Q4 2024 Azul SA Earnings Call
and many more. Thank you. Thank you.
and many more. Thank you. Thank you.
and many more. Thank you. Thank you.
Zach: Hello everyone and welcome all to Azul's fourth quarter earning call. My name is Zach and I will be your operator for today.
This event is being recorded and all participants will be in an instant only mode until we conduct a Q&A session following the company's presentation.
Speaker Change: If you have a question, click on the Q&A icon at the bottom of your screen and write your name and company. When your name is announced, please turn your microphone on and proceed. For those who are listening to the conference on the phone, press nine to join the queue and six to accept the audio when requested. I would like to turn the presentation over to Thais Haberli, head of investor relations. Please proceed, Thais.
Speaker Change: Thank you, Vec, and welcome all to Azul's fourth quarter earnings call. The results that we announced this morning, the audio of this call, and the slides that we referenced are available on our IR website.
Speaker Change: Presenting today will be David Neeleman, Azul's founder and chairman, John Rodgerson, our CEO, and Alex Malfitani, our CFO. Abhi Shah, the president of Azul, is also here for the Q&A session.
Speaker Change: Before I turn the call over to David, I'd like to caution you regarding our forward-looking states. Any matters discussed today that are not historical facts, particularly comments regarding the company's future plans, objectives, and expected performance, constitute forward-looking states.
Speaker Change: These statements are based on a range of assumptions that the company believes are reasonable but are subjected to uncertainties and risks that I discussed in detail in our CVM and SEC fights.
Speaker Change: Also, during the course of the call, we will discuss non-IFRS performance measures which should not be considered in isolation. With that, I will turn the call over to David.
David Neeleman: and all the other people in the world. I'm so happy for you. I love you. You are a legend. You are a great person. I love you so much. Thank you. I love you all. I love you. I love you. I love you all. I love you. I love you. I love you.
Speaker Change: Thank you, Thais. Welcome, everyone, and thank you for joining us today. First, let me begin by thanking our incredible crew members for their passion and dedication. 2024 was a tough year for Azul. Like many airlines around the world, we were impacted by OEM supply chain and engine challenges, which created schedule uncertainty and operational disruption.
Speaker Change: This affected our customers and crew members in addition to a heavy financial impact of over a billion reais. Also, the Azul family and Brazil at large were severely impacted.
Speaker Change: by a significant evaluation of the local currency and extreme floods in the state of Rio Grande do Sul, which resulted in the closure of the Porto Alegre airport for over six months.
Speaker Change: Despite all these significant challenges, our crew members went above and beyond taking care of each other and our customers on each and every flight. I'm proud of them and I cannot thank them enough.
Turning to slide three, the Azul Business Model.
Speaker Change: more than ever demonstrated its value thanks to our strategic and competitive advantages. The combination of a differentiated network with unique fleet flexibility, our high growth business units, the lowest unit costs in the region, together with passionate crew members and supportive stakeholders,
Speaker Change: is what allowed us to deliver the record results we present to you today.
Slide 4
Speaker Change: I would like to describe what I think is the strongest of our competitive advantages, our network. From the beginning, Azul was designed to be different. Our focus has always been to grow the market, to access demand that has never been accessed before.
Speaker Change: While our competitors focus its operations in three cities of Brazil, resulting in high overlap, our unique fleet and network
Speaker Change: combination allows us to be the only carrier in 82% of our routes connecting over 150 destinations, many of which are located in the fastest-growing regions of Brazil.
Speaker Change: Slide five is another clear way to see how differentiated our network truly is.
and many more. Thank you. Thank you.
Speaker Change: of each airline's capacity is in the airports where they have over 60% share. As you can see, Azul leads the global industry with 63% of our capacity deployed at airports where we are the most relevant carrier. This means we choose to fly where we are strong, and we are strong in airports where we choose to fly.
Speaker Change: This is in clear contrast to the industry expectations that as we grew, we would inevitably face more competition. In fact, the opposite has happened. We have grown our markets within our network, increasing our strength, and extending our competitive advantage.
Speaker Change: We truly built a unique business that allows us to succeed, even in the most challenging moments. Proof of that is the tremendous support we have received from all of our stakeholders, whom I would also like to thank.
Speaker Change: We have truly set up Azul to be successful for the long term. With that, I will turn the time over to John to give you more details on our record results. John. Thank you, David. We are very proud of what we built and I too would like to thank our outstanding crew members.
John Rodgerson: On slide 6, you can see that we are excited to report another tremendous quarter with an all-time record revenue EBITDA and EBIT. Our revenue was up 10% year-over-year to a record 5.5 billion Reais with a strong RAS of 45 cents.
John Rodgerson: Our record quarterly EBITDA of R2B with a margin of 35.2% and EBIT of R1.2B reflects the strength of our unique business and competitive advantages.
bringing Azul to industry-leading levels of profitability.
John Rodgerson: A new and unique ways to increase our revenue outside of just the ticket revenue our high margin business units contribute caused the confusion to arrest grew 15% and four cumulated free to a very strong 23% and four Q 'twenty for all units combined resulted in a positive impact of more than 450 million.
John Rodgerson: Yeah.
John Rodgerson: [noise] re ice in the border and 1.5 billion Reais in the year accounting for 44% over 2020 EBITDA.
John Rodgerson: The investments, we're making in people technology and products to these businesses the key element of creating and extending our competitive advantages, allowing us to continue our profitable broker directory for yourselves.
John Rodgerson: On slide nine I will discuss further highlight some key results from each of our business units, our loyalty program, which continues to do well now has more than 18 million members and increased 27% and gross billings ex airline year over year, our co branded credit card ranked best in the country as total spending that represents <unk>.
John Rodgerson: 5% of Brazil's GDP, let me say that again, a half a percent of the value of Brazil's GDP is spent on the Azores credit card our vacations business continues to expand its network of agencies and stores throughout the country, resulting in an incredible 63% growth in gross billings in 2024.
John Rodgerson: Our logistics business has returned to revenue growth as well powered by a 9% increase in international revenue for the full year and a very impressive 54% growth in international revenue quarter over quarter in summary, the growth beyond the metal is strategic and is a key part of the Azores story and a fundamental element of our competitive advantages.
John Rodgerson: Yes.
John Rodgerson: On slide 10, we focus on what is becoming yet another competitive advantage. Our cask is the lowest amongst our peers.
John Rodgerson: Overall cash was down six 5% year over year, even more impressive is that despite an 18% devaluation of the local currency in the fourth quarter and almost 5% inflation in 2024.
John Rodgerson: Cost X fuel remained flat this was driven by our laser focus on efficiency and productivity to examples of which I will show on the next slide as you recall from our past two earnings calls our elevated plan became a new way of managing our business. In fact, elevate elevate was so important to us in 2024 that it has been incorporated into our yearly.
John Rodgerson: Strategic planning moving forward slide.
John Rodgerson: Slide 11 shows two very beneficial initiatives of our elevate plan increased aircraft utilization and productivity, which has been key in driving down our unit costs on the left you can see how aircraft utilization has increased year over year. Among other reasons. This was accomplished by reducing aircraft ground time, and optimizing our handling catering and airport processes.
John Rodgerson: Is leading to an increase in utilization of almost 13% on the right you can see that the airline today is 10% more productive in terms of a S case per FTE compared to last year or at any time in our history. Therefore, it is fair to say that a xul has never been more productive and further gains are on the way.
Summing it all up on slide 12, you can see that the combination of our structural competitive advantages growing business units and lowest unit cost have put us all back on the path of consistent profitable expansion. Despite its challenges 2024 was the best year in our history in terms of EBITDA generation 2025 in turn is expected to be.
John Rodgerson: Even brighter with significant revenue growth with that we are in a position to reaffirm our outlook for 2025 with a projected record EBITDA of 7.4 billion Reais.
Alex Malfitani: This superior operational performance is now paired with an optimized capital structure. Thanks for the comprehensive restructuring we've negotiated with our bondholders Oems and lessors I will now turn it over to Alex who will provide more details about the capital restructuring.
Alex Malfitani: Thanks, John.
Alex Malfitani: We have been communicating consistently our comprehensive restructuring focused on improving liquidity and cash generation, resulting in reduced debt and leverage over the next slides, we will present in detail the robust capital structure that resulted from this point.
Alex Malfitani: On slide 13, you can see the different liability components, we have eliminated from our balance sheet, resulting in almost $8 5 billion reais in that being extinguished and an additional $500 million of new capital coming into the company.
Alex Malfitani: The first step of the plan was the elimination of equity obligations, Ulta lessors and Oems totaling approximately $3 1 billion Reais in exchange for 96 million, new resort or preferred shares which are being issued right now in the first quarter for any greenfield.
Alex Malfitani: The $2 7 billion re I as you'll see on this slide represent the present value of these obligations.
Alex Malfitani: Payments also extinguished a significant part of the 2030 notes held by lessors and Oems with the remaining notes being exchanged for new unsecured notes due two years later in 2032 with an option to Brazil to pay interest in kind that is additional to the cash flow improvements of over $300 million across 2025, 26 and 27.
Alex Malfitani: Also negotiated with our commercial partners.
Alex Malfitani: Given our successful agreements with lessors and Oems. We then moved on to negotiating with our bondholders. We managed to reach an agreement to <unk> into preferred shares $785 million of the 2029 in 2013 notes by April 30, 35% of the notes value will be confer converted into preferred shares and 52.
Alex Malfitani: 5% will be converted into new exchangeable notes also with a pay in kind interest option. The remaining 12% Shelby converted upon completion of an equity offering raising at least $200 million by reaching these agreements we were able to access the full gross proceeds of the super priority notes of $500 million.
Alex Malfitani: These transactions significantly improved resource capital structure, and operational cash generation by eliminating not only the lessor and OEM equity issuance obligations, but also most of the 2030 live store in OEM nodes as well as a 23 920 30 bondholder much none of this would have been possible without the support of our partners and investors to whom I am <unk>.
Alex Malfitani: Thankful there support demonstrates how the aviation community and financial markets and believe in the overall business model.
Alex Malfitani: On slide 14 shows the resulting share count of all of these agreements on a fully diluted basis. Once all convertible instruments are exchanging the shares our total share count on equivalent preferred basis will be $2 3 billion shares the shares issued to lessors and bondholders represent 85.
Percent of that base compared to 30% before we started the restructuring as you all know before this restructuring we had to equity instruments. The convertible debenture issued in 2020, and the lessor and OEM equity instruments, which together were already represents a 30% dilution to our shareholder base.
Alex Malfitani: Since the dilution of these instruments is already included in the 85% the incremental dilution from the new agreement is 55%. This means that we exchanged 55% of the company for a total debt reduction of over $6 3 billion Reais.
Alex Malfitani: Can see that illustrated on slide 15, as we saw before we reduced our debt by over $6 3 billion reais, including the new Super priority notes, we issued in January if you do the simple math. This represents an implied valuation of over $2 billion.
John Rodgerson: We have strengthened our balance sheet and can now turn our attention to expanding our margins and generating positive free cash flow. This has been the focus of our strategic planning effort. We have just concluded and which John will now discuss Trump.
John: Thanks, Alex with a successful conclusion, we're now even more excited about our future as I mentioned before we have incorporated elevate into our long term strategic plan as you can see on slide 16 under a permanent safety mindset, we will focus on four major pillars to fly us all into even brighter skies cash generation and profitability operational integrity.
Crew member engagement and customer experience underpinned by new framework, our governance is already one of the most profitable airlines in the world and now with our financial restructure completed the best is ahead of us.
John: Finally on slide 17, you can see how we will continue to expand profitability into 2025 and beyond we still have significant fleet transformation upside to come with more next generation aircraft being delivered our business units continue to grow beyond our metal delivering high margins and unit revenue expansion, our new business management strategy.
John: Produce even lower unit cost and secure every additional revenue opportunity ahead of us with our exclusive network platform and unique fleet flexibility and the lowest cost in the region. We're very optimistic about the future with that David Allergist, Avi and I are available to answer your questions as I turn the call over to the operator.
Speaker Change: Ladies and gentlemen, thank you we will now begin the Q&A session remembering that if you have a question click on the Q&A icon at the bottom of your screen and write your name and company Meaner name as announced please activate your microphone and proceed for those who are listening to the conference on the phone breast nine to join the queue.
John: And sixth to accept D audio when requested.
Speaker Change: Let's then go to our first question.
Speaker Change: Our first question comes from Savi, It's Ted.
Speaker Change: Outside analysts Raymond James.
Speaker Change: And we're going to open your auto so that you can ask a question. Please proceed.
Speaker Change: Thank you good morning, and congratulations to the team on completing the current base of your capital restructuring.
Speaker Change: Maybe Alex could you provide an update on like the major cash flow components for 25 and 26 after what's been completed.
Speaker Change: Yeah, I think it's still consistent with what we provided as all day.
Speaker Change: If you look at the guidance for free cash flow that we that we showed.
Speaker Change: You can see the $7 4 billion EBITDA that we reaffirmed and then youll see the additional components of working capital grams.
Speaker Change: Capex and interest obviously you know those numbers were provided when the real was a little bit stronger than what it is today.
Speaker Change: I think around the budget time, we were at 550, a railroad up to six planning now worried about <unk> seven ish, probably if there is a little bit of headwind here, but just to remind everyone. I think we've given these numbers in the past, but basically when you see a 10% devaluation in the currency to get back to <unk>.
Speaker Change: On a free cash flow basis, we only need about a six 5% increase to first and obviously from 550 570 were only talking about a 3% devaluation of the real so they're very inquiries, we would need to come back to that free cash flow guidance would be only about 2% bread, which is very much.
Speaker Change: Feasible, especially give a demand environment that we are.
Speaker Change: So we are seeing today, so we've reaffirmed the sub one 4 billion.
EBITDA and the free cash flow is something that we're also still continue to to to pursue for for this year. We definitely I think that's what we all collectively are looking for clearly we have a very solid strategy. Our EBITDA generation is best in class.
Speaker Change: But we all want to convert as much of that cash flow generation.
Speaker Change: Much of that EBITDA generation into free cash flow going forward. It's obvious it's a strategic pillar that the whole company is focused on right and so every crew member at Xul is aware of it and our metrics are driven by at our bonuses are Arlington cash flow generation.
Speaker Change: And the net interest number that we talked about already reflects all of the <unk>.
Speaker Change: Components of this acquisition right.
Speaker Change: The debt reduction the Pik option pretzel that is all.
Speaker Change: <unk> already announced.
Speaker Change: Yes.
Speaker Change: That's helpful. Thank you and then maybe just on.
Just what are you expecting in terms of kind of the fleet delivery, the Sierra and retirements and how should we think about kind of domestic pressures international growth as you kind of progressed through the quarter inch.
Speaker Change: Yeah, Hey, Savi, yeah. So so you will see a higher growth first six months of the year.
Speaker Change: Mostly because of Port Alegre us what you will see kind of a peak in second quarter, and then it will come down <unk> and <unk>.
Speaker Change: In terms of deliveries this year are really it's only the EU.
Speaker Change: We have no Airbus deliveries. This year. So our focus is going to be on the IMU, obviously were pushing embraer and like every OEM in the world that has its challenges.
It is.
Speaker Change: Our constant monitoring and a constant engagement with them.
Speaker Change: And in terms of retirements, we do have a one retirements. This year, we are selling some aircraft and we have some ATR retirements as well and so we're managing that in terms of overall capacity I think we're going to be somewhere in that 10% to 12% range.
Speaker Change: Mostly driven by international.
Speaker Change: Domestic I would say is going to be high single digits in the 80% range and in international is going to be high.
Speaker Change: Hi, the reason internationally is much higher is because one of the largest OEM impacts we had last year.
Speaker Change: Was on the wide bodies are we had delays early in the year with aircrafts that we were expecting that.
Speaker Change: We didn't get.
Speaker Change: And then we had impact late in the year with Rolls Royce engine severely impacting our widebody fleet. So I would say a domestic sort of high single digits around 8%.
Speaker Change: Overall capacity growth of about 10 to 12.
Speaker Change: Very helpful. Thank you.
Speaker Change: Thank you. The next question comes from Victor Mr. Sasaki sell side analysts Bradesco Victor we will open your microphone. So that you can ask a question. Please proceed.
Victor Sasaki: I have two questions here.
Speaker Change: The first one.
Victor Sasaki: With regards to the financial restructuring.
Victor Sasaki: If I'm not mistaken there is a.
Speaker Change: Our plan to raise like 200 million raise off of equity.
Speaker Change: So my first question is this kind of comments about the status of this process.
Speaker Change: And the second one.
Speaker Change: As you called our shareholders' meeting.
Speaker Change: To approve the issuance of a insurance as part of the restructuring plan.
Speaker Change: No.
Speaker Change: Can we assume that confirm to shareholders real real subscribe the dish deal.
Speaker Change: Yeah I'll take the second one and then I'll give the first one to Alex Yeah. I think we're excited Emmy David's on the call and he is putting money into the company right now I think that is a bullish sign for the company overall.
Speaker Change: And we're also in a process of going to a single share class right and so that's something that as part of this restructuring process that will happen in about a year's time and so seeing the controlling shareholders put new capital in there doing that at a slight premium to where the stock is today I think that's also kind of a bullish sign that they believe in the company and and <unk>.
Speaker Change: <unk> planned to be around so I think that's a good thing I'll, let Alex kind of talk to kind of the final steps to restructure.
Alex Malfitani: Thanks, Victoria. So as says we described there are essentially.
Speaker Change: Three capital raises happening right as all part of the restructuring that we have already announced the first one which is happening right. Now is the acquisition of the lessor and OEM obligations.
Speaker Change: Which are going to generate about 96 million preferred shares at a price of 32 and some change right.
Then is also part of this restructuring as John mentioned, the voting shareholders a frozen shareholders are putting in more money into the company.
Speaker Change: That is also a capital increase that we have already announced which will be made into oh ends at the equivalent price of four Reais 54 preferred share which is about $600 per ordinary share and then there will be the acquisition of the 28 29, and 2030 nodes and then consistent with.
Speaker Change: Our bylaws and with Brazilian law all of these capital raises.
Speaker Change: Now or shareholders to participate so shareholders can buy together with the lessor has a 32 high as they can buy together with the voting shareholders at $4 50.
Speaker Change: <unk> per preferred share and then they will be able to exercise the middle same conditions as the bondholders and we have to do that until April 30th if you've seen that on our documentation right. All of this is public information that we have already announced so we have to see how much interest there will be from the market on all these capital increases.
Speaker Change: And then your view as you've also seen from all of our announcements. There is a remaining 12, 5% acquisition of the 23rd noninterest 30 notes that do depend on a capital raise of 200 million and so we will see the results were focused on implementing all of these capital increases in them.
Speaker Change: We will see where we are with regard to the remaining required.
Speaker Change: Thank you.
Remember <unk> you have a question click on the Q&A icon at the bottom interest screen and write your name and company. When your name is announced please activate your microphone and proceed.
Speaker Change: Brian The next question now comes from.
Speaker Change: <unk> Bank of America.
Speaker Change: We will open your microphone. So that you may ask your question. Please proceed.
Speaker Change: Yeah, Hi, guys.
Speaker Change: Good afternoon, Thanks, a lot for our dead time in and and also.
The question I have a couple actually one is regarding the number of shares that you just disclosed at 2.3 billion highs.
Speaker Change: Does it include the $200 million follow on offer.
Speaker Change: And also in this restructuring and there is a clause, saying they control their shareholders actually theres, a calls, saying that management team and marred neighbors. They may have 11% share in the future both.
Speaker Change: Elution.
Speaker Change: Ed.
Speaker Change: Can you disclose a little bit of the terms of those 11%.
Speaker Change: Shares and if it does it somehow included in India's calculation.
Speaker Change: That's the first one thank you.
Speaker Change: Okay.
Speaker Change: First question is not included right and so we did not include the the $200 million capital raise because that's.
Speaker Change: That can happen at any time in the future and so were given the outstanding shares as of now and AH. Yes. You are correct. There is a management incentive plan for management team. It's performance based and time based from a retention standpoint, and so it can result in up to 10.
Speaker Change: 10, 11% dilution as you suggested however, there are certain criteria to getting there and the compensation committee at Xul is defining what those terms are and and that is.
Speaker Change: Our new long term incentive plan that will be available for the company for the years to come so it extinguishing all old.
Speaker Change: Equity plans that we had and this is the new equity incentive plan to the management.
Speaker Change: Okay sounds great. Thank you very clear the second one is regarding a haircut that was made in in the 2013 notes.
Speaker Change: I'm not mistaken in about $244 million.
Speaker Change: Use you say in the in the release that this was done the next change for all of their commercial agreements.
Speaker Change: Could you please clarify what.
Speaker Change: Commercial agreements.
Speaker Change: Does it included.
Speaker Change: So there was a cash component and bad debt was paid with a significant discount to face value on the on those notes.
Speaker Change: And then there were other let's say commercial items in dispute for example.
Speaker Change: <unk> maintenance or Burger era maintenance reserve reimbursements or aircraft deliveries, it's mainly I think in general.
You know selecting our lessors and continuing with our commercial relationship with Lyft source under market conditions, but we have a lot of growth into our future.
Speaker Change: And so.
Speaker Change: Some of the concessions are some of the commercial agreements that we have.
Speaker Change: Negotiated essentially locks in some future demand that has all has for future aircraft deliveries with a specific lessors or it saddles. Some disputes that we had in the past, but everything done you know as you probably know we had a F D. I inside the company here kind of checking all of the agreements that.
Speaker Change: We have negotiated validating it to make sure that they qualify towards the 100 million dollar annual cash flow improvement that we had as a mission right from our bondholders to be able to access the full $500 million and the <unk> and all of that has been.
Speaker Change: Certify them and checks.
Speaker Change: Hey, Thanks, very much Alex have a great one.
Speaker Change: Yes.
Speaker Change: Thank you. The next the next question now comes from Savi <unk> sell side down with Raymond James.
Speaker Change: Savi, we're going to open your microphone. So that you may ask your question. Please proceed.
Speaker Change: Hey, Thanks for the follow up just as of yet.
I was wondering if you could provide a little bit more color on the current demand environment I know, there's a lot of noise I think and.
Speaker Change: And the Carnival timing is not great for one key area of Edr for how easy comps coming up but just curious what you're seeing both on the leisure side in that business.
Speaker Change: Outside here.
Speaker Change: Yeah, Hey, Savi, so actually we've been positively surprised with what we've seen January and especially February.
Speaker Change: You are right normally with Carnival kind of first week of March you would expect kind of a lame duck February if you will and then corporate demand coming back or after carnival, but we've been actually a reasonably positively surprised in February with the close in our revenue bills.
Speaker Change: Actually been better than last year, which is a good sign.
Speaker Change: We see a disciplined.
Speaker Change: Overall, our discount environment as well so looking at corporate discounts looking at travel agency discounts Ah, we see that's a pretty disciplined which is a very good sign are talking to our corporate customers. We see no signs of corporate demand slowdown or or anyone trying to kind of an approach.
Back or we see a lot of groups demand, we see a lot of demand offer in Paris, and trainings and conventions.
Speaker Change: Which has been quite good as well so and for US honestly in all our operation has been.
Speaker Change: Much more stable.
Speaker Change: Then it was at the end of last year, especially on international side.
Speaker Change: And so for us just having less disruptions and less volatility has been a really good positive sign as well so.
Speaker Change: Overall, I think I've been.
Speaker Change: Positively surprised with what I've seen so far January February next week as carnival since it's going to be dead, but we do expect strong corporate rebound March 10th and onwards, So I would say overall discipline environment overall corporate discounts are disciplined as well and our operation has been stable, which has been a very good sign also.
Speaker Change: That's helpful. Thanks Ali if I might just are you seeing any differences between domestic versus international.
Speaker Change: International continues to be good.
Speaker Change: And it was interesting because even when the currency kind of went to 630, a we didnt really see a slowdown in international either and now it's now it's at $5 70 and.
Speaker Change: It looks good we've actually had to increase a little bit of capacity for the carnival timeframe, because you were a little bit to Stu to both actually but it looks stable to me are the normal seasonality.
Speaker Change: In our spring timeframe very strong in the U S Europe, a little bit weaker, but as we look ahead to the northern summer, we see Europe Europe coming back strong.
Speaker Change: And the U S kind of holding its own so.
Speaker Change: We announced a receipt of Porto that's already selling and.
Speaker Change: And we will have a couple of more announcements coming down the Pike next couple of weeks as well so.
Speaker Change: We also announced a cameco Argentina for the peak winter season here.
Speaker Change: We're excited about Abad Mendoza and barrel launch so overall, a pretty pretty stable international strong I think are kind of the commentary that I'm hearing in all around.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question comes from Gilead remains a sell side analyst J P. Morgan <unk> open your microphone. So you may ask your question. Please go ahead hey.
Speaker Change: Hey, Thank all Hey, John Alex Harvey sang.
Speaker Change: Thanks for taking my question. So regarding the the proposal of the many would go can you share some expectations regarding the cat analysis of Ford a proposed M&A in terms of timing and potential remedies.
Speaker Change: And a second one on the synergies.
Speaker Change: I mean.
Speaker Change: What is the timing for your expectation to capture synergies are in terms of revenues and in terms of costs. Thanks again.
Speaker Change: So obviously, we cannot comment too much public here here, but what I will tell you is that we're really confident in the technical analysis and what we propose right. So let me just give you the quick highlights of what we see as the main benefits to the consumer and to Brazil.
Speaker Change: First is we have very low overlap between <unk> network and goes network right and we think that the low overlap is a key driver for future growth. We look at the Brazilian market overall has not grown significantly.
Speaker Change: For the last several years, we want to get the 200 cities served in Brazil, and we think we can do that when we have these networks that are not.
Speaker Change: Got it.
Speaker Change: Very very complementary to connect together right. So we really believe that on the technical case here that it is a case of growth of adding service.
Speaker Change: We believe that many more cities in Brazil for example, should and will have service to international destinations right and so we think that that's a key element of growth as well and also we think that we can build an airline that is going to be able to compete globally. When it comes to feed.
Speaker Change: When it comes to engines when it comes to OEM as it comes to access to capital and those are going to be really really critical to keep the market growing. So all of this we think is our technical case, we see no significant consumer benefits coming from this and that's the case that we're putting forward.
Speaker Change: Thanks Savi.
Speaker Change: Thank you. The next question now comes from Michael Lindbergh.
Michael Lindbergh: Hello, Simon Allen's Deutsche Bank.
Speaker Change: Michael We will open your Argo Citi you May ask your question.
Mike We can't hear you.
Speaker Change: Yes.
Speaker Change: Mike.
Speaker Change: Sure.
Speaker Change: Yeah.
Speaker Change: But just kind of always happens to Mike.
Speaker Change: Yes.
Michael Please press six so that you can mutiara audio and ask your question.
Speaker Change: Yeah, we can hear Mike.
Speaker Change: We'll try to get back to him. If there are any other questions. We can move on.
Speaker Change: Otherwise.
Speaker Change: Okay. So this closes our Q&A session for today I'll turn it over now to <unk>.
Speaker Change: We now for closing remarks.
Speaker Change: Wed like to thank everybody, obviously, a lot of information our IR team, Alex RB myself will be available to talk to you.
Speaker Change: About xul going forward a lot of great things happening lowest cost highest EBITDA margins I think in close to the world right now and so we're very very excited about the future we fixed the balance sheet now now we're off to the races and we appreciate the support of all of our stakeholders and we're going to continue to grow a very profitable business. Thanks, everybody.
Speaker Change: Thank you. This concludes as those August conference call for today. Thank you very much for your participation and have a good day.