Q1 2021 Gol Linhas Aereas Inteligentes SA Earnings Call
[music].
Welcome to the goal Airlines first quarter 2021 results conference call. This call is being recorded and all participants will be in a listen only mode. During the Companys presentation. After Kohl's remarks, there will be a question and answer session at that time further instructions will be given.
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And then the there is receivables growth and there of $2 million to $300 million.
And so that's basically the bridge to the.
The four two if you were to include that half the half of dozen wrath of the capital increase at $4 two would be around four seven.
Now in addition to that and let me just kind of throw in there that the.
That does not include.
And that number which is cash receivables and deposits, which we have access to that does not include our unencumbered assets.
And which are not.
Where we have leveraged capacity.
Of our existing secured financing program of spare parts and IP.
Yep.
And then Theres the IP of Smiles and then there's also the at least on accounts receivable.
We can also.
Factor. So it represents effective leverage if you were to take that $4 2 billion and add the fifth.
<unk> financial portion of.
Our unencumbered assets spare parts go like the smiles IP and the increase in receivables and that number would go to about $7 7 billion reais of total potential lip.
Liquidity sources, including including the unencumbered assets, which is around the $2 1 billion of rail increase over where we were at the end of the.
The Q1 because of if you'd take the if you take the.
The $4 billion and total liquidity at the end of the Q1 and you add and just.
Just the spare parts and go IP, because we didn't have access to the smiles and IP and there was no increase in receivables that number yeah in terms of the total financeable.
The five six and some of that five six at the end of Q1 growth of about $7 seven at the end of Q2 and.
And part of that is also related to where we are.
In the and the rate cut and the recovery after the second wave.
If you look in the rearview mirror, we have the.
The last 15 days of January through February and you can see some of the data and the.
The presentation, we provided to you guys on right.
Well that's in the rearview mirror and now we're now and we've been now and the last two or three weeks and will probably maybe you can comment on this.
The portion of that is related to the.
To the.
The the increase and sales that were.
Experiencing now as we go.
Yes.
Good morning, and actually have been supplies.
True.
Alright.
Our pretty I'd say conservative approach towards the pandemic.
The development.
That's the the <unk>.
We need stretches of that had made years ago.
The true is the desert crossing.
Protecting all of the company and making ourselves able to.
Alongside with.
Every day.
And I say closure.
To protect the companies because of the future. So that's why we have shared with you.
The conservative.
The guidance.
At <unk>, we spent the and it's got it.
It's also important to highlight that already for two weeks we have.
And those of us.
And quite considerable.
The booking curve.
Yeah.
The decrease.
And the rate of 10% per week.
The 10% growth per week and it shows that we might.
Emulate the same.
The man.
Recovery that we have seen in the United States for the domestic market and they have quite comparable correctly excuse I mean debt.
And the Calgary size the robust.
Domestic market and.
And and and we leave that and once I mean, the third quarter last year and the fourth quarter, we had recovered.
And I presume the pre COVID-19 demand.
And.
And a very.
The sustainable way and then became the second wave, but the biggest difference now is the.
And the.
The vaccination and I mean, having two of the vaccine available.
And you, possibly no debt, we have the span of a considerable.
The amount of our time and supporting the central government to acquire.
The additional shots of them in.
By more of a vaccine.
And the and.
And the government has been successful so far and considering that and we have already contracted and 500.
The 32 million.
<unk> for four of this year, which is enough to even is 117% of the visit of population considering that every one of the wood, which takes the vaccine.
And now also the Humanization and the national immunization of pregnant.
Curt is ramping up so I think that we have considerable.
Chad.
The emulate.
Emulate the same the same the theater, we haven't seen the United States and actually.
This is one we are seeing at the moment most of the read the forward booking curve and that just.
The coverage is real quick and I know you didn't sorry and Michael.
And a lot of on here because.
Part of the walk through some of them.
Liquidity relate to lots of us because again, we're kind.
Kind of as you know things like we need to do.
The cover about half of 1 billion Reais of accounts receivable that we lost because of the pandemic. It was kind of war hitting right now we start to get the recovery on that now that the.
Those numbers that we gave on the roughly 1 billion reais of revenues for the Q2 do not consider.
What kaki was just talking about.
Yeah.
We were seeing.
Higher growth and that obviously, we need to get a couple of more weeks into it before we do.
Before going to adjust at all of our operating liability.
Planning, but the.
And those numbers for the Q to consider us.
May up.
Slightly over where we are in April but at this point, it's looking like it's going to be.
Kind of be it's gonna be higher sorry go back here.
Yeah, No that's looked at what Kaki said about vaccinations, clearly reassuring and I know, Brazil has actually and strong history and that area with respect to like the Zika and malaria so the raw.
Rollout.
I think we'll go Wow.
Just one rich back to just quickly on just two items that you mentioned you talked about Q2 recap on.
And on bonds.
What were the notes what was the series did you say 2016 I can't.
No no no and as you know in December we created this secure financing program with the positive.
Around $900 million of collateral and there.
And we did in the initial 200 millions of dollars capital raise and they are.
And so you're right you can ask and that's that's.
And that's kind of like our day.
It's gonna be on.
And as that matures in.
It was the <unk>.
And and <unk>.
Mid 2000, 2026, and so that is a threat.
We're adding on to that.
And that sort of secret weapon.
And that's sort of secret weapon to go back to.
To go back to whenever we need to put in some.
The additional liquidity for.
And again for credit accretive earnings accretive use of proceeds is not going to be used for operations, but we have that and the reason I'm, saying that Michael is that we specifically avoided doing.
Schizophrenic capital Raisings and during the last 12 months I think you know the the like the the announcement last night on the.
Our equity investment plan of the controlling shareholder is an example of that on.
And you know, it's the right time for that to be coming in right now and.
And so.
With this program that we set up.
We have significant borrowing capacity.
One of the million dollars of <unk>.
Additional borrowing capacity.
On that that trades and the market, it's there and it's perfected and.
And.
That's our that's our proprietary and.
So and that's a win on it.
Our business.
Uh huh.
You said 400, and we have around and additional borrowing capacity of their rollout.
Yeah, we have and we haven't we.
We have of net connection I apologize.
And I gave the number of it cut out.
You cut out every time you say the number one what is the additional borrowing capacity is at 400, you have with the collateral we had been there of minus 45.
And we have $3 million to $400 million of additional.
The financing capacity and the secured program.
Right Great well. This is listen this is great. It's reassuring that it's that the rights offering is not and the liquidity numbers. So we know there's upside down and thanks for the extensive answers.
Answer to my questions gentlemen.
I appreciate it.
Okay.
Okay.
The next question comes from Dan Mckenzie with Seaport Global Securities. Please go ahead.
Hey, good morning, guys. Congrats on all of the initiatives here. This morning of the transactions come.
Couple of questions, one and I'm wondering if you could just add some more color around the smiles transaction. So the the 400 million synergies highlight and the release you know what are the timing of at least synergies.
Are the immediate day, they ramp up say over several quarters and then you know how do they break down revenues versus costs and then just finally on this I wonder if you can just share you know what the final mix of equity versus cash that was opted by the the smiles shareholders.
Yes sure Dan.
And I actually let me start with the second thing the.
And.
The next week.
Is the end of the withdrawal rights period.
And then there is by the end of May and there's the choice period, where the minorities will pick between.
Options, one option is 80% cash 20 per cent stock and then the other option is.
This versa.
The 80% of stock, 20% cash and that decision will be made by roughly the end of May and then the.
And there is the operational component phase with the percentage of stock exchange and the actual closing and and liquidation would be.
On June.
'twenty three so there's almost no two months.
And on that now.
We also you know what.
And we kind of put and the presentation and I realize many of you guys lined up and all that time to the <unk>.
Look at that yet, but if you looked at page.
Pages 22 the.
25 of the <unk>.
Of the of the videos that are on the website.
Gave you guys a lot of granularity on that but I'll summarize and for you now.
And we.
The structurally there are many funds that when you give an option of.
Stock.
They're obligated fiduciary wise to take the maximum stock component.
And so based on what we know from our process with the minorities during the taken process.
The structural as well as what's been indicated to us.
We.
All of that around 70% are going to be taking the more stock option.
And so in that scenario and with.
And with 70% of taking the more stock option.
And that would be 537 million reais.
Required.
For the.
For the cash component.
And then the dilution on what would be seven 8%.
Now.
If the.
This takes the maximum of more stock option of 100%, taking the more stock option.
And that would then require.
301 million Reais of cash usage and nine 9% solution.
We're aware of the gold prices are trading today, it's pretty much trading at the at the.
At the.
Right.
The rational financial breakeven.
Where economically rational decisions would.
The result in taking 100% of minority shareholders, taking the more stock option and obviously theres still you know.
The six or seven weeks between now and the liquidation. So there's look there's look there's an option component and there given the volatility of the gold stock, but if the gold stock.
Stays where it is or and increases above where it is today, it's likely that we would see a 100% taking the more stock option and that's why that's why I said in the previous answer the word.
Assuming that there's going to be on a consol basis of 300 million real.
Cash outflow.
To the.
Two two smiles minorities and the implicit goal local P and stock price used and that for the dilution calculation is 27, reais and so that would be nine 9% dilution at the.
At the 'twenty at the 27 range.
But you know if you go to page 24 of the presentation and you put up there today, you've got scenarios that go between 70% more stock and 30% more cash and the 100% more stocks zero percent of our cash and you can kind of see how that would play out there. So that number is right. There and you know the estimated to end of Q2.
Cash balance of smiles is around 600 million reais, so and all of those scenarios.
On the cash balance of smiles is.
The liquidity if you will at smiles is more than enough to cover that cash component and that is why we kind of use the phrase it's kind of self.
The financing on the synergies.
Yes, I mean.
The estimated.
N P V of the of the synergies.
Is.
$2 8 billion Reais and most of that's going to be realized over a five year period.
And the synergies start to be realized.
Once we get the.
The transactions on so if you will and July of this year.
The.
The.
The there's you know there's a variety of the components are.
There is.
Our yield management component and.
The the better optimization of yields there is a.
Better cash management component in terms of not.
And not having cash trapped earning CD.
CD rates on cash, we can allocate that more effectively across the group and higher opportunity cost.
<unk> and then there is the tax efficiency.
Component, which is really twofold, one is a reduction in the taxes on revenues on the smiles revenue stream.
There is a significant reduction there and.
And the better.
Better utilization of the goal.
Nols.
Hum.
But those.
The start.
This year.
And then it was approximately there's potentially around.
400 million Reais of synergies I'm, sorry of incremental additional cash flow if you will.
And I can already be realized in the and the second half of this year.
No I think for all intents and purposes that is.
And that's a done deal and so that will start to get incorporated in.
Into the and so the cash flow management of the group how much we can realize on the tax synergies and.
Part of it is going to be related to the utilization of the Nols.
And at a group basis and how profitable.
The overall entities are.
But you can use of approximately 400 millions of hours of.
And the incremental cash generation and the second half of this year.
Well, thanks for taking the time to walk through the presentation of the ankle.
The second question here I am looking at you know the $129 million and you know the natural amortization of debt from aircraft leases and the quarter and if I just do some simple math on what that could mean and say over the coming three years, you know it looks like gold could potentially pay down seven $5 billion to $8 billion of pay on some of debt and.
And so that's that's just setting aside the debt maturities just looking at deleveraging that comes from the natural amortization of aircraft leases.
And I guess I'm just wondering if you can triangulate that math with you know how youre thinking about the balance sheet, you now and how you want and manage the the balance sheet and of normalized demand environment.
Yeah, that's that's.
At the heart of a lot of what we've been doing I mean during this pandemic.
And as on different management.
<unk> focused on much more on cash utilization and then margin maximization of week, we cannot to guiding directors that we've used here.
The guarantee that we have of unit cost equal to or lower than where we came into the pandemic and the other was to match the heap.
Keep matching assets and liabilities.
Which will ultimately mean that on a run rate basis, and the fourth quarter of this year, we will have the leverage equal.
On a run rate basis equal to or lower than when we came into the pandemic.
And that for us from a policy perspective, as you know we generally target in terms of what makes sense for all of this.
And its meaning how the margins go through the cycle from peak to trough.
We work with and average.
The leverage of three times of of debt of net debt to EBITDA.
And that's so that's where we'll be on the other side of this.
Normalized and excluding grounded aircraft and excluding.
The the LTM effects of the pandemic.
And we could start to see on a run rate basis. Those statistics again on a run rate normalized basis Q4 of this year.
You know.
Just a couple of other points there because this is important and I think we're not necessarily getting a lot of credit for this.
Now people have.
I looked at it.
We.
Since some of it.
Since the beginning of the sheer till now we have amortized.
Over 4 billion Reais of debt a portion of that has been returned to investors.
Some has been a reduction and the.
The other types of debt and so we've continued to do delevering.
During this crisis. So the problem is not really the.
The numerous it's really the denominator the denominator of any of the LTM EBITDA is kind of collapsed and.
So we.
And it's hard and that's why the number has gone up from its 11 times the.
Using the you know the LTM.
The statistics.
Now you know pre pandemic, we had we.
We were kind of staring at around two five times.
Leverage towards the end of 2020 again pre pandemic and at the beginning of last year.
And that and that for us means that we're managing the leverage from peak the trough.
We want to kind of be between the two and a five times from peak to trough in terms of the economic cycle.
Obviously the.
Barring pandemics, which aren't part of the normal economic cycle and your question on the leases.
No. This is Dave.
Correct.
Increased $1 5 billion.
Part of this is because of the the way the IR for of 16 calculations work, but they've increased $1 5 billion during the pandemic.
From a portion of our negotiations debt related to deferrals and.
You repaid starting in 2022 at a rate of 20% to 30% per year and so that.
And $1 5 billion.
Our company achieved in terms of the deferrals.
We will be gradually reduced.
Over over a two to three year period, and there's another component.
We're full of.
And for those of you looking at the.
The FX, the Brazilian real devalued at 30% and the.
And also increased our of gross lease that buy and.
Other $1 5 billion, it's a different one 5 billion.
Now, we can say on that 1.5 real devaluation.
And then that was offset and that will be offset by a $1 5 billion debt repayment and.
So if you know if you assume that that FX variation on the snack and you combine that with the 1.5.
The billion specifically on leases.
Net debt repayment, starting in 2022, and 2000 and 'twenty two 'twenty three 'twenty four.
That just that component on the leases is the $3 billion.
Deleveraging and the next three years, which I think what would you have been you you might be getting at but I you know on.
And so on the lease side, there's 3 billion on the on the other components.
We.
Big components I mean, the of the smiles complex represented for us about $600 million of debt.
If you take the the term loan B, which became the Delta alone and then the minority interest that's gone on at the end of the second quarter currently got.
Then the only other potential targets of our liability management is the Brazilian real debenture.
We have outstanding today, which is about 600 million of Ais, which is a very unproportionate and unfavorable collateral of mechanism today because it has the vision.
And there just sort of assignment of our accounts receivables there and so that will also be disappearing, but one once we've taken care of that there's really no. Other liabilities that we would on a normalized basis change other structural liabilities that are part of our business that are always going to be on the right side of the balance sheet.
The day the capital markets instruments.
Which is our secured debt or unsecured debt and our unsecured convert.
Or the working capital facilities, we have which are related to financing of working capital and maintenance.
Maintenance and things like that so all of those liabilities will stay.
And we've been rolling those over during the pandemic, but they belong in the capital structure with few exceptions, what has happened again.
And and the global pandemic, we haven't had a liability problem, we've had a asset problem.
We had a significant portion of our current assets wiped out by the pandemic, which is around 1 billion reais and so like as Kaki was saying is that you know as.
And we get the recovery on the revenues we get back around.
Actually and probably by the third quarter on a normalized basis around half of million rise of corporate sales per month that will translate into and additional <unk>.
Capable of somewhere between accounts receivable on our balance sheet of between half of 1 billion and 1 billion Reais and so once we have the normalized accounts.
Receivable normalized current assets.
And we go back to having a 60 days receivable of 60 of these payables.
And that's what our balance sheet will look normalize, but there's not a whole lot we need to do.
On the non answer on the on the.
On the non current portion of the assets and liabilities.
There is some final pieces there is the lady foot and smiles complex and as I mentioned you know the the the term loan B, which was paid 300 million rise in August of last year.
And then we had of $250 million load.
On comes out and that is pretty much paid off of where we are right now and so when you look at it if you look at it.
From.
Big picture.
<unk>.
You know the.
We will continue to Delever Delever and I ask should also say and the Q1 number is once you guys on the packet you'll see that we also delivered and the in the acute and the Q1.
And you know if you look at.
If you back out of exchange rate effects and look at the the Delta alone and.
The cash effects.
You know back and these things out.
That's the long answer, but the short answer.
You know our objective is to return to a three times net leverage which we believe is sufficient to get our credit rating to a double b and we already have that latent and what we're doing here right now you can't see it because of the pandemic effects and also some of the exchange rate effects of where we already have that kind of locked and loaded if you will.
In terms of of the work we've done on both of the working capital structure as well as the long term capital structure and Unfortunately, you you're probably the only only give all of the seats once the EBITDA starts.
Starts to normalize which as you know we will be more of a Q3 and Q4.
That's apologize for the long answer, but I don't I know you are focused on the lease component, but I think I.
I was clear there with the the lease component the the the the negotiations we did focus on.
The NPV positive Mark to markets are focused on converting what we needed into the power by the hour. So that we could keep the aircrafts on the ground without having the return on them until the recovery happens and then the.
<unk>, but the froze that will match perfectly.
Not just with the ramp up but.
So in terms of getting back to the three times leverage on the capital structure.
That's terrific. Thanks for the comprehensive answer Richard.
The next question comes from Matthew Breckenridge with DSC Meridian. Please go ahead.
Hey, guys all my questions have been answered thanks.
Okay.
The next question comes from Savi <unk> with Raymond James. Please go ahead.
Hi, good afternoon.
Could you share how many and Max aircrafts do you expect from 2020. One and then you know what you think and might be in 'twenty, and 2020 and trying to me it means kind of the high and low estimate and.
Around that.
And I'm thinking maybe roughly $2 million of aircrafts and kind of theories that game on.
On the cash contribution from free.
And probably a factor.
All of it accurately.
Expecting to get between H two gun.
On.
Of more aircrafts this.
And we are at this moment.
The discussing with with Brian how much how many and how fast we could the speed is basically a new process of I believe that'd be the gonna have.
The interest the news to be shared with you, but you assume but you know and.
And everybody knows out are we.
Wheeling and two to speed the grosses up as a.
My surgery.
And I think that the negotiations are progressing quite well and it now I think that it's really it's really hard to tell.
How much you could get and that was through a sales in the back.
Because the.
The the market is the market prices are pretty volatile and see the theory of appetite.
From the lessor side and.
Choose to support of these kind of transaction and so I think that there wouldn't be.
And any kind of bottleneck.
And that's coming from the lesser of side too to keep the.
And in enabling us to achieve this is faster.
The strength of a new program being implemented and we also have you know financing mechanisms available to us this year as well, which combine opportunistically with the.
The aircraft that are available on the market, including outside of our existing of water.
And what we though the wood.
The approach we've taken is that we want to have additional cash reserves on our balance sheet.
Before we go out and and walk in.
And finance leases we have.
Very attractive.
Long term financing available for 85 per <unk>.
Sent or so of the acquisition price of the aircrafts and we just have to come up with the.
The other 15% of our own equity contribution obviously, we can lever of that as well because that's the.
Something that will definitely.
VP President and the second half of this year as we as we get on and the other side of the intense focus on salary and operations, but.
With us and in particular, we want to kind of saying, we want to accelerate our transformation from the Angie.
To the Max's are sooner the size so fast.
And it all makes sense and we'll see.
The team there and can I.
And quickly a follow up on the as you bring back aircrafts and in Canada the antenna.
The system and.
And should we expect any kind of maintenance cash up that debt.
And is related to that and and you know how much of that might be incremental cash with us being able to use of maintenance and insurance that you have already.
No it's not the spot for in our case, it's not required for <unk>.
Increasing operations, we have the regular outflow.
On the engine overhauls, where we need to do anyway, and then we have.
The.
So none of that is going to the incremental what can be incremental to us is if we accelerate the transition from <unk> to the Max's because as it relates to the aircraft free delivery process than.
And then we have an extra cost and cash outflows as it relates to.
The the re delivery.
Now we can use some of our noncash current assets of deposits and reserves and other things the cost out.
Those returns.
And that for us is.
Non of a high class problem, because if we're if we're accelerating the transition from the interest from the Max's is because we've locked in.
And some attractive.
Acquisitions of aircrafts and then we can generally work out the details with the Counterparties on that being the leasing company are on.
Or or or or whatnot in terms of how we how we pay if you will or finance the AR.
The aircraft are re delivery costs, but what we've been guiding on the capex per quarter as is more or less you know, what we need to kind of the.
The spending here in terms of engine overhauls and so on.
Okay. All right appreciate it thank you.
Okay.
As a reminder, if you have a question press Star then one to be joined into the queue.
The next question comes from Mr. Victor.
Zaki with Bradesco BBA. Please go ahead.
Alright, thank you.
Two questions here.
The first one Richard you mentioned about the secured bond program.
And I mean, basically you're saying that the maybe the computer and issue new bonds and in the second quarter.
And we take a look on your press release, you now see some of the targets for U S. G. So my question is the if is there any plan to maybe be true sustainability linked with the bumps in the near term and the.
The second question is related to the extra race I mean, you mentioned that for the guidance for the for the second quarter Youre not just from the debt to cap the inquiries.
So I'd like to understand if he's there and you can pay me now.
Or why did it type of two did not include the use the type of 100 meter range.
Just I'm sorry of victory was breaking up can you repeat the second question.
Yeah, I mean, yeah the guidance for the second quarter I mean, the the liquidity position I forgot you mentioned the conference call that you were not including.
The extra rates of five come to me the rice that should it be conclude the next week. So.
I understand that you're sort of is there any reason why did you talk to the non to incorporate these and your guidance.
Okay and the one that's not correct you're of course, the Jewish and there are many there's a couple of sell side guys. This morning that need a lot of mistakes.
But I think trying to put stuff how quickly.
The the date that you referred to is the is the filings with the SEC.
Because what we do is we offer and Brazil preemptive rights of mandatory.
And like in the use of the voluntary but we do as we always make our preemptive rights process available to all of our ADR shareholders, including a retailer. So we gave our print the rights they.
And they could available to everybody and so what you referred to there may 7th is not when the.
Capital increase closes it specifically refers to when the.
Those documents are filed with the the U S authorities, because there's that component as well and so there is a.
There is a the.
The way there the capital increase process would be.
Finalized by the end of the certainly the end of May.
And also what I was trying to say and the previous answer and maybe you did hear does that the.
Those.
Resources will be used.
For the specific.
Credit accretive and earnings accretive opportunities most likely in the second quarter and.
And so it's not necessarily going to change our overall liquidity position.
There was an asset coming in and then it will be of liability.
Going out if you will or cash going out and then and the case, we use those funds per aircraft acquisition the <unk>.
Posits, where we made for example, some of the the the activities with aircraft acquisition. For example, if we go out and Spotify and aircrafts today. Those aircrafts are already produced on the ground. So you immediately have to make the.
The deposit.
For the for the pre delivery or or just pay your equity component. It is not the normal cycle for us which would be you know of 12 to 24 month process of gradually making the pre delivery deposits and so the main reason its not and there is debt.
The the use of proceeds.
And for equity here, you know, we always match our assets and liabilities.
Long term equity capital has to generate.
The returns appropriate the equity capital and so that and it's going to be used for highly credit accretive liability management and highly earnings accretive.
Asset acquisitions and so that's the main reason on that and in terms of your question on the.
Yes, and it.
And let's say of a green bond or something like that.
We don't have any plans to do that right now we don't have anything under study, but I think it's something we may study and the future.
But you know in my and we haven't spent a lot of time looking at that because we've been looking at other types of financings for this company for this airline.
I think if we could generate of benefit out of that you know.
Would do that quite I think for the most part.
You know and I'm speaking of little bit out of ignorance is debt.
You know versus what we're doing already I mean, we're already doing.
The goal has been doing.
ESG related metrics and management for.
The 20 years, there's not anything new for us and we're doing is providing a lot of more disclosures on it mainly because investors are requesting us to put more and information out there and <unk>.
We also have good conversations with buy side folks that are raising funds the focus on companies with good ESG initiatives.
So we kind of feel like we can access those pools of capital.
Not necessarily slapping and ESG name on a on something we're already doing.
But I said part of it is I'm speaking out of ignorance, because I have not.
Generally we spend a lot of time studying and preparing these things before we go out and do it and I've seen companies go out and do these things were there.
Committing to sort of things, but as you can see we've already committed to the things, we're doing and internally anyway, because we think it makes sense, you know, including being net carbon neutral by 2050 and.
And a whole bunch of variety of other types of initiatives, but the.
Potentially but we don't see like any.
The change in our capital access.
Because of what we're doing I think it tends to be a little bit the opposite it for companies the nodes.
Have the proper metrics and goals and one of the more important thing is actually on specific goals that you're working towards you will lose investors and your existing securities and we have many investors that we engage with on ESG metrics that are in our current <unk>.
Curious.
And if we you know if we if we didnt provide the disclosures that we provide they wouldn't be able to invest and our current securities and they'd have to disinvest.
And.
And I don't know I think you know and are of particular case, we have.
You know, let's say more limited.
Our tools are I'd say more of a limited opportunities you know the the tools, we have today and developed a pretty much the tools that we need.
We have.
Equity, which.
Provides the base and finances long term investments we have.
Our unsecured book.
Ponds, we kind of unsecured bond on a per which kind of occupy a level and our capital structure right above that.
No.
And part and parcel with that because of our unsecured convert structure, which fits and they're nicely nicely and allows us to monetize the volatility of our sock and and attractive sort of the type of investor and the recently, we've put on top of that and the first of the capital markets. The secured financing program right now we feel like we kind of have all of the right tools.
To properly finance all of our assets and all types of cycles, now, whether and ESG bond or a green bond would fit in there and would depend on the use of proceeds factor I mean, we'd have to of what we'd be the use of proceeds for that and that's something that we'd have the study.
Because of all of our long term all of our capital markets raising always use of proceeds driven.
In terms of.
Where the proceeds of going to be allocated.
And to create value and so we'd have to see that.
So perhaps you know there could be something more of a working capital nature because of all the obviously a lot of what we're doing and ESG is much less related to long term capital and that's much of our related to operations right. It's how we operate our aircraft and we manage the company.
And so you know, perhaps we would look at something from a working capital.
The perspective, but everything we do here as the flow through the prism of proper matching of assets liabilities and anytime we violate that is when we get on the wrong side of the balance sheet gets.
Flipped and the wrong direction and so there's the other thing I was thinking of that and the answer I gave the Dan.
We think that.
We've got the the proper capital structure policy today, and that's something we could study.
But I don't see anything happening in that category of this year.
Okay. Thank you.
The.
Okay.
The next question comes from Guillermo Mendez with J P. Morgan. Please go ahead.
Hey, guys. Good morning, everyone and thanks for taking my question actually the follow up on the smiles on the kept on Chris I just wanted to better understand the timetable for the transactions you mentioned the bolthouse actually should be concluded by the end of May.
Just wanted to double check if the capital increase should happen after the full incorporation of smiles and it's not if the capped increase may impact the exchange ratio between smiles and and gaucher and thank you.
Okay.
The answer is no across the board I mean, I'll just repeat the previous answer the the smiles strength of the liquidation of the smiles transaction would be June 23rd.
On the withdrawal right period ends next week.
The choice of.
And in terms of cash and stock is the end of May and that transaction will be on.
Analyzed by the end of June.
And now the capital increase is not in.
The impact.
Anything related to the.
The smiles taken.
If anything it impacts it and a positive way because investors debt.
Made that are that are making are made or on making the decision if.
And if they want cash or it could become a goal of shareholder.
Are you effectively getting out for free and it wasn't something that was involved and their decision.
At the shareholders' meeting little over a month ago.
And now it doesn't it doesn't affect any of the calculations there and the only thing that affect those calculations was the dividend payment and they buy smiles.
Couple of weeks ago.
Where the.
The the ex dividend.
It's adjusted down by about 40 items, we've explained.
Got it thanks Richard.
Okay with that let's flip it back some of the operator and the spirit of time and you can close out the call we have no more questions and the cure.
Yes, we have no more questions and the Q did you want to give any closing remarks.
This concludes the Gull Airlines conference call for today. Thank you very much for your participation and have and.
Nice day.
Okay.
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