Delta Air Lines Inc. is in talks to let Gol Linhas Inteligentes SA postpone payments on a $300 million loan for which the U.S. carrier is guarantor, two people familiar with the matter said. The loan matures in August.

Negotiations are under way and a delay agreement is expected to be reached, the people said, asking not to be named because the discussions are private. No additional details were provided. Victor Mizusaki, an analyst at Banco Bradesco BBI SA, said in a June 5 email to clients seen by Bloomberg that he expects the discussions to “conclude soon,” which should alleviate Gol’s cash position.

Delta is guarantor of the five-year loan that Gol took out in August 2015, paying an annual interest rate of 6.5%. Morgan Stanley acted as administrative agent and representative of creditors, Gol said in a statement at the time. Voting shares issued by Smiles SA, the Brazilian airline’s mileage program, were used as collateral to Delta, according to the statement.

Gol and its global peers are struggling through the industry’s most severe downturn ever as the Covid-19 crisis prompts lock-downs and paralyzes air travel. But while European and U.S. carriers have received help via subsidized loans and other aid, Latin American governments have been slow to put together rescue packages. Two of the region’s biggest carriers—Chile’s Latam Airlines Group SA and Colombia’s Avianca Holdings SA—have already filed for bankruptcy protection.

When asked about the loan and talks, Gol referred to previous public statements, including a May conference call in which Chief Financial Officer Richard Freeman Lark Jr. said the company planned to pay the $300 million term loan in August, as well as a local bond of about 150 million reais ($27 million) in September. Morgan Stanley declined to comment. Delta also wouldn’t comment or confirm talks, pointing to mention of the loan in its first quarter financial statement.

‘Increased Risk’

In the statement, Delta said that the loan hadn’t been booked as a liability as of March 31, but “there’s an increased risk related to Gol’s ability to repay this term loan, which may require our performance under this guarantee.” Delta also said that based on the market value at the end of the first quarter “approximately 50% of our guarantee is secured by Gol’s ownership interest in Smiles.”

At the time the loan was made, Delta and Gol were strategic partners. Delta sold its 9% stake in Gol in 2019, after reaching a partnership agreement with Latam Airlines Group SA. Delta’s flight-sharing pact accounted for 0.3% of Gol’s total revenue, a spokesman for the Brazilian carrier said at the time.

Moody’s Corp. estimated in a report last week that Gol had about 3.5 billion reais in cash at the end of April 2020. The loan obligation plus the September local bond would eat up about half of that.

Gol’s $650 million of bonds due in 2025 are trading at 61 cents on the dollar to yield over 20%. The notes traded above par at the start of the year.