Intelligence Says...

Slower capacity growth on domestic routes across Latin America could support airlines’ yields and margin in 2024, though this may be offset by lower GDP growth rates.

- Francois Duflot, industry analyst. 

Gol has struggled to expand capacity and cash in on the rebound in domestic Brazil flights due, in part, to a delay in Boeing Co. deliveries. 

The company so far has received only one of the 15 planned 737 Max aircraft from the US manufacturer for this year. The best-case scenario is getting another four by the end of December, Chief Executive Officer Celso Ferrer told analysts last month. 

The company counted on those deliveries to return aircraft considered to be less efficient. It is having to deal with lease expenses related to jets that are grounded — leaving it with a reduced operating fleet and weighing on its cash flow.

That has left it with weaker liquidity compared to the other large regional airlines, according to Omar Zeolla, an analyst at Oppenheimer & Co. 

The most recent move is aimed, in part, at addressing its deals with lessors for its fleet of 141 planes. Seabury is working with SkyWorks in those negotiations, according to the Friday statement. Azul completed a similar restructuring of leases this year.

“It seems Gol is going to finally restructure the leases — which they need,” he said.

--With assistance from Leda Alvim, Maria Elena Vizcaino and Chester Dawson.

(Updates with credit downgrade starting in second paragraph.)

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