Q4 2022 Gol Linhas Aereas Inteligentes SA Earnings Call
Speaker 1: As of now, participants are free to submit questions through the webcast platform. You just need to click on the question mark in the upper left corner and type in your question.
Speaker 1: Investors and analysts should consider that events related to macroeconomic conditions, industry and other factors could also cause results to different materially from those expressed in such forward-looking statements. At this time, I'll hand you a call over to Mr. Celso Ferrer. Please go ahead. Hi everyone and thank you all for your participation in this conference call. This morning we boasted our Q4 2022 earnings release.
Speaker 2: and a live presentation on GOAL's IR website. So we will make some brief comments and shoot straight through to your questions.
Speaker 2: I would like to start by highlighting our most important results of the period, which were made possible by the trust from our customers.
Speaker 2: investors, suppliers, partners and specialists from our team of eagles. Gold delivered strong performance in Q4, a quarter with similar supply to the pre-pandemic period.
Speaker 2: we achieved a new record for revenues of 4.7 billion reais.
Speaker 2: and increase a recurrent sebichda to 1.2 billion highs, the highest level since before the pandemic.
Speaker 2: Let me share how we got there.
Speaker 2: 2022 was characterized by the rebound of demand for air travel in all segments and this peak in the fourth quarter.
Speaker 2: We serve more than 200 markets.
Speaker 2: and transported approximately 8 million passengers, 19% above fourth quarter last year. We operated more than 700 flights a day in December as post-holiday bookings and the recovery of business demand led to strong ticket sales.
Speaker 2: the border. In part this is due to the resumption in corporate demand as workers return to the Aussie and the strong and resilient demand of the leisure passengers.
Speaker 2: In line with this recovery, our flight frequencies increased by 26% when comparing to the fourth quarter 2021.
Speaker 2: and reactivated frequencies in corporate markets predominantly in the downtown airports of Congoience and Saint-Domingue.
Speaker 2: At the same time, our air prep utilization continues to improve and we maintain a load factor around 80% during the quarter, reflecting our focus on improving our operation fleet's productivity as we expand our network.
Speaker 2: We are still observing a rational price environment among industry players and the resumption of strong load factors which in the goals case were followed by an incremental combined offer of seats and profitability.
Speaker 2: Gold has the lowest unit cost in the industry and plans to reduce it even further to generate a faster recovery of its operating margin and increase efficiency.
Speaker 2: and 25% expansion in unit revenue, RASC.
Speaker 2: on preserving profitability and liquidity. We are highly committed to running an efficient operation and as our results show today, our productivity standards are getting better and better. By generating higher revenues and reducing costs, we are making significant progress on improving our balance sheet. By 2023, we expect that our ability to drive operational efficiencies will be our main competitive advantage. This will be critical and continue to win.
Speaker 2: the business of our customers and growing market share in the current economic scenario.
Speaker 2: The central to growing profitable market share is expanding our offer in both domestic and international markets.
Speaker 2: In the case of the former, we expand our presence in the regional markets during the fog.
Speaker 2: The company has increased its offer to Rio de Janeiro by over 40% during the high season, in addition to achieving a record level of seats available at the Congoians airport.
Speaker 2: In November , we announced the expansion of our operations in the Midwest, connecting capitals in the region on direct flights to the south and the northeast regions during the high season.
Speaker 2: In the international markets, we have added more frequencies on the Brazilian Orlando route and we have inaugurated new flights from Galle Alme report to Rio de Janeiro to Montevideo. We also have Uber taxtone radio dock. That thing was Def interesting sand
Speaker 2: We have also returned the cities of Cordoba and Rosario, which represents the return of 100%
Speaker 2: of pre-pandemic destinations in Argentina. I also want to highlight the beginning of our operations between Manaus and Miami, connecting the north of Brazil to the United States.
Speaker 2: We have seeming to invest in the customer experience at every stage of the travel journey from the continued refreshment hour of bleach.
Speaker 2: with next generation and far more fuel-efficient air prep to technology investments that are providing our employees better tools and our customers a more seamless experience.
Speaker 2: This quarter, we took the deliver of one new Boeing 737 MAX 8, ending the year with 38 aircraft of this model, approximately 26% of our total fleet.
Speaker 2: Our goal is to achieve 50% of our fleet composed of the Boeing 737 MAX, suppressed by 2025.
Speaker 2: The Go brand was recognized as top of mind by Folio di São Paulo for the fifth time in a row. This recognized our commitment to customers and strengthened our presence in all segments. Turning to our loyal program, Deismayo's customer base reached approximately 21...
Speaker 2: of both operations.
Speaker 2: Finages were generated from tax management in seats inventory, important levers that optimize goals working capital and liquidity. I would like to conclude by highlighting the results produced by our team of vehicles.
Speaker 2: And that we were projecting also next year in 2023.
Speaker 2: The actions we have taken in the recent years have put us in a position of strength and enabled us to have a competitive position to extract maximum value creation for 2023.
Speaker 2: I now turn the floor over to Richard, who will present some other highlights. Future
Speaker 3: We're doing our poll today from our hub in Brasilia, which is one of Gold's big hubs.
Speaker 3: It's also where we have direct flights on Maxis from Brasilia to Miami and Brasilia to Orlando.
Speaker 3: Just a point of curiosity, the flight we're doing on the Brasilia Orlando flight is the longest flight done to date on a 737. I'm here in São Paulo at Gold's headquarters with Mario who will be participating with us in the Q&A.
Speaker 3: Goals Detailed Analysis for the quarter you have in the earnings release and the presentation that are made available on the Goals Investor Relations website and also on this webcast platform. So please access those. There is some additional information as well in the presentation.
Speaker 3: Revenue in the quarter was higher in the fourth quarter of 22 was higher than any fourth quarter.
Speaker 3: in GOAL's history. As Celso mentioned, the domestic and short-haul international markets continue to lead the way as GOAL ridiculously added back additional capacity into these markets and routes.
Speaker 3: The management of working capital, together with the increase in accounts receivable and advance sales of both tickets.
Speaker 3: The management of working capital, together with the increase in accounts receivable and advance sales of both tickets and miles.
Speaker 3: has enabled goal to maintain and finance the pace of growth necessary.
Speaker 3: and the market challenging market environment, and enabled operations in the high season with a reduction in unit costs.
Speaker 3: while at the same time maintaining fair levels.
Speaker 3: The transformation of the Gulf Fleet to the born...
Speaker 3: which is in part guided by enhanced productivity and reduced unit costs.
Speaker 3: Yield and RASC in the quarter showed increases of 25 percent.
Speaker 3: over the same period of 21, reaching 48.2 and 41.6 cents in real respectively.
Speaker 3: We increased average fairs, demonstrating our experiencing in managing variations in both fuel prices as well as the exchange rate. Goals recurring EBIT and EBITAM margins.
Speaker 3: reached 15% and 25% respectively. A recurring EBITDA totaled...
Speaker 3: 2.8 billion REI's in the full year of 2022.
Speaker 3: As we plan to maintain these new levels of yields...
Speaker 3: and UNICEFs together with the resumption of capacity back to pre-pandemic levels. We are maintaining our financial projections for 2023, which incorporate a more robust
Speaker 3: nominal either die generation. In the fourth quarter of 22 we achieved approximately a 12% reduction in goals recurring cask excluding fuel measured in dollars compared to the fourth quarter of 21.
Speaker 3: Well, continue to be impacted by high oil prices.
Speaker 3: the showed a range increase of around 7% compared to the fourth quarter of 21.
Speaker 3: which along with higher costs associated with the oil supply chain and logistics and refining, have represented an increase of approximately 44 percent in the average jet fuel price denominated in REI's paid by goal.
Speaker 3: here in Brazil in the same period, i.e. a 44% increase in GOAL's average jet fuel price, Q4 of 22 compared to Q4 of 21. As for GOAL's cash flow in the quarter, GOAL had generated 5.3 billion RIs of operating inflows.
Speaker 3: This resulted in a positive operating cash flow of 2 billion reais excluding interest expense despite the impact of higher jet fuel prices.
Speaker 3: In the fourth quarter of 22, we concluded the issuance of senior secured amortizing notes.
Speaker 3: in the amount of $200 million, which allowed the extension of financial obligations with less words, mainly due to leasing deferrals and the improved goals expected cash flow for 2023.
Speaker 3: an average cost of capital to goal of 4.3% per year and also added a new innovative initiative to the company's liability management toolbox.
Speaker 3: And this was done even in the midst of a capital market environment which was not conducive to new issuances.
Speaker 3: by 13% to a little over 4 billion reais.
Speaker 3: And then pro forma for the issuance of senior secured notes due to 208, which was finalized on March 3rd in Q1, pro forma for that goals total liquidity would have been 6.2 billion realized and you have some more detail on that on page 18 of the presentation.
Speaker 3: put on the website and the webcast platform. The average is measured by the ratio of net debt.
Speaker 3: using the seven times annual lease payment convention, excluding the perps, divided by recurring LTM EBITDAB, was 9.5 times on December 31st, 2022. This is about 0.2 times lower than the leverage at the end of 2021.
Speaker 3: And that includes the issuance of the the $2 million of senior amount of secured advertising notes that happened in the Q4.
Speaker 3: So site reduction and leverage, but a substantial reprofiling of the maturity profile. Excluding payments made during the fourth quarter for deferred lease obligations, the leverage ratio was around nine times. And if you use, if you calculate aircraft that under the IRFRS 16 convention, goals leverage was a little over six times at the end of 2022. In the first quarter of 23, goal completed one of the largest liability management and refinancing operations in the history of the company and the airline industry.
Speaker 3: through the issuance of $1.4 billion of senior secure notes to 2028 in a private placement to Aberdeburg Limited, goals controlling shareholder. These notes bear a total interest rate of 18 percent.
Speaker 3: of which 4.5% is paid in cash and 13.5% will be payment in kind with that pick feature giving substantial cash flow relief to goal and these notes are guaranteed by the IP and brand of smiles.
Speaker 3: goals market leading loyalty program and also a paripasuline on the IP brand and spare parts of gold.
Speaker 3: This issuance included $451 million in cash for specific uses at goals subject to certain conditions and approvals and the contribution and retirement of approximately $1.1 million.
Speaker 3: billion dollars in face value goals of Panty bonds, which was comprised of 83% Bond percent of the bonds maturing in 25
Speaker 3: 61% of the bonds maturing in 2026 and 10% of the purse.
Speaker 3: These bonds that were contributed and retired have been cancelled, which represents a discount to par of $313 million for gold.
Speaker 3: Pro forma for this transaction, the net debt of gold will be reduced by over $100 million will result in over $30 million of annual interest savings.
Speaker 3: For Gold. They said this transaction represented one of the largest completed liability management and comprehensive refinancing transactions in both the airline industry and the emerging markets.
Speaker 3: It also represents the 10th liability management or capital raising transaction. The goal has completed since the onset of the COVID-19 pandemic. You know, on page 14 of the presentation, you have a summary of that. Gold did three transactions in 2025 and 2021. This.
Speaker 3: the senior advertising notes in 22 and senior secured 28 notes now in
Speaker 3: in 23 and so with that we've completed all of our liability and capital management transactions as it relates to what we need to do during the pandemic.
Speaker 3: As a result of this liability manager operation, gold paint a series of important benefits.
Speaker 3: in capital structure and a significant improvement in its credit profile by increasing the average maturity of its bonds from 2.5 to 4.4 years. Also the access of up to $451 million.
Speaker 3: in cash resources and the significant reduction in annual interest payments with the cash pay rate reduction on goals bonds on average from 7% to 8% per year to a level of approximately 4%.
Speaker 3: And we'll continue to work on both debt reduction opportunities and investments in the business.
Speaker 3: while continuing to meet appropriate target liquidity levels.
Speaker 3: Of course, you know, goals, successful liability management during the pandemic positions with the lowest short-term debt.
Speaker 3: goals, successful liability management during the pandemic, positions us with the lowest short-term debt among our competitors.
Speaker 3: And as we mentioned, we've updated our financial outlook for 2023 and we've also included our Q123 projections which taken to account.
Speaker 3: The increase in the jeffial prices.
Speaker 3: and are also based on the preliminary results for the first two months of the current year. For the first quarter of 23, we expect an EBITDA margin of 22 percent on net revenues of 4.8 billion reais.
Speaker 2: to disguise while some supply constraints continue. As the industry leader with a proven strategy and strong execution track record, GO is well positioned to build on our momentum in 2023. We are confident in our ability to deliver significant improvements in urns.
Speaker 2: and pre-cash flow of going forward. I would like to thank our team of vehicles.
Speaker 2: for the day-to-day outstanding work in delivering these quarterly results and serving our customers during our very busy holiday travel season.
Speaker 2: They are the reason our brand and our customer loyal is at the top of the industry.
Speaker 2: during back. We are continuing to improve and extend our competitive advantage.
Speaker 1: Operator, you may initiate the Q&A section. Thank you. The conference call is now open for questions.
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Speaker 1: Please hold while we pull for questions. Our first question today comes from Michael Linenberg from Deutsche Bank. Please go ahead with your question.
Speaker 4: Oh yeah, hey, good morning everybody and congrats on getting this financing done team. Quick just question here on.
Speaker 4: the guidance for 2023.
Speaker 4: you know, you pull down the capacity a little bit and you sort of point to the supply chain issues, which I think everybody's dealing with that.
Speaker 4: But then there was another part of the sentence that talks about in view of expectations of recovery and corporate demand. And I'm just trying to interpret is it that the recovery is more gradual or more moderate than maybe what you were anticipating. And so that's part of it. Just if you can clarify what is meant by that.
Speaker 2: all over the chain, not only bridges, but also in the whole supply chain, and in terms of parts and antennas. And that's why we are reducing a little bit the guidance. It's like movement down. We are also, like you know us, we manage the capacity.
Speaker 2: on a very detailed way. So we, the first quarter of this year, for example, we are flying 33% less in February compared to January . So we do this short-term adjustments based on...
Speaker 2: the seasonality but also what is happening on the industry as a whole. So this is the best picture we have from now and what we expect for the corporate, it's not related to the this capacity itself because the capacity for corporate, the main routes in the corporate market.
Speaker 2: We are following close how the corporate demand is coming. It's coming in a place that was slower than we thought. But we are compensating these with other segments. Like I said, the leader demand and also VFR, and VFR is super strong in those routes.
Speaker 2: they are very resilient. So we are managing a way that we are able to keep yields at this level even though the corporate, and when I say corporate I'm talking about the large corporate because PMEs and other segments are already there. It's just large corporates that is still like going.
Speaker 2: in a slowly pace. I hope that now after Carnival and we are starting to see, and now beginning of March, we are starting to see a strong demand coming from corporate, but we are not assumes that we will stay for the whole year.
Speaker 2: So, you know us, we are taking this as a cautiously approach.
Speaker 4: Okay, good. That's thanks. And then just, I guess, Rich, when we look at, you know, the aggregate principal amount of the seniors secured, but the secured senior notes do 20, 28 up to 1.4 billion. So presumably where it is today...
Speaker 4: is before you've incorporated the 13.5% tick per atom. Is that the way to think about it?
Speaker 3: No, no, Mike. The bond buyback portion was 1.1 and the cash portion is the 450. So that's roughly the – there's the market value of the bonds. There's some other components in there that were disclosed, OID and so on.
Speaker 4: But that's the beginning. OK, so the one one and then it's going to grow 13.5% per annum over the next five years. That's the way to think about it. That sort of one one is the base. Is it space out standing for five years, yeah? Yep, that's right. I mean, that was designed to...
Speaker 3: I think the focus should be on the 4.5% cash pay, which is not something that goal or frankly any airline would have been able to achieve on its own. And that gives goal a lot of flexibility to conserve cash. You know, then that overall cost there is...
Speaker 3: as you saw at the ESSN, the exchangeable, very similar to the structure that Goal did back in 2018 with its first exchangeable. We did not want to issue the exchangeable from Goal in a distressed state. And so, the using of the stat mechanism.
Speaker 3: You know, at the beginning, you know, allows us to remove the stressed component from goals security prices.
Speaker 3: and eliminate any concerns over the going concern issue, allow the market the price and the information about what the impacts are on of this.
Speaker 3: financing terms action before issuing an equity linked security. But the ultimate destination on this will be, you know, it'll be transformed into an equity linked security which, you know, we described in the public announcement.
Speaker 3: And so, it's unlikely that the SSN, if you will, the notes would be outstanding for the five years, still have a much shorter life. And that ultimately would be the ideas that this will be an equity-length transaction. The cash pay component will not change. And when that's done at the appropriate time.
Speaker 3: When it's done, when all of those settles on this and everything is stabilized and properly priced and trading in the market, it's mandatory in Brazil that we offer preemptive rights to our PN shareholders. And of course, we historically have always offered that, including to the ADR shareholders. And so everybody will have a...
Speaker 3: where the market cap is and with the size of this capital raising, it would have had to come at a significant discount to the existing market valuation. So the way we're doing this in a sequenced and well thought about way will allow when the equity linked offering happens, you don't have a premium.
Speaker 3: to a more correctly priced equity price. So that's the...
Speaker 3: That's part of the reasons for the more complex.
Speaker 3: structure that you guys all saw in the announcements. So it's being done sufficiently so that it wouldn't, you know, it wouldn't have any negative impacts on an equity link issuance on, you know, the market perception of the company in it's in a distressed state and so we're working.
Speaker 3: come out, you know, going concern, emphasis concerns will go away and the market will price in this initiative into ultimately what should be a more proper price for the equity. How long it's going to take, your guess is as good as mine. A couple weeks or a couple months, but we'll see.
Speaker 4: Yeah, we've seen some movement in asset prices, so that's a good thing. Just my last thing and Richard or so.
Speaker 4: you know in the past rich you've you've talked about the iag holding company structure and there's a lot of goodness in that type of structure and when you think about you know cross utilization you know joint procurement and and synergies and you know i think about you know if i fly b a you know i get preferential um...
Speaker 4: treatment on say i'd be here or or air lingas and access to the clubs when um... when do we start rolling out that because i feel like that that's um... that's an exciting part of the story and it would be sort of the first of its kind in in in latin america
Speaker 3: Yeah, no, we – yes, there are a lot of synergies.
Speaker 3: across the group's structure starting with Gona Bianca. Bianca will be rolled up under the platform company by the end of April . But a lot of the groundwork on that has been laid where possible. You know, we already have all of the...
Speaker 3: approvals we need to start working together and do that. Yes, I know a lot of people will potentially use IIG as an example, but we have a lot of differences in how we're doing it, you know, here in the South America.
Speaker 3: market and what we've created effectively is a platform company that has its own reason for being. There's going to be doing a lot of work to...
Speaker 3: generate a variety of different types of synergies.
Speaker 3: from the members of the platform in terms of its focus on being an even lower cost.
Speaker 3: a higher efficiency group, which is obviously the main tenet because we believe that low cost always wins and all the members of the ABRA platform have that in their business models. You know, Avianca.
Speaker 3: did its transformation of its business model during its restructuring process and was in the process of finalizing its full transformation to an LCC and then also delivering above market revenue growth which is going to be through a federal utilization of the massive networks.
Speaker 3: that we all have that can work together. It ultimately also gonna benefit customers with new city pairs and new ways to get benefits from the loyalty programs, the combination of loyalty programs is one of the largest in the world.
Speaker 3: And then when you go into the overall fleet size, we'll have significant scale across the board to do things. But obviously that's something we'll spend more time as we have developed. So obviously, the point today is to help people understand goals, forth core results, and where we are in the...
Speaker 5: the time. Just two quick things for me if I may. I know that the Brazilian government is studying the idea of potentially making some adjustments and fuel taxation. And if we cross that bridge, would you anticipate?
Speaker 5: revisiting your fuel hedging strategy or do you think that's something that's going to stay in place regardless of what happens. Thank you.
Speaker 3: Thanks for the question Steve. As I said I have Mario here with us on the call today. I'll hand it over to Mario.
Speaker 6: Can you just repeat your last point one question?
Speaker 5: No worries Mario. Presuming that the Brazilian government does move forward with some kind of adjustment on fuel taxation, would that possibly lead Gold to revisit its long-term fuel hedging strategy?
Speaker 6: Yeah, so, you know, we, first of all, what have been seen in terms of the last trend in terms of the movement on the jazz field?
Speaker 6: has been very correlated to the market, what's been happening so far. So we have been trying to avoid, to spend a lot of cash and partly reserving right now the death cash to other priorities but we have been so far.
Speaker 6: active on the market to do some packages especially for the next months when we build some good protection. Also using some instruments that are related to the main supplier that has had to broads there's a commercial hatch.
Speaker 6: We're using some fixed surprise hints. So at this point of time, we still don't. A tension impact that Warren can provide on that. So we, you know, the most effective tool they're using from HITRO.
Speaker 6: has been our capacity management using our instruments. So there's nothing concrete in terms of the discussions with the government right now, just changing that fact right now. Yeah, but Steve, no, we're not – I mean, GOAL is not – I mean, GOAL's hedging strategies for fuel.
Speaker 3: FX is the same. I mean, we basically try to have something between 25 and 50 percent 12 months out and then beyond 12 months, kind of months 12, 24.
Speaker 3: We'll gradually build so that when we get into 12 months out, we're roughly 20% that we've been strapped on cash. So we've had to be creative with instruments that we've been using to wrap around that. But
Speaker 3: But nothing the government is doing alters our, the way we're doing, as we continue to kind of, we've always generated a lot of value by getting ahead of the curve and doing it that way, as opposed to reacting. So hopefully that answers your question.
Speaker 5: Yeah, no, very helpful guys, thanks Rich, appreciate that. And just one more very quick one for me. I recall before the pandemic that goal used to seasonally subly some of its planes, you know, overseas, you know, trans aviore or names like that.
Speaker 5: during Brazil's low season and now that the world is kind of edged out of the pandemic, do you anticipate maybe more potential operations like that going forward?
Speaker 7: High speed, this is also a hand.
Speaker 2: That's a good question and it was kind of a part of our business model pre-pandemic. As I said to Mike, we have been managing capacity and Brazil became a very...
Speaker 2: highly seasonality market to compare the traffic like that we had in December or even in January now to the low season we should be managing the fleet in that way. As a synergy of Avra, one thing that we may do in the future is the sub-lease.
Speaker 2: But until then, of course we have the same partners, KLM and Transavia, they are really close.
Speaker 2: to us and we are starting to continue this type of operation as soon as possible. If not this summer, probably the next one.
Speaker 1: Oh, okay, very clear, so thanks very much. Our next question comes from Savi Seth from Raymond James. Please go ahead with your question.
Speaker 8: Hey, good morning everyone. Just on the capacity, could you talk a little bit about how you see that capacity kind of growth between domestic versus international? You did open back up some international markets as well recently?
Speaker 2: Hi, Sabi. Thanks a lot. We are going to, I mean, other domestic sites, we are just growing to this.
Speaker 2: slightly above to the levels we had pre-pandemic. So if you look at the fourth quarter, we are still below, but as we go through the this year, we are renting up the capacity in the domestic market very culturally to maintain the unit revenues.
Speaker 2: that became very crucial for us. And international markets, most of the growth was already implemented at this point. By the end of the year, like I said, we launched the more frequencies to Orlando, more destinations from Brazil to Miami. And then what are you going to see? It's the full year effect.
Speaker 2: to restart. Those markets like St. Chiavoo and Lima, we normally fly as a utilization flight. We fly red-eye so we may open during the year as we see those markets becoming healthier.
Speaker 8: That makes sense. It's a helpful thank you. If I might on the ticket tax, is there an assumption? Is the guidance reflect kind of the ticket tax break? Does that assume any kind of continuation here?
Speaker 2: No, no, no, no, we are not assuming anything and nothing from the text and also we are not assuming anything on the field pricing. So that's really upside perfect. All right, thank you very much. It's going to be an upside here.
Speaker 3: Thank you. Let me just insert, let me just insert, because we have questions from the platform that people submit on the platform. And let me just, let me just weave one or two of them in before we go back to the queue on the people that are on live. We have a question here from.
Speaker 3: Chris Reddy, talent, which asks, can you provide how Ford bookings are looking?
Speaker 3: talk about VFR and corporate passenger traffic and fares also.
Speaker 2: Yeah, so bookings are performing very well at the beginning of this year, like better than the what we had in the fourth quarter as corporates is growing. We have now
Speaker 2: achieved more than 100% of the revenues that we used to have in the corporate segment, but not the same in number of passenger. So we are still around 70 to 75 dependent on the amount, depending on the week, on the 70 to 75% level of in numbers of passengers.
Speaker 2: and the corporate segment. As we grow those passengers, there is room to improve the use of those passengers. They book on a short a-piece.
Speaker 2: So VFR demand and leisure demand stay very resilient that was kind of uncertainty during the pandemic those segments were the most important one and the good news is that those segments stay
Speaker 2: Even in flights like in the shuttles that we used to have less leisure or less VFR, we have now a significant portion of those flights.
Speaker 2: with health affairs. So it's a legacy from the pandemic that we will stay. So the combination of these legacy with the rebound on the corporate.
Speaker 2: It's going to be very helpful. And we are not assuming the whole upside. We are taking culturally that when we announce our guidance here. Okay. Another few questions that we got on the platform. I'll just read it here and I think I'll send it to Mario to answer despite a reduction in capacity. It's non-fuel cast guidance of...
Speaker 6: it speaks how we're managing this company in terms of cost perspective. So since 3Q22, the company already achieved that level 3.6 and has been maintaining now in this four quarter. Just coming down from high force.
Speaker 6: in terms of cascading as dollars in 2021 and low for in 2022. So not only related to potential capacity dilution as we preserve capacity and in this year in terms of our guidance we are expecting to recover.
Speaker 6: to highlight that first is our discipline in terms of controlling the workforce, so the number of the total employees where we are achieving with almost the same 2019 SKs reasonable for work.
Speaker 6: but with... So, just coming from almost $16,000 to $14,000 right now, so we have been able to reduce the payroll costs and compensate more than the fact or the impact of the accumulated inflation.
Speaker 6: that impact on the line. So, and second, as you know, we have been preparing to provide a better visibility to the market, especially in terms of the maintenance costs that is gonna be impacted through the fleet transformation. So we recorded.
Speaker 6: that from 2021 results, almost 1.6 billion rise of provisions for maintenance that helped this maintenance lines to be outperforming now in the panel so that can keep this line much more visible and below what has been the historic trend.
Speaker 6: The third item is related to depreciation because since we are doing a lower capitalized maintenance that has been translated ultimately to a lower depreciation and those are the three main items that is, the company is managing in order to keep that that territory cash Back Saved in this video.
Speaker 6: And as we were probably the only airline that was planning or is still preserving that capacity, and as long as towards the second half of the year, most of the capacity for 2023 was going to be expected to be linked to the high seasonality of the second half of the year.
Speaker 6: that can potentially represent a better efficiency and productivity in terms of our cost control. Okay, operator, you go back to the queue, please. Our next question comes from Pablo Montes from Barclays. Please go ahead with your question.
Speaker 9: Hi guys, thanks for taking my question. My question is a bit on the medium-term outlook for you. Since you have a pretty good cost advantage and deals are high.
Speaker 9: and we expect those yields to be high for the next virtual future. How would you, what's your game plan? A year from now. Do you think you're going to be more aggressive in terms of capacity or pricing to take advantage of your high yields and low cost that you have?
Speaker 2: to outcompete your peers domestically, or what's on your thoughts or how to compete in the medium term. Thank you. Yeah. Hi, Pablo. Thank you for your question. And as you said, we have the cost competitive advantage. And this is the reason why I go became the most important.
Speaker 2: with the synergies we will have and with the extra range on the 737 MAX, we expect to grow next year more on the international routes with long sectors that we will dilute even further our costs.
Speaker 2: We are, of course, we have potential to grow. We have more planes. We have the cost advantage, as you said. But it's really, really important for us to keep the capacity to discipline that we have been keeping since the beginning of the crisis, actually. And we want to maintain and make sure that our domestic is going to be...
Speaker 2: growing as the market grow. So we still see room for health growth in the Brazilian market, but we also want to explore even further the international markets.
Speaker 2: And as you know, low cost always win.
Speaker 1: Thank you very much. Our next question comes from Nick Frank from Jefferies. Please go ahead with your question. Hi, this is Nicholas from Jefferies. Thank you guys for the call. Congrats on the results.
Speaker 10: transformative liability management transaction. Just had two follow-ups. There was one point that was not clear in Michael's question at the beginning. So on the capital structure pro forma, the buyback was 1.1 billion. I think it's actually 1.077.
Speaker 10: of notional of 24, 25, 26 amperes and the new SSNs is 1.4 billion today, right? It's not up to, it's just, you know, right now it's 1.4 billion of SSNs which are wholly owned by ABRA. Is that correct? I just wanted to confirm that point.
Speaker 10: of 24, 25, 26 and perps and the new SSNs is 1.4 billion today, right? It's not up to, it's just, you know, right now it's 1.4 billion of SSNs which are wholly owned by ABRA. Is that correct? I just wanted to confirm that point. That's correct, yes. That's correct, yes.
Speaker 10: Okay. And then looking forward for goal, I'm sure we're all looking forward to ask questions and to get to know the ABRA story, but when we look at the remaining goal bonds, most of which are unsecured except for the 26s, can you give us a little color how we should think about those, the stubs, kind of different options or how the company is thinking about addressing the...
Speaker 3: What is that about 16 months from now is about 75 million dollars left over and of the mid 25 maturity. About 340 or so million dollars left over.
Speaker 3: So that's a point of $1.25, $25.75 million that matures in.
Speaker 10: Do you want to be a live 24? Is that what you're worried about? Or maybe don't understand the question. I mean, very much not worried about it, because the amount is small, and the liquidity position is significantly improved, but just mechanically, right, because the understanding is that any repurchases today are capped at a certain price. I think it's 15.
Speaker 3: we run by bags, we run...
Speaker 3: different types of liability management operations.
Speaker 3: There's a lot of different tools on its balance sheet in terms of capital markets. It's an interesting obviously yes that market access which is not something that has.
Speaker 3: been available to the company since the war started in February last year.
Speaker 3: But the company would just continue to manage around those maturities.
Speaker 10: with the available tools that it has. Perfect, that's great. I'm sure that will continue to be what received after the company has extended runway here. Let me just go.
Speaker 10: Okay, sorry, you cut out there. Just said that that's great and I'm sure those will continue to be well received as the company has extended runway and bolstered liquidity. The last one was just on the equity, the listing of Abra versus potential delisting of v
Speaker 3: We only got a couple more minutes here. Let me just insert a couple quick questions, make sure we get to everybody that asked on the...
Speaker 3: on the webcast. There's a couple of quick questions here. One was how the secured advertising notes that were issued to leasing companies at the last year will affect.
Speaker 3: Cash flow, quick answer there. We mentioned that these notes have a very low cost to capital for gold and also have a great period of 12 months, which...
Speaker 3: has a big impact on cash flows in 23. And you've already had the lowest lease that among competitors. And that transaction gave additional relief for goal, but also the less or the participated that were secured by top deal.
Speaker 3: Well, we had previously planned to end last year with 44, meaning December of 22 with 44, B737 max in the fleet. We finished with 38. And so obviously we go as being affected by the OEM bottom. Which are not just affecting Boeing operators. They're also affecting Airbus operators. That's mainly due to logistics problems and all the manufacturers that...
Speaker 3: start delivering aircraft. And so that's why we, you know, we're forecasting a lower number of acts than previously for 2023, which would reach 53 by this December . And so we're still praying catch up, given the pandemic and given the max grounding, you know, going all the way back to 2019 and those other issues that.
Speaker 3: We're pretty catch up on that. You know, Boeing's been working very closely with us in order to mitigate this. We're confident that our long-term partnership with them will continue to work together as partners on.
Speaker 3: We're playing catch up on that. Boeing's been working very closely with us in order to mitigate this. We're confident that our long-term partnership with them will continue to work as we work together as partners on. We continue on.
Speaker 3: on that. And they just won final just to make sure we settle in by the top of the hour here. I'll maybe extend for another couple minutes here just one last question which I'll send them are which is from Gabriela, Rwanda, Yovita, Obedeah.
Speaker 3: He says, you mentioned about increasing corporate traffic.
Speaker 3: I actually made all of the Senate to sell so. What's the main explanation on?
Speaker 3: I'm actually made all Senate to sell so what's the main explanation on yield expansion quarter recorder.
Speaker 3: How is corporate traffic apparent with pre-COVID-19 levels? Regarding yields, you see risk on achieving the additional yield increase implied by your guidance. How these yield increases should happen on 23 and maybe I'll just I'll just chime in there before you speak so so there's no yield increases in the guidance. What you guys have to do when you look at
Speaker 3: You have to be careful with the year of a year comparisons. We mentioned this in the last call. We did and we had our, you know,
Speaker 3: We didn't change our 23 full year guidance. We just provided some Q1 numbers. We just
Speaker 3: reaffirmed it if you will and we provided that in our last call and we made a point to explain that when the war started in a February there was a massive increase in oil prices in you know March April and
Speaker 3: You know, we did a we affected a significant shift and yields up in the second quarter And so you need to strip out the Q1 of 21 So yeah, 22 from your comparisons in the year over year. Otherwise you won't be able to do the comparison and if you take the yield progression going forward if you were kind of go Q2 Q
Speaker 3: 3, Q4 and compare that to our, you know, look at the data that we've provided in the releases and compare that to our 23 guidance Stripping out the Q1 of last year. You'll see Reductions, I mean for example, I think if you take the nine months comparison last nine months versus of last year versus this year It's like an 8% reduction yield if you just look at the second half. It's around a 10% reduction
Speaker 3: And if we look at the Q4 comparison, it's like a 12% reduction. And so that is not correct. And so your question on do you see some risk in achieving the additional yield increase in planned buyer guidance, that's not a correct question. There's yield reductions in there, which are also necessary to stimulate demand.
Speaker 3: So maybe I, looks like I answered the questions also. Okay, so we can skip that. Let me just check here real quick. Let me just make sure we got everybody's.
Speaker 3: Questions? I think we were able to get through everybody's questions. If there were any questions on answer, please shoot us an email to the Goal IR department and we'll
Speaker 3: I think we were able to get through everybody's questions. And if there were any questions unanswered, please shoot us an email to the goal IR department and we'll get back to you on that.
Speaker 2: So we can wrap up the call. We can wrap up the call and I don't know if you have any closing comments. Thank you. Thank you all and I hope you enjoyed today's Webcast. And like Richard said, our investor relations and communication team are available to speak with you as needed. Thank you. Thank you very much. Ladies and gentlemen, this concludes go where.