Gol Linhas Aéreas Inteligentes S.A. Q1 2023 Earnings Call
These statements are based on the beliefs and assumptions of the company measurement management and on information currently available to girls.
They involve risks and uncertainties given that they relate to future events and therefore depends on circumstances that may or may not occur.
Investors and analysts truth go see their debt events related to the macroeconomic scenario industry and other factors could also cause results to differ materially from those expressed in such forward looking statements at that time, I will hand, the floor over to Mr. Social for her.
Mrs. <unk> you May proceed.
Good morning, everyone. We appreciate you joining us today.
This morning, we post our Q1 2020 through 2023 earnings release.
And a slide presentation on growth IR web site.
So we will make some brief comments and should straight through to your questions.
As you saw our numbers 2023.
So a strong start for go with records.
Net operating revenue recurring in beta and yields delivering safe and reliable air travel remains our top priority and nowhere lines does this better than go out.
I would like to thank you our team of Eagles for all of the.
Two for our customers each and everyday.
Their dedication professionalism and hard work are the foundations of this company.
We delivered consistent operating results.
Even surpassing the fourth quarter last year, which is usually our peak seasonal quarter.
In the first three months of 2023, we transported approximately 8 million passengers to more than 200 markets.
Totaling more than 57000 departures and increase of 17% compared to first quarter last year. We now have a flights every four minutes, taking off or landing at <unk>. One of the most important Brazilian airports, we continue to improve our operational efficiency.
Supplied measure in case grew by 11% over first quarter 2022.
Simultaneously.
With an improvement in load factor by two three percentage points to 83, 3%.
The utilization of our operational fleet increased by 6% and reached 11 seven hours per day, which is consistently through the with utilization we used to have pre pandemic.
Around 40% of this quarter escape will produce it by Boeing 737, Max aircraft, which provides improved accretions in fuel consumption per hour operated.
<unk> continues to be the airline with the lowest unit cost in the region, even with the spare capacity for further dilute costs. Our objective. This year is to resume the high fleet utilization and increase its productivity by investments and bring back all of nonoperating aircrafts.
We remain committed to improving our operational efficiency leverage by increasing aircraft utilization.
<unk> with a winning proven business model, we will sustain our unit cost advantage over the competitors.
The expansion of our offer in the domestic market with an increasing regional flights and in international routes remain a fundamental piece of our plan for profitable growth.
In the domestic market we reach it.
To a mark of 7000 additional seats during the Carnival holiday this year, which were mainly allocated to Salvador Rio Janeiro has seasoned fortaleza at the peak of the holiday we reached 790 departures per day about 10%.
And double the average of the purchased in 2019 in the international market. We continue to resume our capacity registering a growth of around 250% comparing to first quarter 2002.
Focus on the increase in our presence in markets like Argentina and in the United States. This quarter. We also announced the Codeshare agreement with Dog Airlines of Angola, which had 13, new international destinations for our customers.
Our recurrence unit costs excluding fuel.
And the operational.
Our cargo fleet.
Reached $3 nine.
The dollar seven 4% higher than the previous quarter, where our offer in <unk> was slightly higher due to the market seasonality.
We reached record yields and pressed they had growth of.
32% and 36%, respectively compared to first quarter last year.
Higher than 2019, our unit revenue RASK grew by 38% comparing to first quarter 2022.
Moving to his miles our loyalty program, we had an increase in our customer base by eight 4% comparing to first quarter 2022, and our record sales of $1 2 billion.
We've recently launched as miles the items and new travel agents, which will enable customers to customize their impact Becker, just easily and effectively through a single platform. The new search enables customers to create travel and leisure activity experience and provide the opportunity to.
For chase completely packaged air travel hotels and tours with the added benefit of using goals strong network, which provides us of all the main airports in Brazil, our expectations in that smiles the outages will be one of the top five largest online travel agencies in Brazil.
Within the next five years.
As for our cargo unit in April goes logs <unk> fourth quarter.
Fourth cargo aircrafts anchor.
Into leveraging the partnership between <unk> and <unk>.
Foresees, an initial fleet of six cargo aircraft in operation and an expansion option up to 12 aircrafts in the coming months and next year. Therefore.
Therefore, our ancillary revenues increased 84% over the.
First quarter last year compared to first COVID-19, as Myers practically double its billing and go log expects to reach 1 billion higher this year compared to approximately $530 million last.
Last year.
In the <unk>.
In the first quarter.
<unk> had a record net revenue.
Which means 53% and 4% above first quarter 2022, and fourth quarter 2022, respectively.
During this quarter. We also returned three Boeing 737 energy.
Aircraft in our fleet. We also conclude the private placement of senior secured notes due in 2028 with the Abra group goals controlling shareholders in the amount of up to $1 $4 billion. This operation was transformational reducing.
Liabilities extending debt matures and increased <unk>.
Increasing cash flow.
We are well positioned to grow our operating results and cash flow in 2023, and 2024 with our leading brands building on our foundation of service and operation real ability and delivering financial results that create significant long term value for our stakeholders.
I'll now turn the floor over to Mario who will present, some other highlights seasonally.
Thanks also good morning, everyone.
Revenue for the quarter was a record as mentioned by cell. So we continue our catastrophe cover movement and together with our focus on maintaining profitability. We also again delivered strong operating results.
Our yields and RASK, which also record virus and increased by 32% and 38%, respectively, reaching 48, 5% and 43 eight cents of Reais, we achieved growth in the average ticket fair supported by strong demand from leisure passengers.
Our sales in this quarter of which $5 4 billion rise, 33% higher than registered in the first part of last year, even considering a seasonal reduction in sales during the carnival week.
With did not occur in 2022.
Our recurring EBIT and EBITDAR margins reached.
17, 1% and 25, 2%, respectively. Our Grande Beach totaled $1 2 billion realized in the first quarter of 2023.
We plan to maintain this new level of yields and expect to have further dilution of unit costs together with the resumption of supply we maintain our financial projections for our Chinese 'twenty three.
We continue to be impacted by high fuel prices that is around 25% up compared to first quarter of last year, which ended up being at that as a factor in increasing our recording the unit costs on the same basis by around 20%.
As for the cash flow in the quarter, we had 5 billion rise of operating inflows.
These generating an operational cash flow of 1 billion rise excluding interest expenses on debt. Despite the impacts in the fuel price increase.
As mentioned by cell so with the placement of the senior secured notes due in 2028.
With our controlling shareholder.
<unk> retired approximately $5 6 billion rise in that and open a new starts with liquidity of approximately $450 million.
With this transaction will reduce its leverage by $1 six times to seven nine times in the methodology that used seven time leases.
And that is six times under <unk> 16.
Using pro forma numbers in <unk> 16, and excluding the senior notes train 28 gross leverage was four six times.
And the total liquidity increased by 36% to $4 4 billion in rats.
We will remain very focused on balancing debt reduction opportunities and investments in the business, while achieving the appropriate levels of liquidity leverage it by the consistent recovery in our operating results. The company is successful liability management during.
The pandemic position us into a leading position with the lowest short term debt ratios among our competitors.
Now I'll turn the floor back to yourselves.
Thank you Mario.
We continue to be optimistic about demand, even now for the second quarter seasonally the weakest of the year.
We reaffirm our commitment to initiatives that increase productivity and maintain profitability.
As the industry leaders with a proven strategy and a strong is a key.
You should track Records go is well positioned to build on its momentum in 2023, we are confident in our ability to deliver significant improvement in earnings and free cash flow going forward. So in closing I would like to thank you again for the team of vehicles for the elevated service they provide to our customers everyday.
I am incredibly proud four day, a fundamental role in rebuilding the best performing airline in the region.
Operator, you may initiate the Q&A session.
Thank you the conference call is now open for questions from analysts and investors. Therefore, if you have a question. Please click on the right hand button located at the bottom bar of your assumed screen. If at anytime Youre question is answered before it's your turn.
The hand down burden to leave the Q west skewed that when your name is announced speak closer to the receiver of your device. So that everyone can hear you clearly.
Participants can also submit written questions through out the platform just click on the Q&A button located at the bottom of your screen and Dent type. Your question. Please hold while we will pull for questions.
Our first question comes from Michael Lindenberg phone Deutsche Bank. Please.
Mr. Michael Your microphone is open okay can you guys hear me.
Mike go ahead, a J <unk> Mario.
I guess I have two questions one.
<unk> on a good March quarter, a strong March quarter.
Where can you just run us through the.
On the liability management slash restructuring.
What are the next steps I know that there is a there is an anticipated rights offering and I think it has to occur within a certain timeframe can you just sort of in broad terms tell us what you expect over the coming in I guess, it's really over the next 12 months or so and then on the timing on that thank you and then I haven't.
Another question.
Yeah.
Hi, Mike This is model.
Hello.
We.
We are pretty focused on continuing to deleverage the company and in which the level five times leverage as we mentioned that we feel is good.
<unk> 2008 on the calculation with the currency of each of the that we're expecting.
It is going to be going down to five times. So.
You remember that most of the times that we presented as a fee.
Future planning in terms of levers in order to get back to me.
More normalized leverage there thats going to be RMA focus we don't have specific time.
Timing too.
To do that you know that Abra has the.
The time in order to decide in terms to make this second stat in terms of.
These exchange with serono over.
The course of the maturity of the <unk> 28.
That.
The decision in terms of our retrofit or we expect to to do this very very soon but we don't have a specific timing, but it definitely is going to be focused to do this.
Okay that makes sense.
So it's an opera decision, but it sounds like it's going to happen sometime in the imminent future.
My second question.
He is just in the release.
Highlighted that there were some adjustments that were made to the network and you specifically called out <unk> Brasilia and Rio.
And I guess council. This is sort of a two part question with Azores, adding.
A lot of new service.
In <unk>.
Have you seen what has been the competitive.
Any sort of noticeable competitive changes in that market and is this network restructuring that you referred to in the piece.
Maybe just rebalancing.
Your aircraft between those three airports.
Thanks for taking my question.
Thank you Michael Good morning. Good morning, So first think the what we call. The restructuring is not I think restructure is a strong word of what we're doing is as we grow the sk's and as we go through the seasonal.
Movement in Brazil, which is normal for the year, we exchange we invest in one airport more than the other and then we go for <unk>, we are operating our full capacity there which means.
One departure are landing in every four minutes. So we have a very strong network in place right there.
Entering these markets actually a zoo launching three new markets, which Brasilia Porto Alegre in Curitiba and what we're seeing so far is that a zero came more cautiously.
Cautiously approach rationale approach to those markets and our main concern right now regarding ongoing as is the operational capability of the air of the airport itself because the new capacity came without significant improvements on runways on tax rate. So we may have a new X Ray machine.
But we don't have enough versus we don't have.
And our tax rate. So the airport is crowd at this point. So we are our main concern is with the level of service to our customers at this point and delays we are investing in our operations right. There we are running within the same otp marks of the competition in congruence.
That's what we want to improve.
And the big concern is for.
For the high season, how can we as Brazilian sector of aviation can dealing with very busy airports not only <unk>, but also Santos Dumont at go what we did is we are also leading <unk> since demand within.
Our system, where we can operate those two airports in a very high frequent mode. All the shadow from conversions and also launching new Shadows from Santa Monica to other places and we can isolate this let's say this aircraft.
From the rest of the network that normally runs with a better on time performance better.
Irregularity and Thats, what we are doing.
<unk> and central Soma.
Great. Thanks, Thanks for that comprehensive answer to also take care. Thank.
Okay. Thank you Mike.
Our next question comes from Daniel Mckenzie from Seaport Global.
Please Mr. Daniel Gramophone So is open.
Oh, Hey, good morning, guys can you hear me okay.
Yes.
Okay.
Excellent congrats on the quarter and I guess my first question here, we had a better than expected first quarter. Yet you left the full year outlook unchanged. So I guess my first question is if that suggest.
Conservatism and then secondly to clarify the sort of the earnings roadmap from here to get to the full year profit.
It looks like when fares drop Theres a dip.
Surge in demand and so I'm just wondering if you can speak to pent up demand and the pace of the corporate recovery from here.
And I guess is the as we think about the roadmap for this year is it just simply one more challenging quarter before we exit on a steadier profit footing and is that is that a fair characterization yes.
And then good morning with cell. So thank you for joining us and thank you for your question and yes first quarter was better than expect.
On the on the revenue side.
But as always we have been adjusting capacity if you look at.
I was on the networking generally and then in February recur to almost 30% of the capacity that we flew in January to February . So we are managing the capacity to make sure that we are going to leverage results in a way that we are flying with higher load factors than the industry and we are doing exactly what you said which is.
I mean, we are inside the.
The aircraft today, I mean, we have different segments.
And one more inelastic, which is the corporate.
Again corporate is not there yet we are proving quarter by quarter, but it's always behind a little bit our expectations, but the good news.
Is that on the leisure side on the BFR side, we have been able to which stimulates the traffic and fly with 83% load factors. So we had different.
Pricing strategies for the same client so we have a fair basis, which is for the segments more than elastic segments in the short ap's, whereas we're still stimulating demand because I agree with you that there is.
I mean, a lot of people, who want to fly and the growth we expect for the high season months.
To reach our guidance is exactly based on that I mean, there is demand we are of course cautiously.
Adding capacity, making sure that we don't lose control on the cost side, especially on the <unk>.
On the on the fuel prices I mean, we had a very bad experience last year, when the pure spike and we had liked.
Our flights already sold so we are being very careful to make sure that we have the right.
Booking curve building process for every every flight so we expect to keep the yields.
At this level I mean, so we don't we don't expect a big change in the in the macro level, but we expect through during this seasonal months, we expect to sometimes.
Stimulate more let.
Let's say low entry level the curve various keep their fares on the short Aps at a very high health level and we are seeing the competitors also.
On a more rational approach.
Yeah, that's perfect. Thanks.
Other question here it looks like Capex has largely been finance and so the question is is.
Ken cash builds from here.
Or is the priority to keep cash.
Essentially flat and instead deleverage as fast as you can.
Hi, Ben.
Arrived our priorities.
You don't expect the cash is going to be changing significantly.
Over the course of the year end.
Surplus cash is going to be.
Reserve in order to.
Reduce the backlog of maintenance that you know has been on one of our main priorities.
Since the end of dynamic so.
We are now.
Delivering the news, but remember there is still carrying some idleness on the fleet.
So when we can address that either on us.
Pull back all the aircraft that is no operation are now under operation and we have this.
Capacity deployment over the second half of the year that.
As also mentioned most of the debate has been concentrated.
And by building that profitable in the second half of the year and depends on those investments as many require to put back those aircrafts that's going to be the main products. So the cash going to be reserved for investments and concerning the leverage of the company.
Yeah perfect. Thanks for the time guys.
Thank you Dan.
Our next question come from Stephen Trent from Citi.
Mr. Stefan <unk>.
Yes.
Good morning, guys and thanks very much for taking my question.
I apologize if you already mentioned this as I ended.
Ended up joining the call just a little bit late but.
I was curious when we think about the smiles program and the revenue generating today.
What sort of the view on a long term basis regarding.
How big this program could become and.
Is there a potential.
For our smiles to actually.
Collaborate for example, with their partners at American Airlines. Thank.
Thank you.
Hi, Stephen good morning, so to speak for themselves.
<unk>.
Good question I mean, the numbers are.
On smiles are really really growing like I said it doubled our size since.
Since 2019.
And we have already started and international expansion of the program. So we now have as miles in Argentina, we have a management there we have a company there and we like that model, we will probably continue on the region.
Expanding the program in Brazil, we are expanding the services, we are launching new products everyday and make the program more attractive, but I think the main big step forward, we will be with <unk>, where we have been working now really really close to the the avianca team and also with the Abra managed.
Man.
To make sure that we address all the all the senior to as possible.
And the synergies on the upper group will be focused on revenues I mean, we are not talking about two companies that has a tremendous overlap that we will start to cancel flights to make sure that we will have pricing power. That's not the strategy. The strategy is to create value. So in that specific question. We are talking about.
Very true.
Talk through frequent flyer programs life miles and miles so.
This group together now we think we can grow.
The size of <unk> within the region and the customer base.
Great Great color really appreciate that and then if I could just kind of wiggle room.
One one more and just very quickly.
The U S Airlines, there's a lot of talk out there about how Jimmy.
Demand patterns have changed and our ticket purchase patterns have changed and less close in bookings and there used to be I'm wondering from a high level.
If you could provide a little color on what youre seeing in your markets. Thank you.
Yes.
Good question I'll also following what is happening in U S and my impression is that we are I mean, some steps behind what is happening in U S. I think the corporate market in U S recovered faster than than ours.
And now they are starting to see there is this different than pattern, how they book et cetera, while we in our case, we are still not there we are on a corporate side we are still.
Between 75, and 80% of the let's say previous demand pre pandemic demand.
And while we have large corporates still.
Still at 50% of there used to be so and we are seeing a slightly growth in the corporate quarter by quarter. So we don't expect for the second.
Quieter right now or even for the third quarter right now.
<unk> pattern that the domestic U S are seeing because we are still recovering so I think that we still have these upside on the corporate to be incorporate into into our bookings.
Okay I'll leave it at that thanks for the color Celso.
Susan.
Our next question comes from Matt Roberts from Raymond James.
Please Mr. Matt Gamma pumps open.
Hey, good morning, and thank you all very much for the time.
My first question is on your capacity planning.
And how you're thinking about that and in particular as I've scheduled that I'm looking at 17% is that accurate and then how do you foresee that progressing throughout the rest of the year.
Okay.
Fair enough can you repeat your question.
Great.
Basically just on capacity planning, yes higher looking.
Yeah, each quarter to get to get to that full year target of an <unk> I'm looking at scheduled that is up 17% year over year. So is that accurate and then how you expect that the trend throughout the rest of the year.
Okay got it and yes, we are I mean, we are confident with the guidance, we put in place and besides the challenges we may face, we Max delivery, we still have planes on the ground that we can and we are focused on this and bring those planes back the idea is.
Two.
Who sets the same number of aircraft flying independently, if it's a market where LNG further for the second half of the year.
The the growth that we're talking here is basically on the high.
Peak season that we have here in July and especially the fourth quarter of this year, where we normally fly.
Much more than the low season as you as you know we have managing capacity.
On a more aggressive way than the competition month by month, and so the growth will be much more concentrated in those.
In those high high peak months and also exploring new opportunities in international markets as we are now.
Part of Abra.
The seniors will be true network.
Expansions.
Yeah.
That's very helpful. Thanks for the additional color there.
And then quickly on the.
The status of the ticket tax suspension do you expect that to get extended beyond or how are you thinking about that thanks again for the time.
Yeah, we expect to be extended basically because yesterday, we had an approval on our.
Our Congress.
So theres still a progress on approval to be made by the Senate.
Next week, but we are confident that this does tax exemption we stay.
For until 2026 at least.
So that's an upside regarding our.
Our projections now because we only.
We had of course the benefits in the first quarter.
But we were not projected for the entire year yet.
Very good thanks, guys for the color there.
Let me take opportunity to Oh, we received some questions on the Q&A platform. So let me with some some of the.
The questions here.
Here on the webcast so.
There is a first question.
That is asking you to provide more color about the increase in cask ex fuel the main driver of compared to the fourth quarter and how we should expect to be in the second quarter of this year. So basically there are mainly three drivers.
The drivers of that.
Impacted the increase on the on the call. So first is related to maintenance you can see that as increase around 80 million re is off in maintenance.
<unk>.
<unk> two till last quarter that was basically related to.
The anticipated.
Delivery delivery of some aircraft we were expecting to return four aircraft. This year. We're basically three aircrafts has been concentrated in the first part of this year.
Two aircrafts as basically postponed from the fourth quarter. So you, you'll probably see for quarter in terms of the maintenance line being much lower than it was the historical trend.
Trends for this line and that was postponed now to the first quarter.
And also we have.
Basically some of the contracts, especially for passenger services and airport fees.
It has an impact of annual increase in terms of inflation in Brazil.
And also.
In this quarter, even though we carry it.
The same number of SK in terms of departures, whereas there'll be higher so we carried more passengers.
Also.
We make some adjustments in our stage lengths.
So we reduced stage and labs are in.
In order to deploy more directly routes are having more higher departures than what we have basically in the fourth quarter that has a more.
Connection the roads.
So for that since impacted passenger service in that port fees as well.
We expect the second quarter.
And we the cask ex fuel is going to be neutral to the first quarter basically.
We have the seasonality within the year. So in our guidance, we expect the cask ex fuel in U S dollars to reach a level between three five to 26.
So.
As long as they start to continue.
Deploy the capacity that has been preserved during the pandemic.
We still have opportunity to further dilute our costs and have.
Cask ex U in the second semester of this year lower.
And then the current quarter so everything is on track.
Nothing was deviating in terms of what to expect into projections as most related to the season.
And the second question that basically.
First of all.
We have seen here in the.
In the Q&A session was.
How much of the $450 million.
Was <unk> during the quarter and when expect to.
Obtained approximately $300 million of not.
<unk> received so we we we.
Have a one around $140 million that has been recognized this quarter.
$40 million has been.
Basically.
<unk>.
Proceeds coca costs for the emission and the remaining was basically what we are.
Already.
Lance.
Quarter.
There is no specific timing for the.
The remaining $300 million.
Most of those proceeds is going to be.
Investor in the company over the course of next quarters. According to the necessity in terms of the investment in this as other companies. So there's no any restrictions, but there's no specific timing on that.
While.
The <unk>.
<unk> continued to work on.
Prompting the questions. There was one additional question as well.
That was.
How advanced the ticket sales.
Very high up to $3 1 billion so.
How are the booking curve is now.
Behaving between the second quarter of 2003 compared to second quarter 2019.
And how we expect this booking curve to evolve.
So.
As we have been consistently.
Consistently delivering.
In all quarters.
Our load factors has been achieving levels beyond 80%. So this first quarter, we have a very strong load.
Load factors at 83%.
We expect that this 80% load factors continue to be consistently.
Delivered over the next quarter or so.
Into our yields there is higher compared to 2019.
So the booking curve nine now for second quarter has been.
In the same pace.
What are we have been controlling the capacity for the second quarter and we expect that.
By matching the high season in the second semester of the year.
That capacity is going to start to ramp up.
Over the course of the second half of the year in order to reach.
Almost.
The stable or flattish level capacity.
Compared to 2019 in the second semester of the year.
So.
I see more people in the queue of the Q&A session. So please operator.
We can move on.
Our next question comes from Pablo Muncie voice from Barclays placements.
Plus Mr. Pablo <unk> phone shopper.
Hi.
Thanks for taking my question.
Just wanted to travel more visibility on the working capital evolution, it's kind of a follow up on previous call previous question sorry about that.
Bookings grew around the air traffic liability what should we expect for working capital due to behave for the next three quarters. Thank you.
Hmm.
Pablo Thanks for the question, we expect a more natural working capital going forward.
So receivables is going to be continue to grow according to an increase in tons out of the revenue.
So the.
The revenue is going to be increasing.
As a combination of the capacity additional capacity theres going to be stronger for the second half of the year, they're basically not additional capacity, but the capacity that has been preserved since the beginning of the pandemic. So we're matching that capacity deployment. According to we expect a more stronger demand that is usually very high.
Since the second quarter and second semester.
<unk>.
Stable.
<unk>.
Our payables are so.
We then expect to continue to maintain a payment terms.
For most of the state border. So we expect to be neutral.
In terms of working capital.
Where most of the.
Cash generation that it was going to be embedded to the beach. The is going to be focus on the investments and the capex that was needed in order to go operate the company with the.
The capacity expected for and look towards the second semester.
Okay. Thank you very much.
Wait while we pool for questions.
So that's one question that are we already answering the.
In the Portuguese a webcast, but theyre going to repeat here, maybe associated kind of emphasize that what is the impact of the ticket tax exemption.
The first quarter and what you expect the balance for the year and there is also one of the questions are.
That is are the yields coming under any pressure with lower sales.
Or is the industry holding price.
So.
Thank you Mario for the question. So the tax exemption was already in place for the first quarter of the year, which generate around 230 million <unk>.
Net revenues benefit.
And if we had the approval.
We expect to be.
On an exemption of 500 million year round.
130 in the first quarter 500 would be the total number for the 2023 guidance that we that we share. So it's important to highlight that this is not on the guidance.
Why are we still need to wait for the approvals.
So on your second questions. If there is any.
Pressure on yields because of the fuel prices.
My view is that the fuel prices are still very high. So there is a volatility in February for example, we had.
13% increase in the fuel price in Brazil, now, we have 10% decrease but.
If you look at those.
The level of the.
What we have banned the pump is still quite high but we don't see room for any <unk>.
Any yield reduction because of that as being any any yield pressure will come from overcapacity and thats why we are leaning the dose rationale movements market by market, we're not talking about let's say the domestic as a whole but market by market, making sure that we.
We keep.
The unit revenues at the right.
The momentum that the industry needs at this point.
Yes.
So there's two remaining questions, mostly whether it's free cash flow for us is how.
We are.
Got in the cash flow for this year and how has been compared to 2019.
We back in 2019.
In terms of the beach or their expectations.
That beachhead.
There was an event back in 2018, there was around $3 9 billion and there is close to 30% of the beach the.
There wasn't a number a margin that generated a.
Free cash flow, we are expecting now 24%.
Related to the expected rental payments are.
The net Capex of 600 million rise and also the financial expenses of $2. One that was going to be the living in a neutral free cash flow this year and so.
You know that that is basically in the ultra and I expect to continue for the increase.
You know along the nice coming years and as we mentioned.
That's expected Mitch the is going to be important to really for.
Put the company in terms of leverage.
Below five times, considering the quint.
At that Big picture that we have in our balance sheet right now.
And then there's one question there is how much is the quaint to receivable due to losses in the first quarter.
That number is has been neutral compared to the fourth quarter.
As you saw.
Back in December we issued a 196 million around $200 million of our senior amortizing notes.
There was basically a refinance of the commercial that that could have a will last or is that has been switched to.
A private placement of instruments.
That.
So part of the company in order to expand by almost three years three to four years.
Most of the mature that.
It's going to be falling in terms of repayments.
Repayments of deferrals.
In a much shorter tenor and most recently we also.
This goes a recap for additional notes of $26 million of.
The addition of the firms that have been included into the structure. So besides of that number are you know what you see in our balance sheet that is around $1 million is the number that is that the volume of the leases is still not included in this transaction and.
That has been negotiated beats.
Between the company and the losses.
So those are the questions that we've seen here in the Q&A session. So please operator getting back to you if not.
Have any.
Additional question. So we can move forward.
Thank you. This concludes today's question and answer section I would like to invite Mr. Celso to proceed with the closing remarks. Please go ahead Sir.
So I hope you're enjoying today's webcast I would like to take the opportunity to thank you again, our team for the incredible work.
Or that we just released at this point I mean step by step we are bringing back the whole.
The go.
Profitability and also productivity. So thank you very much again, and our Investor Relations and communications team are available to speak with you as needed. Thank you all and have a great day.
This does conclude goes Airlines conference call for today. Thank you very much for your participation and have a wonderful day.