Gol Linhas Aereas Inteligentes SA (GOL) 2016 Q4 法說會逐字稿

Welcome to the Gol Airlines Fourth Quarter 2016 Results Conference Call. Today's presentation will be made by Paulo Kakinoff, Gol's President and CEO; and Richard Lark, Gol's EVP and CFO. This call is being recorded. (Operator Instructions)

This event is also being broadcast live via webcast and may be accessed through Gol website at www.voeGol.com.br/ir and Engage-X platform, where the presentation is also available. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded.

Those following the presentation via the webcast may post their questions on the platform and their questions will either be answered by the management during this call or by the Gol Investor Relations team after the conference has finished.

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of Gol's management and on information currently available to the Company. They involve risks and uncertainties because they relate to future events and, therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry and other factors could also cause the results to differ materially from those expressed in such forward-looking statements.

At this time, I will hand your call over to Paulo Kakinoff. Sir, please go ahead.

Good afternoon, ladies and gentlemen. Welcome to the Gol Airlines Fourth Quarter 2016 Results Conference Call. I'm Paulo Kakinoff, the Chief Executive of Gol, and I'm joined with by Richard Lark, our Chief Financial Officer. Both the press release and live presentation are on the Gol website, and I would urge everyone to make sure you have had a look at that. Richard will us through the quarterly results in a few minutes, and I will give you a couple of brief summary remarks. In 2016, Gol achieved the number one position as the largest airline in Brazil, as measured by market share of RPKs and passengers transportation. We are Brazil's favorite airline, having carried almost 400 million passengers since our first flight in 2001. In 2016, over 32 million passengers chose to fly Gol, and our forward bookings and traffic are rising. Gol is recognized by customers for having the most attractive flight network in Brazil, the leadership in punctuality and the best customer experience and service. Our fleet of 120 Boeing 737 aircraft and an order for another 120 Boeing 737 MAX will allow us to maintain the lowest operating cost of any airline in Brazil. Gol has a team of more than 15,000 skilled aviation professionals, delivering the region's best on-time performance and an industry-leading 16-year flight safety record.

Please move to Slide #3. This morning, you have seen we released the fourth quarter numbers showing that we recorded a net loss of BRL30 million for the quarter. We achieved an operating margin of 7.4% in the quarter and 7.1% for the full year 2016. Our pretax income margin was 1.2% in the quarter. Our EPS was a loss of BRL0.09 in the quarter or $0.003 per ADS. Fuel costs fell 17% per ASK in the Q4. Non-fuel unit costs, excluding nonrecurring expenses, were down 7% as we grew load factors and benefited from dollar weakness on some parts of our cost base. Our low cost base continues to be the key differentiator with all other lines. Not only had we the lower operating costs, but as this gap widens, we will continue to deliver an even better value proposition to customers to ensure we grow safely and profitably.

On-time performance in the quarter was solid at 94% and in 2016, Gol was recognized as the most punctual airline in Brazil by the OAG, Official Airline Guide. Our load factors were at 78% in the quarter, up 2.2 points over 4Q 2015. We returned five aircraft in the quarter and reduced our ASK capacity by 6% year-over-year and reduced our number of flights by 20% year-over-year, allowing us to match our supply with Brazilian economic conditions. The balance sheet continues to improve. In December, we moved to a net debt position of BRL 5 billion. Gol's leverage pro forma for aircraft returns (inaudible) in the first quarter of this year is now close to four times.

Please switch to page 4. In the quarter, average fares increased 19%, while traffic decreased 15% to BRL8.1 million. I also highlight the 6.6% increase in our units revenue quarter-over-quarter. The RASK was almost BRL0.23. During the fourth quarter 2016, we returned five aircraft as we continued to match our capacity, route network and basis to adverse Brazilian economic conditions at a time when some other airlines are growing capacity despite the Brazilian recession. Accordingly, our price environment has improved, but we still have economic and political uncertainty.

Slide number 5 please. Here, you'll see that the reduction in our fleet permitted a 6% cut in ASKs and 20% reduction in the number of flights. ASKs increased 2.6% in the fourth quarter 2016 compared to the fourth quarter of same year.

And on page number 6, we demonstrate how the new network launched in May 2016 was responsible for the major portion of our quarter operating margin increase. Our new network has refocused on the higher yielding portion. This flexibility permits us to happily take advantage of an adjusted to market opportunities in accordance with seasonality.

Increasing our supply in certain high season months is part of our plan. However, challenging the recent environment, I would like to emphasize that it is due to this smart work of our dedicated aviation professionals that Gol was able to minimize the effects of the crisis on our operations.

Our single fleet-type hedge operations and fast turnaround times helped us to partially mitigate the adverse conditions. The results of our operational excellence is reflected in our monthly punctuality data.

Moving to slide number 7. We have maintained load factors near 80%. In the (inaudible), we saw load factors and yields improve, which has helped us exceed our guidance for the fourth quarter.

Moving to page number 8, as you can see, even with a 15 reduction in the number of aircraft in the fleet, net revenues increased 0.5% quarter-over-quarter and reached Richard BRL2.7 billion. Q4 revenues included 11% over third quarter 2016. Among the factors that drove fare higher in the quarter were a 19% increase in average fare, a 16% higher stage length and four higher yields combined with 7% higher RASK.

On slide 9, you can see a key reason for our RASK improvement is our significant investment in the customers' experience, which now includes onboard Wi-Fi that we launched in the Q4. By the end of this year, we're going to achieve 78 aircraft equipped with such future.

Moving to page number 10, looking at the first quarter of 2017, while we expect the industry environment to remain difficult in the short-term, Gol is seeing strong underlying demand for our service as daily ticket sales have increased around 30% in January as compared to December figures, and we are experiencing load factors above 80%. Aircraft utilization is increasing 10%.

Moving to slide number 11, since the launch of our new flight network, we increased our load factors by an average of two percentage points in the second half of 2016, and our forward bookings are strong. For the first six months of 2017, we expect loads to be in the high '70s.

Moving to page 12, at present, the last six years of operating profits that represent the combination of our capacity reductions, network reorganization, cost discipline and stronger Brazilian real. Our low costs are a key differentiator and our growth in ancillary revenues and miles has contributed to our improving the RASKs.

On slide number 13, in summary, I'd like to emphasize that Gol is working smarter to strengthen our foundation, so has delivered consistent and sustainable results for shareholders through the business cycle.

On page 14, we highlight our 2017 focus areas. We are working our maturing our new flight network to maintain its contribution to increasing margins, keeping our dominant position in the Rio de Janeiro markets, enhancing our connectivity and capillarity in Galeao, Guarulhos and Brasilia; developing new markets in the North and Northeast of Brazil; investing in international regional expansion, South America and the Caribbean; increasing RASK from investments in customer experience.

Moving to slide number 15, for 2017, we are expecting increased aircraft utilization from our Boeing 737 aircraft. We will make seasonal capacity adjustments in Brazilian dry season, derived from our single fleet-type advantage. Our tactical capacity adjustments help us meet demand in different market conditions. Our 2017 revenue metrics will be driven by the improved environment and deriving from the more stable Brazilian economy and currency. Thus, we expect to push our load factors higher. A key will be our continued focus on improving our execution across the commercial function. In terms of outlook, we remain very cautious. There are six weeks of the quarter left to go and Brazilian carnival is in the last week of February. We will carry over 8 million passengers in the first quarter this year, and the full year ex-fuel unit cost should increase by approximately 1%.

Looking out in 2017, it seems clear that pricing will continue to be challenging as Azul and Avianca are adding capacity in the Brazilian domestic market. We intend to respond to those adverse market conditions with, unlike other airlines, even lower unit cost. We believe that we reserve the best outcome for our passengers, our employees and our shareholders.

Before handing the call over to Richard, I would like to review some of our competitive benchmarks. On page 16, you can see we are among the top airlines in revenue generation per aircraft, primarily due to higher productivity and high load factors. Also, if the real maintains its appreciation trend compared to the dollar, these figures could be even better next quarter. The graph in the middle compares stage-length adjusted cash. Gol is second to only Ryanair. Gol has the lowest CASK in the Latin America region and in Brazil. We expect more in terms of cash reduction for the near future. We have already concluded in 2016 our investment in technology and product, and we will begin to receive the first five Boeing 737-800 MAX in July next year. New equipment will enable an increased range combined with lower fuel consumption. On the right graph, you can see a comparison for total operating costs over total net operating revenue ratio. The current 93% is still high, and we are implementing a comprehensive cost reduction plan intended to contribute with higher and sustainable operating margins within the next two years. Richard will also provide some extra color ahead.

Moving to slide 17, for the CASK ex-fuel adjusted by the average stage length, we can see Gol has one of the lowest fixed cost structures in the world among the leading low cost carriers. We have demonstrated our commitment to remain Brazil's lowest cost carriers since our foundation in 2001, and it's a continuous and relentless effort of the entire team of eagles, which enable Gol a sustainable competitive advantage over the other airlines in the region. Since we have a standardized single fleet, Gol obtains smaller crew costs and better spare parts management. Nevertheless, safety comes always first, and we maintain our FAA certification as best-in-class maintenance. We also have lean and productive operations that position Gol as number one in the most important and efficient airports. As a result, we are able to extract the best aircraft utilization. We have reduced the exposure to fixed costs with an efficient administrative structure working towards improving our client experience and strengthening Gol's brand.

In summary, through consistency, efficiency and service, we expect to deliver sustainability and profitable growth for our shareholders.

With that I'm going to hand over now to Richard Lark, who will take us briefly through the MD&A of the quarter.

Thank you very much. Moving to slide number 18, we had a solid December quarter. We're maintaining the lowest cost in Brazil and our number one position in traffic. On page 18, we have the quarter highlights. We obtained a 7.4% operating margin. This figure included approximately BRL142 million in restructuring costs, which were in non-operating expenses. From a 144 aircraft in December of 2015, during the year 2016, we reduced our fleet to 121 aircraft at the end of December 2016, and our plan contemplates an average fleet of 115 aircraft in 2017. The capacity rationalization required by the industry slowdown in recent years is finally paying off. Despite a 3% decrease in RPKs year-over-year, our load factor reached 78%, 2.2 percentage points higher than the fourth quarter 2015. This is possible due to our concentration on capacity and yield management. In the fourth quarter, Gol's airline operations reduced capacity by 5.7% and increased passenger revenues per seat kilometer or PRASK by 6.8%, permitting a total RASK improvement of 6.6% in the quarter. The 19 percentage point reduction in available seats above the 6.9% ASK reduction in the year is primarily due to the increase in stage length, which is part of our new route network, fully implemented in May 2016. Gol's continuous focus on improving revenue management helped drive a yield increase of 3.8% over the fourth quarter of 2015. From January to December 2016, yield was up 8% and PRASK increased 8.5%. The operating margin expansion in the quarter resulted in an EBIT of BRL198 million. For the full year, operating margin reached 7.1% with an EBIT of BRL697 million. We remain the lowest cost provider in the region, and we were able to obtain a significant reduction in leverage. At the end of this quarter, the leverage was 5.7 times, while 12 months ago, it was 11 times. We had net losses of BRL 30 million in the fourth quarter of 2016 and net income of BRL1.1 billion for the full year.

On slide 19, you see that the increase in profitability was driven by a 7% increase in RASK and a 5% reduction in CASK, cost performance was very good. We had a 5% unit cost reduction in the quarter just ended, and when we strip out, fuel level i's up 1%. We are targeting, as Paulo said, to keep unit costs ex-fuel stable for 2017. At BRL0.21, total operating cost per seat kilometer or CASK reduced 5% over the same quarter of 2015. This cash excluding fuel increased 1% in the quarter-over-quarter comparison. Compared with the RASK increase, we captured an increase in the profit from operations of BRL0.14, representing a significant improvement when compared to the same period in 2015. In the quarter, consolidated CASK ex-fuel was BRL0.152, an increase of 1.2% in the quarter-over-quarter comparison. The decrease in CASK was primarily driven by fuel price reduction, which in the quarter was BRL0.194 per liter, representing a 12.7% decline when compared to the fourth quarter of 2015. It is worth mentioning that Gol increased by 11.4% -- Gol decreased by 11.4%. We had a reduction of almost 12% in the number of fuel leaders consumed per RPK during 2016 versus three years ago, as a result of the ongoing initiatives over the last several years to improve operating efficiency and reduce fuel consumption. As a consequence, higher RASK with lower CASK led Gol's EBITDAR margin to just under 17% in the quarter.

On slide 20, you see our net financial results, BRL31 million of financial income and BRL194 million of financial expenses in the quarter.

Moving on to page 21, we've broken down our net income variation between the fourth quarters for you. Beginning from the left, Gol had BRL89 million of additional revenues in the year, BRL606 million of savings in fuel, BRL61 million in lower commercial expenses and BRL197 million in other expenses and savings, BRL76 million were salary increases to compensate for approximately 8% inflation in local currency. Exchange rate gains were responsible in the quarter-over-quarter comparison for Delta of BRL3.7 billion in non-cash net financial results. This side explains the net income, primarily net income variation between the quarters, and taxes explain the balance of BRL585 million. This is explained by compensation of accumulated losses in previous years. Gol reported a loss of BRL0.09 per real -- per share for the quarter and a profit of BRL3.17 per share for the full year. On an ADS basis with our ADR program, Gol reported approximately $0 per ADS for the quarter and earnings of $0.09 per ADS for the full year.

On page 22, you can see the breakdown of Gol's cash flow evolution from the third quarter of 2016 to the fourth quarter of 2016. Gol increased by BRL79 million of its cash and cash receivable, primarily due to operating activities and also entirely offset by investing in financial activities.

The balance sheet liquidity is shown on slide 23. We continue to work on delivering Gol's balance sheet with the objective of moving up to a B credit rating. We have BRL1.9 billion in cash and cash equivalents.

On page 24, you can see we reduced our debt by total of BRL2.9 billion during 2016. And the breakdown, you can see also, of our financial debt maturities.

Moving to slide 25, two-thirds of Gol's debt is asset-based, and we've been successful in lowering Gol's cost of debt.

As you can see on slide 26, our net leverage, including off balance sheet aircraft leases, finished the quarter at 5.7 times, which was a significant improvement from 11 times at the end of 2015.

On slide 27, I want to take a few minutes to review the relative performance and liquidity of Gol's shares of the market. During the fourth quarter of 2016 and right up until February 15, 2017, Gol surpassed all of the XLA index, which is the airline index, also the Tier 1 LCCs comprised of Ryanair, Southwest, JetBlue and WestJet, and Ibovespa, the Brazilian stock market index by 6 percentage points, 11 percentage points and 8 percentage points, respectively, as you can see on this page here. Gol's average trading volume per day was $3.5 million on NYSE and BRL19 million per day on the BM&FBOVESPA in the same period. One of the challenges we have had in recently in our public market trading value has been the relative lack of liquidity in the ADS', and for this reason, the Board has agreed to alter the ADR ratio of PNs to ADR's ADS' from 10 to 1 previously to 5 to 1, which will be affected over the next few months.

Now, page 28 shows a table some KPIs of benchmarks using the last 12 months ended December 31, 2016. From an operating margin point of view, we can see that despite Gol's situation, we have significant improvements in opportunities in comparison with low cost carriers, but in spite of that, we lead the pack in margin in the South American market.

On slide 29, you can see a comparison of the profitability and the returns from the same airlines on the previous slide.

Our fleet plan can be seen on slide number 30. We ended the fourth quarter 2016 with 121 aircraft in operation, and we are at 120 now. In 2017, we will maintain an average fleet size of 115 aircraft, and in 2018, we will resume fleet growth and begin our aircraft replacement with the delivery of our first five Boeing 737 MAX 8 aircraft.

As you can see on page 31, we have significant flexibility to match our capacity growth with GDP growth. A key component of our fleet plan is the 737 MAX 8.

As you can see on page 32, the MAX delivers more seats per aircraft, increase operating range and improved performance and significant cost reductions.

As you can see on page 33, we expect an approximate 10% reduction in operating costs.

Our outlook is on slide 34. I hope that we have a favorable fare environment in the second quarter of 2017 with only 2% decline or less in capacity, but we don't have clues to our competitors will do nor do we know what the outcome is going to be at this point for the second quarter. For 2017 full year, we are assuming a yield increase of 6%, but that's a guess. We hope it will be more than that. While the environment can continue to be positive, if there is not capacity discipline, we could see pressure on yields.

We're planning for rising costs in 2017 due to higher jet fuel prices. Our goal is to improve the trend of rising unit revenues in 2017 and achieve positive unit revenue comparisons for the year as compared to 2016. For this, we'll rely on effective revenue management and our route design techniques to achieve this, and we're leaning heavily on our fleet modernization to help mitigate unit cost pressures. We expect better profits, cash flow and returns in 2017, despite the competitive environment.

Our priorities for the balance sheet this year are unchanged. We'll continue to focus on the basics, running a highly reliable operation, offering our customers exceptional service and delivering results for our employees and our shareholders. The guidance for 2017 is a small decline in capacity of 2% or less, average load factor from 77% to 79%, cash ex-fuel of BRL0.14, EBITDA margin from 11% to 13% and an EBIT margin of 6% to 8%. Downside risks are Q4 fares, external shocks and capacity growth.

With this, I thank you all for your attention, and we're ready to move to the question-and-answer session for today's call. Please confirm your name and then ask a question.

(Operator Instructions) Duane Pfennigwerth, Evercore ISI.

I wonder if you could just kind of review for us what you're seeing in the corporate segment of your demand versus the leisure segment of your demand and where you saw more of a recovery in the fourth quarter and how those trends look here into the first part of 2017?

Hi, Duane, it's Kakinoff here, thank you very much for the question. Actually, what we have seen is that the total size of the corporate market has not increased, it's not recovered yet, but part of the Gol has been able to achieve a higher market share last year. For the first time ever, we took the largest portion in revenues, too. So we were leading the market in the number of tickets sold to the business travelers. And in 2016, we achieved the market leadership in revenue. So it means that we have been able to bring more customers to fly Gol, preferring the company. This is probably the result of the investment that we have done changing the low par, offering them more legroom, special packages, conditions, the large program, now the Wi-Fi. So I believe that the company will deliver continuously better results in that segment. But this is because we have been able to bring customers to fly Gol, it's not because the market size in that specific segment has increased, at least not into this moment. Let's see now, because we are at the end of the leisure -- closer to the end of the leisure season, and after the carnival, normally, we have an increase in that segment, but it's quite soon to say that it's going to happen this year.

Can you give us any sense high level -- so it sounds like you're seeing a stable corporate market and your maybe market share is increasing within that, but can you give us a sense for the recovery potential, how meaningful could a recovery in corporate be, how far below trend maybe a normalized trend do you think corporate activity is in Brazil?

Considering the average fares in that specific segments are between three to five times higher than the little leisure ones, any (inaudible) improve has quite significant impact in the results. Personally, I believe that following the market expectations, the second half of this year would deliver a better economy dynamic in the country and certainly getting that effect, we would see an improve in the business travel demand. So this is what we have expected, that's part of our plant. So it could not happen in the second quarter, and we are, say, prepared, considering our offer, our revenue management strategy and the network design to only get access to a bigger business travelers market in the second half of this year.

And then just my last one for Rich. The cost guidance that you've given us here, is there any sort of idle aircraft ownership embedded in that that might be kind of non-recurring into 2018 and beyond? And thanks for taking the questions.

We have a couple of things. We have a couple of aircraft that are in maintenance and the WiFi upgrades, rather in our fleet. And so, (inaudible) it's five or six that are kind of going through that process on heavy maintenance in WiFi through -- pretty much now through July, August. And as we kind of articulated in our fleet plan, we can bring them in as demand seasonality ramps up kind of in the September-October period. We also have a couple of aircraft in subleasing in Europe, which are obviously not incurring cost on your question, but also give us the flexibility on the capacity side. But we expect that the efficiency on the cost side should kind of go out of the system more or less in July, as we go back, just having a couple of aircraft in the spare and maintenance capacity, and we're moving along with the program on the WiFi retrofit.

But for Q2, it's about four to five average aircraft that are in the lease expenses, but are not producing revenues. We also did that as a specific strategy to deal with the lower seasonality in the second quarter that is natural in Brazil on the demand side, plus trying to make sure that we keep our capacity and overall inter-capacity in check, as we've got a couple of competitors that are in Q2 thinking about bringing some aircraft into the market, which concerns us in terms of its potential overall effect on fares. So trying to do our part to match demand with supply. And so, long answer short, it's about four or five average aircraft in Q2 that in July-August period will kind of come back online in terms of producing revenues.

Victor Mizusaki, Bradesco BBI.

I have two questions here. The first one, you reported adjusted net debt-to-EBITDAR 5.7 times, and you also mentioned that for this year, I mean for the first quarter you're likely will deliver another seven aircraft. And I don't know if you can give us a guidance in terms of what do you expect in terms of financial leverage for this year? And the second question, just a follow-up about leisure and business travelers. I don't know if you can give us some color, I mean you're making a lot of change in your network. If you can give us a kind of breakdown in terms of leisure and business passengers for these new routes.

Our overall target for this year, 2017, is to get close to the four times range. I don't think we're going to get under that. What pro forma for the aircraft that are being redelivered here in the first quarter, they're already grounded or in the US in the desert, they are in the return process. Pro forma for that leverage which goes out of the system, with our EBITDAR assumptions, we're already at a leverage of about 4.5 times. That's because of the market convention of taking 7 times the operating leases inflates the overall leverage of those seven aircraft that are still going out of the system. So, we'll be at some point, between Q1 and Q2, will be at around 4.5 times on an accounting basis, but our overall objective this year is get to a 4 times level. As I mentioned as well, we will also be working to re-achieve a B status. But now on your question on the Corporate versus -- I guess I'll let Kakinoff follow up to Duane's question on that.

Hi, Victor, actually it has been quite hard to predict when -- as mentioned to Duane, particularly when the business travelers, or the size of that specific segment will be bigger than it is today. As I said, I'd expect to have more meaningful improvements by the second half of this year. But the most important thing is that after the redesign network, Gol has further strengthened its strategic position among the top eight airports in Brazil, those are standing for 75% of the Brazilian GDP. So, I mean, those are the most important airports due to the business travelers. Our market share among these airports is hanging from 35% to 52%. I believe nobody can come even closer to the offer that we'll have it structured to this segment of customers in Brazil. I mean, we strongly believe that we have an unbeatable network and the timetable to get further preference of these customers. So, I mean, it's promising, but we do need to find a Brazilian better economic conditions, which is supposed to happen from July on.

Savi Syth, Raymond James.

First off on the 2017 outlook, it's right in line with what we were thinking, but if I look at the 1Q outlook, I'm a little bit confused about the components. Your yield guidance of BRL0.24 is below 4Q 2016 and below 1Q 2016, which seems at odds with your comments on January trends. I was wondering if you could talk a little bit about that. And then also just on the ex-fuel unit cost, it's about 3% year-over-year, if you exclude the gain on sales, and you do you have a nice tailwind in FX. I'm wondering, is that because of the -- Rich, what you mentioned about the aircraft that still are non-producing, and then maybe some of the cost related to that?

On the revenue side, yes, and we have -- that will depend on the March. As you mentioned, we have the Carnival at the end of next week. The first week of March is a holiday week. So doing better than what I mentioned there will depend on March. January was very good. January was very strong. So based on January, if those trends continue through March, we'll do better than that. But we're being conservative because of the capacity -- the competitive capacity dynamic. And as you know, any change on yield can have extremely big impact on profitability.

On the cost side, yes we are -- in our planning for 2017, we were assuming in October of last year, based on our own economic -- macroeconomic projections [BRL3]. But it was more at the end of the third quarter. We're already getting close to that level. And fuel, or let's say oil prices has not tracked that as it normally would with a pretty close to minus 1 correlation. So we do have year-over-year fuel cost increase, but the exchange rate effect is more than overwhelming that at this point in time kind of temporarily, if you will, in January. So, while it helps a bit in January, we expect to give a little bit of that back on the fuel side, kind of going through March. But there is a potential for us to do slightly better than that on the non-fuel cost side, because of the exchange rate effect, and then kind of going back to the extent we can maintain disciplined rationality on yields in terms of all the competitors in the market, we could retain some of that in the operating margin. But it's still -- we have a good visibility on the bookings, but not 100% visibility on the yields and much less so in Q2. But the trends are positive for us to have better-than-expected yields, based on where we stand right now.

Just to follow up on that Rich, what's the pro forma rent going to be, once everything is returned, what's kind of the new level of rent expense?

Rent expense per ASK or --?

Or just after you return all the aircraft to the lessor?

I mean it's -- [are you asking] on monthly basis, a quarterly basis, on an annual basis?

Quarterly will be fine.

That goes down. It's about another BRL7 million that comes out on a quarterly basis, BRL7 million to BRL8 million, that you would take out of those numbers.

And then if I may, if you look at 2017 -- or 2017, 2018, could you share a little bit more about what your CapEx expectations are and what you might want to do on the debt front?

I mean, 2017-2018 -- 2017 we have -- this year we have approximately a little under BRL1 billion in CapEx. The majority -- 60%, 70% is related to the engines and maintenance on those. We have a small portion of that, which is the WiFi upgrades there in progress in that BRL1 billion. And the majority of it is covered with financing sources. So the cash portion of that CapEx is only around 20% of the total CapEx balance. That comes from low-cost financing sources, such as we have with facilities we do with Exim Bank guarantee facilities we do with Delta and Air France maintenance -- I'd say credit facilities. And so, the majority of that is covered through these mechanisms that we use. CapEx, 2018 is a little bit down from that. And the PDP component this year and next year will be -- the first five deliveries are already covered by sale leasebacks and it's possible that we will have all of those -- 18 deliveries for the MAX also cover with sale leasebacks. You saw this week we announced the sale leasebacks for the first five of those on the MAX order. So that the PDP component of the CapEx is expected to be much less also.

So we're pretty comfortable with the investment, cash flows, in terms of what we're doing there financially and financing-wise. And then we started -- 2018, we would start to have -- most likely we'd have PDP as financing requirements as we start to take ownership of those portion of the MAX deliveries as they start to ramp up in 2018 on our plan, which we expect will be matching GDP growth at that point in time.

Matt Fallon, Deutsche Bank.

So, aircraft rent came down substantially in Q4. Why is it down so much? What drove the decline and what's the go forward number?

As we describe in the press release, it's mainly due to the impact of contract renegotiations throughout 2016. Gol, we did a major fleet restructuring in 2016. When all said and done, over 25 aircraft that are returned. In the context of that massive unprecedented fleet reduction, we were able to renegotiate and have improved productivity on that. There's also an exchange rate effect in there as well. If you look at the full year, there is an impact of the average depreciation of the real against the US dollar, which is around 5%. And there is also an effect, which relates to the time lag between moving an aircraft from operation, until it's actual actually returned. As we were mentioning, we have inefficiency there. We are still paying the rent on some of those aircraft. And so, fully pro forma that number would have been much lower, but it's primarily due to the work that our fleet team and the management team did on restructuring the fleet, specifically on the aircraft rent side. And keep in mind also that the network restructuring that Kakinoff mentioned in his piece of the call was also very important for us improving productivity -- the allocation of those ASKs and improving productivity. So there's also a general component in that across our base of what management was able to do to better allocate the assets on the route network. So it's a combination of those factors. But the main factor was the impact of contract renegotiations that happened throughout the year, as Gol affected this massive fleet restructuring.

(Operator Instructions) Lucas Barbosa, UBS.

This is Lucas from UBS. Thanks for taking my question. Congratulations for the results. My question is just a follow-up on the last question. Is that BRL120 million aircraft rental costs seen this quarter, a recurring level going forward, or was there any one-off in this line? Thank you.

Yes, as we described we have, in the quarter, we had around -- a little over BRL140 million in a variety of issues in there, primarily in the non-operating expenses. So when you look at the total CASK, it's important to remember that we had around BRL140 million in the quarter that was related to the -- when we return aircraft, adjustments and maintenance and a variety of costs that we have to be able to return those aircraft. But within the actual leasing number, I'm just checking here for you Lucas, I think the actual leasing number that we had -- and that's the number that you're thinking there, there's about BRL8 million -- BRL8 million to BRL10 million of one-time cost that were recorded in the aircraft rent line that specifically relate to that. Majority of the others were, there is a bit in maintenance and then the rest is in the other operating expenses.

[Peter], Barclays.

I'd also want to ask, but I was wondering if you can talk a little more about the nature of the sale-leaseback agreement you guys announced just recently in terms of capital for operating your lease and if you can give us some more color on kind of implied cost of financing and the timing of net proceeds?

Those are times for our deliveries, which start in the middle of next year. So the actual transactions happen according to the delivery schedule. We can't provide the specific details on the negotiations we do with the lessors, but we have a very attractive price, a very attractive asset, very attractive with Boeing. And then as you know, with the sale leasebacks, it's a combination of the sale price plus the lease rate, when we negotiate the best returns for our shareholders. We can't provide details on that other than to say, generally the costs on these -- I would say, if you want to look at it kind of as like a financing cost, it's kind of in the 4% range on the financing cost, in terms of what the effective financing cost in dollars is for our -- we generally on our dollar assets, which are the aircraft, we're generally kind of in the 3% to 4.5% range on the effective financing costs that go into the leasing, which mostly we have been doing or if we were to do an Exim type financing.

Another question I had, assuming full year 2016 results, can you perhaps update on the EBITDAR sensitivity to the move in BRL?

Yes. I mean, obviously we have an environment, I think going forward, where we're looking at -- we're working with kind of -- our forecast for the year was about [3.16]. The market thus far is kind of tracking ahead of that. So we don't expect a lot of sensitivity on the exchange rate in terms of volatility. But my question is -- you'd have to tell me what your assumption was on oil prices, because for us the two of them work together, on our fuel costs and on our business, because they indirectly affect the yields also. And so, we don't really work with just on exchange rate in isolation, on EBITDAR, because it has a very high correlation to what happens on yields and we also have to look at the -- what's going to be the assumption on fuel. Thus far we're getting a little bit better than expected on the fuel. We're doing a little bit better than our budget. But in terms of the overall volatility, for our business, it's very large. I mean if you take the standard volatility for exchange rates and WTI or oil, if you will, and apply it on our cost structure within the actual volatility that exist in those commodity prices today, on a EBIT margin basis, you've a little over 10 points swing on the margin, kind of like plus or minus 5 points on either side of what our current situation is, assuming the current market volatility that exist for exchange rate and oil. There really are like two ways of looking at what our expectation is, which is a -- we're working with a stable to slightly appreciating real and an increasing oil prices. We expect oil prices to increase substantially from now to the end of year. That's how we kind of work with our budget and that's kind of what we've guided in our costs, kind of flat year over year, ex-fuel costs, and then a significant increase in the fuel cost, is what we're looking in our 2017 guidance. But, generically, if you were to kind of throw it in a matrix, you kind of go up 5 points and down 5 points around that using the current market volatilities. I don't know if that's helpful, but you also have to have a view on the oil prices, because they work together with us. An isolated move in an exchange rate, while it can have a short-term effect over three or four months, you also have to look at what's going to happen with the oil prices and see how that's going to affect our fuel price and our cost structure and then how that flows into yields, because yields in the Brazilian market also are highly correlated with what happens with the exchange rates and fuel.

In terms of how we get to the overall margin, we don't necessarily look at it in an isolated impact of what exchange rate would do in isolation, what fuel would do in isolation. We have to look at kind of the overall package. But I think what we can do is, going forward we can think about how to help folks think about those volatility issues, which are significant for our business, as we think about how we provide guidance and talk to the market. I'll take that to heart and think about it.

And the last, if I may squeeze, do you have any maybe additional color on -- from an investor's perspective what the bill -- and the airline ownership could mean for the industry? And I don't know if you talked about it before, but it is potentially going to encompass just the passenger [expectation] or also cargoes and logistics, the discussion will be helpful.

Hi, Peter, Kakinoff here. I need just to repeat the statement that Gol has delivered to the market since the beginning. The Company is totally in favor of liberalization in every sense. So it doesn't mean that we have restrictions to get access to capital due to a quite ancient legislation. This is nothing related to speculations regarding selling any stake of the company or having another strategic investors increasing dramatically its position. As I said, this is basically a speculation. What we have always mentioned is that the cost -- the capital structure of the Company would be much simpler and then highly appreciated by the investors, without having the structure of voting shares, non-voting shares, duration between them, which has been necessary at the moment exactly to get access to a bigger market. So we are pretty much in favor of this liberalization. I believe this can be only positive. And the other speculations regarding the possibility of having more competitors playing here in Brazil, I would say they are welcome. Any brand does need the protection of such type of legislation to be feasible in the market. Probably there is another prong. I believe that Gol is prepared to compete in Brazil with any kind of airline, even newcomers.

So I think this is the right decision to be taken. I cannot speculate on the political environment to approve it or not, but I think that the reasonable decision would be to have that thing approved, and this is I believe our expectation at the moment.

[Pablo Zaldivar], GBM.

We have witnessed during the quarter a drop in leases per aircraft. I believe it should be because of your renegotiation of your contract. I was wondering if this should be sustainable going forward?

If you're talking about the cost per ASK, yes, that's a sustainable level going forward. We had this very large fleet reduction, which removed all of the excess capacity from our system. We have a little bit of inefficiency in Q1, because we're still returning aircraft from our negotiation. And then in Q2, in the seasonality, we keep some aircraft in maintenance and upgrades on the WiFi. So, we also continue to show some lower productivity on the aircraft rent per ASK in Q2. Then in the second half, we should see improvements in that. So that is sustainable, we expect. And as Kakinoff mentioned as well, we are also working to improve our aircraft utilization, which means we're producing more ASKs per aircraft, so the denominator of that goes down. Our aircraft, our Boeing 737 aircraft have the ability to increase utilization above the current levels. So thus far this year, we're kind of tracking with a 10% increase in utilization. So in the first half, that compensates some of this inefficiency we've mentioned on having aircraft out of service. But we should see significant competitive gains for us on that in the second half, as our Boeing 737s crank up the aircraft utilization, which is an important thing understanding about our business, especially us is the only 737 operator in Brazil. Last year -- really kind over the last maybe two years, we were not able to fully take advantage of the utilization capability of the Boeing, just given the economic stagnation in Brazil. But here going forward, we're working on going back to using that capability, which for this year it's somewhere between a half-hour to 50 minutes higher aircraft utilization, which is significant. But why we have to think about that is effectively each aircraft is doing an additional flight per day on the existing assets. So we're having a much bigger dilution on fixed cost and as Kakinoff mentioned as well on the chart he showed you, showing the fixed cost versus the variable cost, in our business, we have a very high operating leverage, based on the low fixed cost component of our business, which is the aircraft. So we can squeeze another half-hour to an hour a day out of those aircraft, is significant in terms of the overall profitability. So it's not sustainable, we're going to push that cost advantage further this year.

Julia Bretz, BCP Securities.

I know you mentioned a little bit about this leaseback agreement. So if you could give us some numbers, I don't know if you could, but for the market value of the 737s. And then if Gol has made any down payments for these?

No, we don't -- when we do the sale leasebacks, they are one of the confidential transactions we do with the lessors and so we can't provide information on that. But in our particular case, with the down payments that we would normally have on an acquired aircraft, the PDP payments we then are not making those in the context of the sale-leaseback transaction there then, put into the deal where basically the lessors picking that up, so that goes out of our CapEx plan. The Boeing 737 in general has a very, very high value in the market, and so we monetize that in the negotiation with lessors, combination of purchase price possible lease rate, but it's a combination of where we want on the cost side on an ongoing basis and what we get in terms of cash. But those would -- this is already done, but as these aircraft are delivered next year, we'll probably be able to see some details on that next year as we -- we're about one year ahead of the curve on our deliveries. So we can probably provide some more information on that next year.

Okay. And if I could ask one more question, your taxes were also very high this quarter and if you could explain the reason for that and then give a little guidance for this year as well?

Gol as -- on the airline side, we're not paying any taxes because of our net operating loss carry forwards, and we have very large amount of tax credits, net-net operating losses, which have an unlimited term, which we amortize against any income we have. The other factor seeing there is the effect of the income tax on Smiles, which is a subsidiary of our holding company, which we consolidate. So interesting there is also the effect of the -- and Smiles is a full tax paying entity -- very profitable, full tax paying entity, but the majority of the numbers on the income tax are coming from the income tax expenses from the Smiles subsidiary.

Right. Will these expenses continue during this year for Smiles?

Yes, they will because Smiles is growing there. You can find some information on that on their website, but they're growing at a very nice rating, continuing to increase their margins, and so they will be continuing to increase that tax amount on a relative basis. In terms of the overall consolidated numbers on our side, it probably shows a slight increase just because our overall business is six, seven times the size of the -- the airline is six to seven times the size of the overall Smiles business in terms of revenues, and so it dwarfs that in our overall revenue in tax calculation. But I think the important thing is Gol going forward is -- as Gol, as we go back to generating operating profitability and pre-tax profitability, we have very efficient tax planning to minimize those as we grow earnings on the airline side of the business. On the royalty side of the business, they will basically continue to show those levels of taxes going forward growing more or less with there with the size of their business, which is kind of growing in 20% per year range.

Paul Lukaszewski, Aberdeen.

Maybe if I could just start with sort of cleaning up and clarifying a few things that you've gone through up till now. I believe you said you're expecting CapEx of about BRL1 billion in 2017. Did I hear that right?

Correct, yes.

Okay. So can I clarify, does that include PDP or PDPs on top of that BRL1 billion?

We don't have any PDPs this year as it relates our MAX delivery. Because of the sale leaseback transactions we've done, the first five incorporate those PDP, so that -- we don't have any PDP outlays this year. We might have some next year depending on what we do with the 2019 delivery.

Okay. All right. So that actually addressed my second question, which was whether that schedule detailing the PDPs reflected the sale leaseback transaction from earlier this week, and it sounds like it did not, so those PDPs have gone away. So then, I guess the follow-up to that, is there any sort of netback of any PDPs that you have recovered back as a result of the sale leaseback against the BRL1 billion or is that already factored in?

It's already factored in because -- it's part of our restructuring plan last year. We did a complete restructuring of our PDP deposits, and so going forward, we'll only have outlays to the extent we actually are going to see financing and taking ownership of the aircraft. I guess in 2018, we might have some PDP outlays based on (technical difficulty) where that's tears down the road, we're kind of working one year ahead at this point on the MAX order.

Okay. Moving on -- sorry, and apologies for having to do this, but back to the rent expense line, just to make sure I've kind of got it completely, are your comments that the sort of BRL8 million to BRL10 million of noise in the quarterly run rate of what was 120, so assuming steady state dollar, we're sort of talking about a sort of 1-10ish aircraft rental line per quarter going forward, is that a number we can work with?

Yes. I mean, part of it on the absolute dollars, on the absolute real, I'll take a note and get back to on that, to provide you more on that, but more or less, we want those lines (inaudible) -- I mean, that's the number on ASK basis. We had a lot of -- there was a lot of noise throughout the year on a quarter-to-quarter basis. There's still a little bit of noise in there in Q4 that I guess confused you guys a bit, but it's more or less what we're expecting on an ASK basis going forward. It probably improves a little bit on an ASK basis based on our lower -- our plans on increasing productivity, but the (inaudible).

I guess -- so it's a fair conclusion to draw that more of the fleet restructuring was concentrated in the operating leases than the financial leases, just kind of given the degree of magnitude in terms of the reduction of aircraft rent in the P&L?

Yes. I guess you can say that. I mean, it's pretty much across the board. I mean, today, we have 31 aircraft in a finance lease construct going forward. And it's definitely calm because two years from now, as you know, we're going to have an accounting change, which all leases, including operating leases, will be treated as financed leases, so (inaudible) and they will go entirely out of the operating margin and move into the construct of interest expense and depreciation, but yes, that's -- I think it's fair (inaudible).

And one more on this aircraft front, I believe your prior guidance was that the fleet size would come down, the full operating fleet including the subleases in the aircraft waiting for return, adopt the target that was going to come down to 122 versus us finishing at 130. Is that correct or I'm sort of mixed apples and oranges here?

What period?

I thought in the third quarter, you guys guided to expect the fleet -- the year-end fleet number to be 122, either after second quarter or after third quarter. I thought that was the guidance, so finishing at 130 I thought was a bit high.

We've finished at 120 -- for December 2016, we finished at 121.

Well, that's sort of the net number, right?

Net number.

The gross number, including the aircraft to be returned and the growth aircraft on subleases, 130 now?

No, no. The121 includes these seven aircraft that are being returned, that will take us down to -- we'll hit kind of like April, May, we'll be at 115 aircraft, and that's -- obviously, that's net of the subleases. It doesn't include aircraft we have in subleasing. So that's not included in that number.

Okay. All right. Let me investigate where I got my number from then, and if anything, I'll get back to you guys.

Yes. 130 on that -- I mean, it's --121 was the actual -- today, we have 120. And like I said, with the adjustments and so on, we plan this year to be at kind of 115 average. We're actually kind of -- we'll hit that number kind of in April and that is an average calculation for the year. But we also have -- this sublease aircraft will be coming back in, in the Q3 -- at the end of Q3, so they also come back into the second half. It allows us to take advantage of being -- seasonal demand in the Brazilian market. And we have the flexibility of not taking those aircraft back in the system either if you want to leave them and sublease them, those contracts expire in Q3. So as I was saying, the point there is we have ability to manage the capacity.

Okay. And my last question is just where should we have our expectations for dividends going forward, are you guys going to pay sort of the statutory minimum or how you're going to think about dividends in 2017?

We won't be in dividend-paying position for years. You have to have a minimum reserve, kind of like a minimum book value reserve, and we're working -- we used it substantially in 2016. But we've got about a little under a $1 billion of negative book value that would have to be recovered before recapitalize, if you will, before shareholders could start to -- Gol had paid dividends in the past. When it got to a certain -- but I think the key there is not -- it's more -- 2017, no; 2018, no. I think 2019, 2020, perhaps something, who knows, but the policy would be (technical difficulty) more by what the operating profitability of the business is because we have to be paying our operating costs, our capital expenditures, our debt service before we can get into a dynamic on return of capital to shareholders via dividends or stock buyback. That's the --.

Okay. So the dividend line we see in the cash flow statement, that's another case of (multiple speakers) Smiles, is that sort of the net leakage of Smiles?

Correct, yes. What are -- the Smiles, they have -- has a dividend, and they are a cash-generating business, very high cash flow, and so there -- what you see there are the effects of the dividends that Smiles pays to shareholders, and then you would have the leakage out for the minorities.

Pablo Barroso, Credit Suisse.

Actually, it's Felipe Vinagre. Just a quick question on the fleet list capturing. Just want to know how much did you spend in recurring fleet restructuring expenses in 2016, and how much do you expect in additional nonrecurring expenses in 2017 with additional reduction up until 115 aircraft? Thanks.

Yes. The whole fleet restructuring costs around BRL220 million. And as you know, that was basically -- from a cash flow perspective, that was financed with the operation (technical difficulty) old vintage -- first vintage Boeing 737 aircraft, we did aircraft sales and sale leasebacks, which generated more than that cash amount, which basically financed --internally financed the return of those aircraft, but going forward, we don't have any more expenses relating to the -- to that restructuring. That was all done with inside of 2016, and all the expenses are appropriately provisioned.

Okay. So the additional aircraft that you will be delivering 2017, the costs are already in the past, right?

Yes. When you return an aircraft, you may have some additional costs at the end when there's some or what -- the inefficiency there relates more to the new owners or the new uses of those aircraft, picking up the aircraft, so (inaudible) potentially being (inaudible) pickup and you might have an extra month or two rent in there which goes into the aircraft front line as a number there, put it -- it's really representing more by lack of revenue productivity as opposed to the one-time costs on those returns. But the actual return -- the one-time cost, which is reflected in restructuring are already recorded in our costs, and I highlighted those in the Q4, it's about a little over BRL140 million that was provisioned and expensed in the fourth quarter relates to the entire fleet restructuring format. But we might have some -- we could have some additional costs as to the extent that the aircraft deliveries delay, which is possible, or there could be some additional costs, but nothing material, but there could be some additional costs.

My last question, what's your breakeven margin for cash flow generation when we include, let's say, a more normalized level of CapEx to maintain the fleet -- the average rate of the fleet, et cetera, and also including in (inaudible) the dividends page who is minority shareholders besides the income taxes, even when you don't have profits. So all included, what's the breakeven margin for cash flow generation? Thanks.

Free CapEx, we're already above breakeven on operating cash flow. As we've highlighted for you our CapEx in there, post-CapEx, you have to add another six to seven points on top of the current operating margin. What I like to say -- I mean, if you want to be net cash flow zero on a margin basis in our business, you need to be kind of around 12% operating margin, which is twice what the current level is. All of our competitors have lower operating margins than us. So (inaudible) point in terms of -- and we look to be, as a business, net cash flow positive with what we're doing this year and next year in terms of revenue management, cost savings reductions, what we're doing with the Smiles subsidiary in terms of the increase in their operating profits, and then, hopefully, improvement on the economic side, which gives us some upside there, all of which can result in kind of a 5 to 8 percentage point over two to three-year period increase in our operating margin assuming rationality on the competitive side. But from an operating cash flow perspective, we're generating positive cash now, but we're not covering the cash back, those are covered with financing mechanisms, but if your answer is why would you need to be zero net cash flow, it's a 6 to 7 poin increase in the operating margin. But of course, all this is highly sensitive to exchange rate and your exchange rate and oil assumptions as well, which can go one way or the other depending on how you're going to work those together, but assuming steady state with the numbers I just described to you.

Last question on the business demand potential, so in the last two years related to the crisis, we've seen some big reductions on the demand for the business side, also from the government, we've already seen some recover on that side and how do you expect this to evolve in the next few months?

In the first half of this year, we still have -- Brazil economically has been recovering. We expect that in the second half, depending what happens with these massive reduction in interest rates, it's happening in the first half of the year, if that could relate to economic stimulation, we could see better demand as Brazil business activity picks up. You also have the US dynamic, which is a big question mark to the extent that the US embarked on a passive of re-industrializing and improving its competitiveness. Brazil is a big important factor in the supply chain for other industrialized economies, and our big corporate clients are the extractors, the natural resource companies, the construction companies, the real estate companies that have to send large amounts of employees around Brazil to develop Brazil. The large chunk of our business, more than half of our clients are corporate clients engaged in industrial projects and so on around Brazil. So that could have a big benefit in our network as we have the -- we're the most corporate travel airline in Brazil with our network and so on. And you know how Brazil works with the large concentration of population centers along the coast and in the large location of natural resources and development in the interior and the north and northeast. And so, you have to use the airline transportation to transport your workers and your employees around the country to the extent that the develop -- the biggest developed country in world, the US is re-industrializing itself this year and next, and we expect that, that will be a -- have like a third and fourth derivative effect on our business and on the corporate travel side. But it's early days on that. I mean, where we sit right now, we don't have visibility on that. We have a partial visibility into the second quarter and that's it. So we're just speculating at this point of what might happen as a result of the reduction -- the 300 to 400 basis point reduction in Brazilian interest rates and how that might get things going here in Brazil in the second half. And so, I think everybody's in that same boat in terms of what the second half of this year is going to look like macro-economically. When I say different than zero percent growth, we still don't know yet, we don't have that crystal ball.

So no rebound at this point, right? So just expectations on the benefits that Brazil could serve (multiple speakers)?

We don't have visibility on (inaudible) when and how much of Brazilian economic recovery is going to happen. We don't have visibility on that.

Juliana Rocha, REDD Intelligence.

Richard or Kakinoff, I'd like to know if you're comfortable with your cash position, the liquidity to start off peak season? And if you're working somehow on the short-term debt, if you're trying to refinance, talking with the banks, or if you are good with the level that you have right now?

Hi. We don't have any significant short-term debt maturities this year. Within our construct on working capital, we're working hard there based on the contracts that we have with financing receivables and inventories. We have a small amortization payment on our 2007 issued bonds, which would be the first full amortization of a capital markets bond issued by Gol in April. It's a small outflow there. But obviously, cash position in general with airlines, you never have enough cash. And so, we're very careful with our cash position. We're working hard to try to increase that. A lot of that will depend on stability and improvement and rationality in the capacity environment in Brazil and also to some extent on the exchange rate. So, no we're not comfortable with our cash balance, we need to improve it and work very hard, especially through the second quarter here in Brazil where we have downturn in terms of seasonality that puts a very high level of pressure on cash on all companies, but especially on airlines.

Okay. But do you have -- can you give us a forecast for the end of the year, what do you expect to have as it has cash position?

No, we're not providing that kind of information.

And I just want to check a few numbers. You expect net leverage to be at four times at the end of the year?

As I said, we're working to achieve four times. I don't think we're going to achieve that this year, I think we'll achieve that in 2018. But I do think that once we've finished the return of all the aircraft that are going out through the system, we'll be at around 4.5 times on the leverage.

And your forecast for the exchange rate is BRL3.16 for dollar?

We're working this year and are planning in that range, BRL3.16 to BRL3.20 as an average for the year. I think we're -- thus far, if we were to stay at the current levels, we'll be a little bit ahead of that, but we have a lot of volatility in the currency, but that was our forecast back in October when we worked on our 2017 budget with that level. And so I think we're more less tracking on that, but we're very cognizant of the very high volatility, so we have to be careful.

Just one last question to clarify on the debt. You said you don't have significant cash that's maturing on short-term, but are you working somehow with the banks? You have (inaudible) maturing this year and are you trying maybe with -- to postpone this or roll over or for the 2018 that are you already working with the banks or there is no need for that?

Well, 2018, on the thing you mentioned, most likely we'll roll over some of those things or refinance with other small activities. We have facilities with financing with maintenance and our Wi-Fi with (inaudible) guarantee and other things. Well, I'd say no significant -- I mean, they're small relative to our overall capital structure, but we do have to work hard to manage them, and they're not they're not insignificant in that respect, but overall, our big debt maturities around in kind of 2020, 2022 on our dollar liabilities and then in 2018 and 2019, we have some larger maturities as it relates to debentures. But yes, we will probably do some rollovers of some of the small debts of refinancing with some of the smaller facilities we have inside of 2017.

Ladies and gentlemen, this will conclude today's question-and-answer session. I would like to invite Mr. Kakinoff to proceed with his closing remarks. Please go ahead, sir.

Okay. Ladies and gentlemen, I hope you've found our presentation and the Q&A session helpful. Our Investor Relations and Corporate Communications team is available to speak with you as needed to finalize this presentation, we'd like to leave you with Gol's competitive strengths on page 35. We see clearly sustainable advantages over our competitors. We have the best cost benefit ratio for the passenger with high rates of one-time performance, and we are leader in the offering of us as main Brazilian airport with a young and modern fleet. So thank you very much.

Ladies and gentlemen, that will conclude today's conference call. We do thank you for attending. You may now disconnect your lines