Gol Linhas Aéreas Inteligentes S.A. (NYSE:GOL) Q1 2023 Earnings Call Transcript

Gol Linhas Aéreas Inteligentes S.A. (NYSE:GOL) Q1 2023 Earnings Call Transcript April 26, 2023

Gol Linhas Aéreas Inteligentes S.A. beats earnings expectations. Reported EPS is $0.57, expectations were $0.01.

Operator: Good morning and welcome to the GOL’s Airlines First Quarter 2023 Results Conference Call. This morning, the company made its results available. After GOL’s presentation, We’ll start the Q&A session for analysts and investors, when further instructions will be provided. This event is also being broadcast in live via Azulm and may be accessed through the company’s website at www.voegol.com.br/ir. We’ll like to inform you that our participants will only be listening to the conference during the company’s presentation, and then participants will also be able to send their questions on the platform that will be answered by the management, by the management during this conference call or by GOL’s Investor Relations’ team after the end of the conference call.

As now participants are able to submit their questions through the Azulm platform, you just need to click on the Q&A button located at the bottom of your screen and then type your question before proceeding. We would like to emphasize that forward-looking statements are based on the beliefs and assumptions of the company management, management and on information currently available to GOL’s. They involve risks and uncertainties given that they are related to future events and therefore depends on circumstances that may or may not occur. Investors and analysts should consider that events related to macroeconomic conditions, industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements.

At that time, I’ll hand the floor over to Mr. Celso Ferrer. Please, Mr. Ferrer, you may proceed.

Celso Ferrer: Good morning everyone. We appreciate you joining us today. This morning we post our Q1, 2022 — 2023 earnings release and a slide presentation on GOL’s IR websites. So we will make some brief comments and should straight through to your questions. As you saw our numbers, 2023 is off to a strong start for go, with a record net operating revenue, recurring EBITDA and yields. Delivering safe and reliable air travel remains our top priorities. And no airline does this better than GOL. I would like to thank you our Team of Eagles for all they do for our customers each and every day. 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 57,000 departures, an increase of 17%., comparing to first quarter last year. We now have a flight every four minutes taking up or landing at Congonhas, one of the most important Brazilian airports. We continue to improve our operational efficiency. Supply measure in as case grew by 11% over first quarter 2022. Simultaneously, with an improvement in load factor by 2.3 percentage points to 83.3%. The utilization of our operational fleet increased by 6% and reached 11.7 hours per day, which is consistently to the — with the utilization we used to have pre pandemic. Around 40% of this quarter areas case were produced by Boeing 737-MAX Aircraft, which provide improved attentions in fuel consumption per hour operated, GOL, continues to be the airline with the lowest units cost in the region, even with a spare capacity to 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 non-operating aircraft. We remain committed to improving our operational efficiency, leveraged by increasing aircraft utilization. Combine it 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 increase in 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 70,000 additional seats during the Carnival holiday this year, which were mainly allocated to Salvador regional portal. At the peak of the holiday, we reached 790 departures per day, about 10% of both the average of departures in 2019 in the international market.

We continue to resume our capacity, registering a growth of around 250%, comparing to first quarter ’22. Focus on the increase in our present in markets like Argentina and in United States. This quarter, we also announced the Codeshare agreement with TAAG Airlines of Angola, which adds 13 new international destinations for our customers. Our recurrent unit costs, excluding fuel, and the operation of our cargo fleet, reached $3.90 of the dollar, 7.4% higher than the previous quarter, where our offer in as case was slightly higher due to the market seasonality. We reached record yields and RASK. They had growth of 32% and 36% respectively compared to first quarter last year, even higher than 2019, our unit revenue RASK grew by 38%, comparing to first quarter 2022.

Moving to Smiles, our loyalty program, we had an increase in our customer base by 8.4% compared to first quarter 2022, and our record sales of 1.2 billion eyes. We recently launched Smiles Viagens a new travel agents, which will enable customers to customize tourism pack packages easily and effectively through a single platform. The new service enables customers to create travel and leisure activity experience and provide the opportunity to purchase completely packaged air travel, hotels and tools with the added benefit of using GOL’s strong network, which provides use of all the main airports in Brazil. Our expectations in that Smiles Viagens will be one of the top five largest online travel agents in Brazil within the next five years. As for our cargo units, in April GOL’s logs — GOL’s logs fourth quarter — fourth cargo aircraft enter into such leveraging the partnership between GOL and which foresees an initial fleet of six cargo aircraft in operation and an expansion option up to 12 aircraft in the coming months and next year.

Therefore, our ancillary revenues increase 84% over the first quarter last year, compared to first quarter ’19 it’s miles practically doubled its billing and GOL log expects to reach R$1 billion this year compared to approximately R$530 million last year. In the first quarter GOL had record net revenue, which means 53% and 4% above of first quarter 2022 and fourth quarter, 2022 respectively. During this quarter, we also return 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 goes controlling shareholder in the amount of up to $1.4 billion. This operation was transformational, reducing liabilities, extending that to matures and 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 a foundation of serves and operation reliability and delivering financial results that create significant long-term value for our stakeholders. I now turn the floor over to Mario, who will present some other highlights, please, Mario?

Mario Liao: Thanks also. Good morning everyone. Revenue for the quarter was the record. As mentioned by Celso, we continue our capacity recovery movement and together with our focus on maintaining profitability, we once again deliver a strong operating result. Our yields and RASK reach also record values and increase by 32% and 38% respectably, reaching achieve R$48.5 and R$43.80. We achieved growth in the average ticket fair, supported by strong demand from leisure passengers. Our sales in the quarter reached R$5.4 billion, 33% higher than registered in the first quarter of last year. Even considering a seasonal reductions in sales during the carnival week, which did not occur in 2022. Our recurring EBIT and EBITDA margins reached 17.1% and 25.2% respectively.

Our recurring EBIT totaled R$1.2 billion in the first quarter of 2023. As we plan to maintain this new level of yields and expect to have a further dilution of unit cost together with the resumption of supply, we maintain our financial projections for 2023. 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 a factor in increasing our recruited unit cost on the same basis by around 20%. As for the cash-flow in the quarter, we had R$5 billion of operating inflows. This generating an operational cash-flow of R$1 billion, including interest expenses on that, despite the impact in the fuel price increase. As mentioned by Celso, with the placement of the center secure nodes due in 2028 with our control shareholder GOL retired approximately R$5.6 billion, in debt and open a new source of liquidity of approximately $450 million.

With this transaction, go reduce its leverage by 1.6 times to 7.9 times in the methodology that use seven time leases, and that is six times under IFRS 16. Using performer numbers in our IFRS 16 and including the center notes 2028, GOL’s leverage was 4.6 times, and the total liquidity increased by 36% to R$4.4 billion. We will remain very focused on balancing that, reducing opportunities and investments in the business while achieving the proper levels of liquidity. Leverage it by the consistent recovery in our operating resorts. The company is successful Liability management during the pandemic position us into leading position with the lowest short term debt ratios among our competitors. Now turn the floor back to Celso.

Celso Ferrer: Thank you, Mario. When we continue to be optimistic about demand, even now for the second quarter, seasonally the weakest of the year, we re-affirm our commitment to initiatives that increase productivity and maintain profitability. As the industry leaders, we’ve proven strategy and as strongest execution track records go is well positioned to build on its momentum in 2023. We are confident in our ability to deliver significant improvement and earnings and pre 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 every day. I’m incredibly proud for their fundamental role in rebuilding the best performing airline in the region. Operator, you may initiate the Q&A side.

Q&A Session

Operator: Thank you. . Our first question comes from Michael Linenberg from Deutsche Bank. Please. Mr. Michael, your microphone’s open.

Michael Linenberg: Okay. Can you guys hear me? Hey. Hey, Celso, Mario. I guess I’m, I have two questions. One congrats on a good March quarter, 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 to expect over the coming, I guess it’s really over the next 12 months or so on the, on the, on the timing on that. Thank you. And then I have another question.

Mario Liao: Hi, Mike. This is Mario. We, we are pretty focused on continue to then leverage the company and reach the level five times leverage. As we mentioned, that if we exclude the center node 2028 on the calculation with the current b that we’re expecting leverage going to be go going down to five times. So we, you, you remember that on most of the times that we presented as a, a future plan in terms of labor, in order to get back to more normalize leverage that, that’s going to be our main focus. We, we don’t specify any timing to do that, that Abra has the the time in order to decide, in terms to, to make the second step in terms of these exchange material notes over the course of the, the maturity of the 2028. that decision in terms of retro often we expect to, to do this very, very soon, but we don’t have a specific timing, but definitely we’re going to be focused to, to do this.

Michael Linenberg: Okay. That makes sense. That it’s, that’s a, it’s an opera decision but it sounds like it’s going to happen, sometime in the imminent future. My second question is just in the release, you highlighted that there were some adjustments that were made to the network, and you specifically called out Congonhas Brazilia and, and Rio, and I guess Celso, this is sort of like a, a two-part question with Azul adding a lot of new service in Congonhas, have you seen like what has been the competitive, any sort of noticeable competitive changes in that market? And is this network restructuring that you refer to in the piece? Maybe just, rebalancing your aircraft between those three airports? Thanks. Thanks for taking my question.

Celso Ferrer: Thank you, Michael. Good morning. Good morning. So first thing, the, the, what we call the restructuring is not, I think restructuring is a strong word. I mean, what, what we are doing is as we grow the case, and as we go through the seasonal movement in Brazil, which is normal for the year, we, we exchange, we invest in one airport more than the other, and, and then we go for Congonhas, we are operating our full capacity there, which means one departure are landing every four minutes. So we have a very strong network in place right there, a Azul entering this market. Actually a Azul launched three new markets, which Brazilia portal and Chiba. And what we are seeing so far is that Azul came more on a, on a cautiously approach, rational approach to those markets.

And our main concern right now regarding Congonhas is the operational capability of the air of the airport itself. Because the, the new capacity came without significant improvements on runways, on taxiways. So we may have a new x-ray machine, but we don’t have enough buses, we don’t have enough taxiway. So the airport is crowd at this point. Okay. So we are our main concern is, is with the level of service to, 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 Congonhas. And that’s what we want to improve. And the big concern is for, for the high season, how, how can we as a resilient sector of aviation can dealing with as a very busy airports, not only Congonhas, but also Santos Dumont at go, what we did is we are isolating Congonhas and Santos Dumont within a system where we can operate those two airports in a very high frequent mode.

All the shuttles from Congonhas and also launching new shuttles, Santos Dumont 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 regularity. And that’s what we are doing on, on in Congonhas and Santos Dumont.

Operator: Our next question comes from Daniel Mckenzie from Seaport Global. Please, Mr. Daniel, your microphone, so is open.

Daniel Mckenzie: Oh, hey, good morning guys. Can you hear me okay? Morning. Okay. Yeah. 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’s just 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 fairs drop, there’s a d 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, as is the, as we think about the roadmap for this year, is it just simply one more challenging quarter before we exit on a, on a steadier profit footing? And, and is that , is that a fair characterization, I guess?

Celso Ferrer: Hi there. Good morning. It’s, Celso. Thank you for joining us and thank you for your question. And yeah, first quarter was better than expect on, on the, on the revenue side. But as always, we, we have been adjusting capacity. If you look at how, how was our networking January and then in February we cut almost 30% of the capacity that we flew in January to February. So we are managing the capacity to make sure that we, 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 aircraft today. I mean, we have different segments and one more inelastic, which is the corporate. We, again, corporate’s not there yet.

We are proving quarter by quarter, but it’s always behind a little bit of our expectations. But the good news is that on the leisure side, on the VFR side, we have been able to stimulate the traffic and fly with 83% load factors. So we have different pricing strategies for the same flight. So we have fair bases, which is for the, the, the segments more in the, in elastic segments, in the short a piece, whereas we are still stimulating demand, because I agree with you that is, there is there’s a, I mean a a lot of people who want to fly and the, the growth we expect for the, the high season months and 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, on the, on the field prices.

I mean, we had a very bad experience last year when the field spiked and we had like, our flights already sold. So we are being very casually to make sure that we have the right booking curve building process for the every, every flight. So we expect to keep the yields at, at this level. I mean, so we don’t, we don’t expect a, a big change in the, in, in the macro yield level, but we expect to, during the seasonal months, we expect to sometimes stimulate more the, let’s say the low entry level of the curve, various keep the fairs on the short aps at a very high health level, and we are seeing the competitors also on, on a more rational approach.

Daniel Mckenzie: Yeah, that’s, that’s perfect. Thanks. another question here. It looks like CapEx has largely been financed, and so the question is, is, can cash build from here or is the priority to keep cash essentially flat and, instead deleverage as, as fast as you can?

Richard Lark: Hi, Dan. You, you are right. Our priority is to keep you, you don’t expect that the cash is going to be changing significantly over the course of the year. And every surplus of cash is going to be reserved in order to reduce the backlog of maintenance that, has been on one of our main priorities since, the end of pandemic. So we are now delivering the, the route, but remember there is still carrying some idleness on the fleet. So when we can address that idleness and put back all the aircraft that is no operational right now under operation, and we have this capacity and deployment over the second half of the year that as also mentioned, most of the profitability has been concentrated in, in by building in the second half of the year. And depends on those investments that’s committee required to put back those aircraft that’s going to be the, the main priority. So the cash going to be reserved for investments and the leverage of the company.

Operator: Our next question come from Stephen Trent from Citi, Mr. Stefan, your microphone’s open.

Stephen Trent: Yes good morning guys, and, and thanks very much for taking my question. I apologize if you already mentioned this as I ended up joining the call just a little bit late. But I, I was curious when we think about the Smiles program and the revenue generating today what’s sort of the view on a long-term basis regarding how big this program could become and is there potential for smiles to actually collaborate, for example, with your partners at American Airlines? Thank you.

Celso Ferrer: Hi, Stephen. Good morning. Celso speaking. And very good question. I mean, the, the numbers of smiles are really, really growing. Like I said, it doubled the size since 2019. And I mean, we, we have already started an international expansion of the program, so we now have smiles and Argentina, we, we have a management there, we have a company there, and we like that model. We will probably continue on, on the region expanding the, the program in Brazil. We are expanding the services. We are launching new products every day and make the program even more attractive. But I think the main big step forward will be with Abra, where we, we have been working now really, really close to the, to the A Bianca team and also with the Abra management to make sure that we address, all the synergies possible.

And the synergies on the Abra 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 have pricing power. That’s not the strategy there, the strategies to create value. So in that specific question, we are talking about ver the two of top two frequent flyer programs, life Miles and Miles. So with this group together now, we think we can grow a lot the size of miles within the region and the customer basis.

Stephen Trent: Great, great color. Really appreciate that. And, and if I could just kind of wiggle more wiggle one, one more in just very quickly, the, the US airlines, there’s a lot of talk up here about how de demand patterns have changed and how ticket purchase patterns have changed and less close in bookings than there it used to be. I’m wondering from a high level if you could provide a little color on, what you’re seeing in your markets. Thank you.

Celso Ferrer: Yeah. good question. And I’m also following what is happening in us, and my impression is that we, we are, I mean, some steps behind what is happening in us, I think you are the, the corporate market in US recover faster than ours. And now they are starting to see this, this different pattern, how they book it, et cetera. While in our case, we are still not there, we are on, on our 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 at 50% of they used to be. So, and we are seeing slightly growth in the corporate quarter by quarter. So we don’t expect for the second quarter right now, or even for the third quarter right now, a similar pattern that the domestic US are seeing because we are still recovering. So I think that we, we still have this upside on the corporate to be incorporated into, into our bookings.

Operator: Our next question comes from Matt Roberts from Raymond James, please, Mr. Matt, your microphone’s open.

Matt Roberts: Hey, good morning. Thank you all very much for the time. My first question is on your capacity planning and how you’re thinking about that. I mean, for Q2 I think scheduled that I’m looking at 17%. Is that accurate? And then how do you foresee that progressing throughout the rest of the year?

Celso Ferrer: Sorry, Matt, can you repeat your question? I’m not a basically just on, on capacity planning.

Matt Roberts: Yeah, how you’re looking, each quarter to get, to get to that full year target. And 2Q I’m looking at, scheduled data’s at 17% year over year, so is that accurate? And then how you expect that to trend throughout the rest of the year?

Celso Ferrer: Oh, okay. No, I got it. And, and yeah, we, we are, I mean, we, we are confident with the guidance we, we put in place and besides the challenges we may face with 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 to, set the, the same number of aircraft flying independently if it’s a max or , for the, for the second half of the year. And the growth that we are talking here is basically on the high peak seasons that we have here is July, and especially the, the fourth quarter of this year where we normally fly much more than the low season. As you, as you know I mean, we have managing capacity in a more aggressive way than the competition month by month.

And so the, the growth will be much more concentrated in those in, in those high, high peak months. And also exploring the opportunities in international markets as we are now part of Abra and the synergies will be through network expansions.

Matt Roberts: Very helpful. Thank you for the additional color there. And then quickly on the status of the ticket tax suspension, do you expect that to get extended beyond May or, or how are we thinking about that? Thanks again for the time.

Celso Ferrer: Yeah, Matt Yeah, we expect to be extended basically because yesterday we had an approval on our — in our Congress. So there’s still progress approval to be made by the Senate next week. But we are confident that this, this tax exemption will, will stay for until 2026 at least. So that’s, that, that’s an upside regarding our projections now because we, we only, we are, we, we had of course, the benefit on the first quarter, but we, but we were not projecting for the entire year yet. Let me take opportunity to we, we received some questions on the, the Q&A platform. So let me put some of the, the questions I here on the webcast. So there’s a first question that is asking to provide more call about the increase in ca axio the main driver compared to the four quarter and how we should expect to, to be in the second quarter of this year.

So basically there are many three drivers two drivers that impacted the increase on the, on the cost. So first is related to maintenance. You can see there’s increase around R$80 million of maintenance compared to to last quarter. That was basically related to the anticipated redelivery of some aircraft. We were expecting to return for aircraft this year, where basically three aircraft has been concentrated in the first quarter of this year. Two, two aircraft has basically postponed from the four quarter. So you, you probably see four quarter in terms of the maintenance line being much lower than was the historical trend for, 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 has an impact of annual increase in terms of inflation in Brazil.

And also we, in this quarter, even though we carry the same number of in terms of departures was a little bit higher, so we carry more passengers and also we make some adjustments in, in our stage length. So we reduce staging length in order to deploy more directly roots having more higher departures than what we have basically in the fourth quarter that have a more con connection roads. So, so that’s impacted passenger service in our port fees as well. We expect that second quarter, we, we, the CASK is going to be Nero to the first quarter. Basically we have the ality within the year. So in our guidance, we expect that the CASK XQ in US dollars to reach a level between 3.5 to 2.6. So as long as we start to continue deployed, the capacity has been preserved during the pandemic.

We still had the opportunity to further dilute our costs and have CASK in the second semester of this year lower than the current quarter. So we, everything is on track. So nothing was deviating in terms of what we expect in the projections as most related to the, the season. And the second question that basically most of the, we, we received here in, in the, in the cleaning session was how much of the 450 million was entering during the quarter and when expect to obtain approximately 300 million of not received. So we have a one around $140 million that has been recognized this quarter. $40 million has been basically proceeds costs for the mission and remaining was basically what we already land the, this quarter. There’s no specific timing for the remaining $300 million.

Most of those proceeds is going to be invested in, in the company over the course of next quarter is according to the necessity in terms of the vast necessity of the com company. So there’s no any restrictions, but there’s no specific timing on that. While we, the, the operator continued to, to look on prompting the, the questions, there was one additional question as well. There was how advanced the ticket sales remain very high at the 3.1 billion. So how the booking curve is now behaving between the second quarter ’23 compared to se second quarter 2019 and how we expect this booking curve to evolve. So as we have been consistently delivering in all quarters our load factors has been achieving levels beyond 80%. So this first quarter we have a very strong load factor at 83%.

We expect that these 80% load factors continue to be consistently delivered over the next quarter. So into yield that is higher compared to 2019. So the booking curve right now for second quarter has been in the same pace whether we have been controlling the capacity for the second quarter and we expect that by matching the high season, the second semester, the year we expect that capacity going to start to ramp up over the course of the second half of the year in order to reach almost the stable or flat-ish level capacity compared to 2019 in the second semester of the year. So I see more people in the queue of the clinic session, so please operate. Operator you can move, move on.

Operator: Our next question comes from Pablo Monsivais from Barclays. Mr. Pablo, your microphone’s open.

Pablo Monsivais: Hi thanks for taking my question. I just wanted to have a little bit more visibility on the working capital evolution. Kind of a follow up on, on on previous call on previous questions. Sorry about the, the booking curve and the air, air traffic liabilities. What should we expect for working capital to, to behave for the next three quarters? Thank you.

Celso Ferrer: Pablo, thanks for the question. We expect a more narrow working capital going forward. So receivables will going to be continuing to grow according to the increase in terms of the revenue. So the revenue going to be increasing as a combination of the capacity, a additional capacity. There’s going to be stronger for the second half of the year. They’re basically not additional capacity, but the capacity has been preserved since the beginning of pandemic. So we are matching that capacity deployment according to the expected more stronger demand. That is usually in the high season of second quarter, second semester. And stable suppliers payables. So we going to expect to continue to maintain payment terms with mo most of the stakeholders.

So we expect to be neutral in terms of working capital where most of the cash generation that was going to be embedded to the beach, that is going to be focused on the investments and the CapEx that was needed in order to go operate the, the company with the, the, the capacity expected for, for the second semester of the year.

Mario Liao: So there’s one question that we already answer in the, in the Portuguese webcast, but they’re going to be repeat here and may maybe it’s also, you can emphasize that what is the impact of the ticket tax as exemption for the first quarter and what you expect the benefit for the year. And that’s also one of the questions that is, are the yields coming under any pressure with lower fuels or is the industry holding price? So helps?

Celso Ferrer: Okay, thank you, Mario, for the question. So the tax exemption was already in place for the first quarter of the year, which generates around R$130 million in, in net revenue is benefit and is, if we had the approval we expect to be an, an exemption of 500 million year round. So 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. So why we still need to, to wait for the, the, the approvals. So in your second questions, if there is any pressure on yields because of the fuel prices I, my my view is that the fuel prices are still very high. So there is a volatility. February, for example we had 10 13% increase in the fuel pricing in Brazil.

Now we have 10% decrease. But if you le, if you look at the, the level of the, what we are paying at the field pump is still quite high. So I don’t see room for any, any yield reduction because of that. I think any, any yield pressure will come from over capacity, and that’s why we are leading the, those rational 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, we keep the, the unit revenues at the right momentum that the industry needs at this point.

Mario Liao: So there’s two remaining questions mostly whether it’s your cash flow. So first is how we are guiding the cash flow for this year and how has been compared to 1019. We, back in 2019 if looked in terms of the expectations that beach that was delivering back in 2018, that was around R$3.9 billion close to 30% a be the that was the number a margin that generated free cash flow. We are expecting now 24% that related to the expected rental payments the net CapEx of R$600 million, and also the financial expenses of 2.1, that was going to be delivering an, a new neutral free cash flow this year. So that, that is basically the ultra expect to continue for the increase along the, the next coming years. And as we mentioned that expected is going to be important to really put the company in terms of leverage below five times considering the, the current adapt structure that we, we have in our balance sheet right now, and the, there’s one cash that is how much is the current receivable due it to Lasters in the first quarter?

That number is has been neutral compared to the fourth quarter. As you saw, we back in December, we issued 196 million, around $200 million of senior amortizing notes. That was basically a refinance of the commercial that, that we have with lasters that has been switched to a private placement instrument that support the company in order to extend by almost three years, three to four years most of the materials that is going to be falling in terms of repayments of the furs in a much shorter tender. And most recently we also disclose a re-tap so additional notes of 26 million of additional def furs that has been included into this structure. So besides that number what you, you’ve see in our balance sheet that is around $1 million is the number, that is the, the volume of the leases is still not included in this transaction and has been negotiated between the company and, and the losers.

So those are the questions that I received here in the clinic session. So please update it getting back to you, if not have any additional questions so you 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.

Celso Ferrer: 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 partner that we, we, we just release at this point. I mean, step by step, we are bringing back the whole the GOL 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.