Q2 2020 Azul SA Earnings Call
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Hello everyone and Welcome to our second quarter 2020 results conference call. My name is Greg and I'll be your operator for today. This event is being recorded and all participants will be in a listen-only mode until we conduct a question-and-answer session following the conference presentation to then participate you need assistance during this call, please press zero to reach the operator.
I would like to turn the presentation over to Andrea Bucher investor relations manager.
Please proceed.
Thank you, Greg and welcome all total second quarter on it's called the results. We announced this morning. The audio's is calling the slides. I will reference are available on our website designing the day will be busy during chairman and John Rogerson CEO CFO and our Revenue officer how to here for the Q&A session. I'm going to call over to David. I'd like to caution you regarding our forward-looking statements any matters discussed today that are not historical facts particular comments regarding the company's future plans objectives and expected performance package. Is it for looking statements? These statements are based on a range of assumptions that the company believes that remote with a subject to uncertainties and risks that are discussed in detail in our CVM and SEC filing with that. I'll turn the call over to David David.
Thank you, Andrea. Hello, buddy. Thank you for joining us on a second quarter earnings call. The second quarter was without a doubt the most challenging time in aviation history in our team has done an incredible job taking care of our customers manage our costs and and most importantly preserving our liquidity. I'm very thankful for the sacrifices. They're making Frizzell. Our mission is to provide our crew members the best jobs of their lives and our customers with the best flight to their lives. I'm happy to report that last month was it was elected the best airline in the world in the 2020 TripAdvisor Travelers Choice Awards. This is an incredible achievement and a strong Testament to our crewmembers dedication and passion and taking care of our customers off on every single fight on every single day. As you can see from slide 3. We're on top of some great airlines in the world moving on to the next slide on the operational side. We have implemented a lot of God.
Since the guarantee to guarantee the safety and sustainability of our business. We have the first Airline into Brazil to introduce daily temperature checks for all of our crew members and mandatory off a mandatory requirement for customers and crew members on every flag. Our jets are fitted with state-of-the-art HEPA filters that remove at least ninety nine percent of the Airborne particles. We have also implemented an Innovative voting process called Israel or blue carpet or projectors create a moving carpet image on the floor guiding our customers to board their specific seats are called on average this process reduces boarding Times by 25% while increasing MPS by 21% by the end of the year, we expect to have this system adopted in 71 78,000 of our flights moving on to slide 5. We're rebuilding our Network. We operated only seven 7 daily flights in April, but in September we expect to operate over phone number.
Hundred as well as free as those Fleet flexibility is like no other airline in Brazil or probably the world we have aircraft ranging from nine seats to 214 seats, which allows us to customize our Network according to the demand using the right aircraft for The Right Flight during times of Uncertain demand. The best thing to do is to bring in that demand at the lowest package. Plus this is exactly what we are doing as we rebuild the network step by step as the man recovers. We will have more options to create our Network faster and at a lower cost than Airlines to fly a larger single type aircraft. It is simply not economical to fly a large plane in markets that don't have enough Revenue to cover the trip costs object building schedules on a weekly basis which which allows him to constantly test am and swap that out aircraft at different times. So if we can fill in a 320, we fly an A320 we can only phone number
Embraer we fly that we only have an 88 ours worth of demand. That's what we fly.
Another way as will as fortunate is that we've been receiving support from our stakeholders including crew members aircraft manufacturers lessors Banks suppliers and Brazilian age. We have developed a management plan that includes a contribution from all of our stakeholders and I'm confident that we will come out of this crisis stronger. I have created many businesses in Airlines over the years. It's all about people in relationships. I can tell you we have the best people in the business. Everyone on this call is an owner and a founder of the best airline in the world. I'm confident that we'll get through this with that. I'll pass the word on to John and he'll give you more details about our results and our response to the crisis particular jump. Thanks, David. Hello everyone and thanks for joining us today. I couldn't agree more with David. We have a great team. I'm very thankful for their dedication and and I'm proud of how together we have been able to successfully navigate through these unprecedented times dead.
During the second quarter. Our main focus was to preserve our financial liquidity and reduce fixed costs. Thanks to our fast reaction. We were able to end the second quarter with a higher caste position than in the first quarter of an achievement that not many other lines of the worlds were able to report we expect to have a net cash burn of only three million high today in the second half of the year. And as you can see on the right-hand side of the slide off we have already negotiated the rollover of all relevant debt repayment in the second half of the year.
As you can see on slide seven, we ended the quarter with significant sources of liquidity and unencumbered assets totaling 6.6 billion reais. We have no restricted cash. We also offer a loyalty program to Azul which can sell points in advance and is wholly owned and unencumbered we reach an agreement with the Portuguese government that was approved overwhelmingly by our minority shareholders this week off a drawer conversion rates of the tap on in exchange for the financial support of 1.2 billion euros to the airline that puts the current value of our tap investment at $754 billion hats off equivalent to 608 618 million in principle plus accrued interest and $65 million reais for the sale of our Equity participation. We feel confident that with the aid provided by the port government tap will come out of this crisis and that our investment will continue to be protected as a reminder. We will maintain our status as a senior editor at an annual interest rate of 7 and a half percent wage.
Collateral including a lien on Taps loyalty program our commercial relationship with tap also remains intact during our last earnings call. We presented a management plan to maintain a what did he require to confront this crisis and optimize the airline for the future the management plan counts with the support of all our stakeholders including crew members less lessors aircraft manufacturers suppliers off and the Brazilian government. I'm happy to report that the implementation of the management plan has already generated over seven billion reais in working Capital Savings until December of 2021 took him from the negotiations on several funds. You can see on slide 9 we negotiate with labor unions bring flexibility to our operation and job protection for many of our crewmembers. We also implemented other initiatives including voluntary programs and involuntary furloughs resulting in a projected salary expense reduction of 40% in the second half of the year compared to pre covid-19.
we continue to make
Progress in negotiations with our financial partners and expect to roll over all of our short-term debt amortization as it becomes due. We've already rolled over all Q 3 2/4 payments in addition to the defrost a 59 emperor.