Gol Linhas Aereas Inteligentes SA (GOL) 2018 Q4 法說會逐字稿

Welcome to the GOL Airlines Fourth Quarter 2018 Results Conference Call. This call is being recorded. (Operator Instructions) This event is also being broadcast live via webcast and may be accessed through the GOL website at www.voegol.com.br/ir and the MZiQ platform at www.mziq.com.

Those following the presentation via the webcast may post their questions on the platform, and their questions will be either answered by the management during this call or by the GOL Investor Relations team after the conference is 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 events related to macroeconomical conditions, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements.

At this time, I would like to hand the call over to Mr. Paulo Kakinoff. Please begin.

Good morning, ladies and gentlemen, and welcome to GOL Airlines Fourth Quarter Conference Call. I am Paulo Kakinoff, Chief Executive Officer; and I am joined by Richard Lark, our Chief Financial Officer.

Good morning. Good to be with you today.

This morning, we released our fourth quarter figures. Also, we made available on GOL's Investor Relations website, 3 videos with our results presentation, financial review and brief Q&A.

Once again, we improved the operating indicators. In the quarter, GOL's RPKs increased by 3.5% from BRL 9.9 billion in fourth quarter 2017 to BRL 10.2 billion this quarter, driven by a 3.4% increase in the number of transported passengers.

Strong demand allowed GOL to continue driving yield through dynamic revenue management. Average yield per passenger increased by 6.6% quarter-over-quarter, reaching BRL 0.29.

Supply growth, ASK, increased 2.4% compared to fourth quarter 2017, driven by a 1.9% increase in seats, partially offset by a 2.3% decrease in takeoff.

The average load factor was 81.9%, an increase of 0.9 percentage points compared to same period in 2017.

For full year 2018, RPKs increased by 3.2%, primarily due to a 2.9% increase in the number of transported passengers with yields growing by 7.7%. ASKs increased by 2.9%. Load factor was 80%, 0.3 percentage point increase compared to 2017.

We continue to drive a strong revenue growth. The combination of higher demand and the optimized pricing resulted in net revenue for the quarter of BRL 3.2 billion, an increase of 10.1% compared to the fourth quarter 2017.

Net RASK was BRL 0.256 in this quarter, an increase of 7.5% over same period 2017. Net PRASK increased 7.7% quarter-over-quarter, reaching BRL 0.239. Average fares increased by 6.7% from BRL 313 to BRL 334.

For our full year 2018, net revenue was BRL 11.4 billion, 11% higher than the prior year. GOL's 2019 guidance is for net revenues of approximately BRL 12.9 billion.

GOL's current network serves high-yield routes and is the leader in the domestic market, with a market share of 36%. GOL is also a leader in the corporate customer segment, with the largest market share of business traffic in Brazil. By the end of 2018, 6 737 MAX 8 aircraft had already been incorporated into our fleet, providing us with lower operating expenses and expanding our network, allowing us to serve new destinations in South America, the Caribbean and the United States.

With that, I'm going to hand you over to Rich, who is going to take us through some additional highlights.

Thanks, Kaki. First, we would like to comment about our controlled cost environment. Total CASK in the fourth quarter was BRL 0.2022, 2% lower than in the same period of 2017. On an ex fuel basis, CASK fell by 19.4%. Our CASK ex fuel and ex aircraft sale and costs from maintenance of aircraft due to the execution of the fleet renewal plan, were BRL 0.1445, 3.9% higher than in 4Q '17.

GOL remains the cost leader in South America for the 18th consecutive year. Thus, our margins remain solid. While the average price of jet fuel increased by 15.6% in this quarter over the third quarter of '18, the combination of stronger pricing, higher demand and the execution of our fleet renewal plan, permitted GOL's operating income to reach BRL 672 million and the EBIT margin to reach 21% in the fourth quarter of 2018, which is the highest EBIT margin since 2006.

EBITDA was BRL 851 million in this quarter, and EBITDA margin was 26.6%. EBITDAR was BRL 1.2 billion, representing a 36.3% margin.

For the full year 2018, EBIT margin was 12.3%, a growth of 2.7 percentage points compared to the full year 2017, and operating income reached BRL 1.4 billion.

GOL's 2019 guidance is for an EBIT margin of approximately 18%.

Second, we want to highlight our cash flow management. The combination of operating cash flow generation of BRL 803 million in the quarter, and stable cash liquidity, improved the company's financial flexibility. Total liquidity, including cash, financial investments, restricted cash and accounts receivable, was BRL 3 billion at the end of 4Q '18. Third, we would like to share the continued success of our liability management program, our net debt, excluding perpetual bonds to last 12 months' EBITDA ratio, was 2.1x at December 2018, improving versus the year ago metrics of 3x.

We finalized a series of deleveraging initiatives throughout the year. We repurchased our bonds with maturities in 2018, 2020, 2021, 2023 and 2028.

In October, GOL successfully concluded a liability management and refinancing exercise on the debentures issued by its wholly owned subsidiary, GOL Linhas Aéreas, or GLA. The total amount of BRL 1.025 billion was fully amortized in a new series of nonconvertible and unsecured debentures of BRL 888 million was issued, resulting in a reduction of net indebtedness of BRL 138 million.

GOL also amortized other short-term debt using funds from the generation of operating cash flow. These transactions represented additional deleveraging of GOL's balance sheet and better matched GLA's operating cash flow generation with the amortization of its liabilities.

Our liability management activities have reduced the company's cost of debt and improved its credit metrics. Today, the average interest rate is 7.7% for local currency debt and for dollar-denominated debt, the average interest rate is 6.8%.

GOL has maintained its commitment to financial discipline, managing the effects of Brazilian currency through our efficient capacity management and dynamic yield management.

For 2019, we expect our domestic capacity growth to be between 2% and 4%; and our international capacity growth to be between 35% and 45%.

Nonfuel CASK is expected to be around BRL 0.13. We have projected EBITDA and EBIT margins in 2019 based on IFRS 16 at around 28% and 18%, respectively. Leverage, measured as net debt and excluding perpetual debt, over EBITDA for 2019 should be 2.9x, reflecting our commitment to reduce leverage in our balance sheet.

Now I would like to return back to Kakinoff.

Thanks, Rich. In summary, we successfully worked to maximize our results this quarter. Our commitment to continuous improvement in results has proven the efficiency of our strategy of offering a differentiated and high-quality product while focusing on cost efficiency.

We remain focused on offering the best experience in air transportation, with exclusive services to customers on new, modern aircraft that connect our main markets with the most convenient schedules. We are committed to highly disciplined capacity management and prudent management of our balance sheet and liquidity, maintaining cost leadership and continuing as the preferred airline for customers, while driving sustainable margins and returns for shareholders.

And to conclude, we are optimistic for 2019, with the general scenario of continuous improvement for the Brazilian economy and the aviation sector in the country.

Now I'd like to initiate the Q&A session.

(Operator Instructions) The first question today comes from Duane Pfennigwerth with Evercore.

So just with respect to the domestic capacity outlook, which remains disciplined, can you talk about flexibility that you have to ramp that up if, in fact, a big chunk of domestic capacity goes away or if there's a void in the market? Question one. And then question 2, have you been approached by lessors to take over any aircraft of maybe a different type in that eventuality?

Duane, thank you very much for the question. Actually, you probably remember when we implemented the restructuring plan in -- by the end of 2015, 2016, we have renegotiated our leasing contract in order to create the kind of flexibility that we could use in situations like this. At the moment the company is fully prepared to either grow or to reduce its current capacity by 4 percentage points in a very short term. So we do not believe that it is going to be needed, at least considering the current scenario, the current landscape. But we are fully prepared to fast react without changing our -- sorry, without jeopardizing our main pillar, which is the standard fleet structure. So we can get access to even more planes than the 17th 737 MAX that we are supposed to receive this year and it could also postpone some of the current leasing contracts in order to increase the number of aircraft serving in our fleet. So we wish an even higher demand than the positive outlook that we have already shared with you. And if it's come, it's going to come, we'll be fully prepared to absorb it. Even if we have one of our competitors, I mean, giving us a further opportunity to increase our own demands, I think that we are capable of getting it without any major movement on our side.

And then just for my follow-up, you've given the forward load factor here into -- in January's on the boards and February, up 1. I wonder if you could comment on yield trends beyond the load factor for January and February.

Sure, Duane. For February, we -- which we'll announce the traffic stats next week, but we're seeing around about a 15% increase in sales, in other words, receivables, in other words, paid tickets, of which around 1/3 of that is volume, about 10% of that is price. Year-over-year, comparison, about a 5% increase in volume and a 10% increase in fares, which kind of parlays into around a 15% run rate increase in sales. If you would take that on a dollar basis, year-over-year -- remember that we haven't increased capacity because we -- capacity is virtually the same as it was last year. It's almost BRL 100 million additional run rate of revenues on top of that. And that's kind of like the February trend. For year-to-date, similar trends with around a [50%] Increase in sales. January had a higher portion on the volume side than on the fare side. But year-to-date, the run rate sales for January and February are about BRL 200 million above what they were in the previous year and keeping in mind that capacity is still growing in the very low single digits. Everything I'm saying is domestic market.

The next question comes from Michael Linenberg with Deutsche Bank.

Rich, as we think about 2019, this year you had a healthy amount of gains or you had aircraft sales, you also had some of the redelivery costs associated with the aircraft and engines. As we think about 2019, what is baked into your forecast as it relates to future aircraft sale gains and/or incremental costs associated with returning aircraft back to the lessor? In other words, you're -- when we think about '19, your fleet transition program, how much of that is going to have an impact on your P&L? Maybe similar to '18 or is it going to be a bigger impact? Rough numbers would be helpful.

Sure. Sure, yes. The short answer is, in terms of our guidance, there's a neutral or a 0 effect in there of the net effect of any potential gains on aircraft sales, less the costs of the return of those aircraft. It was 0 in those numbers. '18 was extraordinary because we took advantage last year of some very particular phenomena that happened in our markets, which was a temporary increase in availability of MAX aircraft. You remember we announced those direct operating leases in October of 11 MAXs to come in, in the second half of this year and the first half of next year, and that allowed us to be more aggressive on the disposition of aircraft in our NG portfolio, for which we continue to have good demand. And you saw the transaction in the fourth quarter, which we monetized [13], but the net effect of that was basically just to accelerate our transition from the NGs to the MAXs. Now generally, we are budgeting from an operating perspective the continued disposition of 1 to 2 NGs per quarter. So it is possible that this year, based on market conditions -- if market conditions continue, we will dispose of some additional NGs this year. But we're not budgeting anything in there or it's not in the guidance, but we may continue to take advantage of the high demand for these mid-life NGs, which we've seen from the market. Our ability to do that or accelerate that, is contingent upon our ability to get MAXs to replace those aircraft in the fleet. And so that's how I would guide you on that.

Okay, great. And then just back to your comments on February and the strength there, how much of that is really organic? Or are you actually seeing some share shift from one of your competitors? Are you picking up, whether it's volumes or getting better prices, sort of that's the A part of the question. The B part of the question is, what -- how does the competitive capacity look out over the next couple of months, maybe quarter or so, vis-à-vis Avianca Brasil? What are you seeing in the markets right now?

Yes, definitely we have -- we can see some traffic shift, but it's not possible to precise how much. And I would say that most of the growth comes from the organic additional demand that they are getting from the market. I wouldn't say that we -- they had it because if you see their competitor deterioration, is so far quite marginal, I mean, losing 1 to 3 -- 1 to 2 percentage points and then giving us an additional demand. I believe that in some of these other markets, we will continue to react rationally, even facing a further disruption in the market, but we also believe that GOL itself has played a major role in showing to the market a predisciplined capacity, a predisciplined offer, and I think that the market has no reason to change this dynamic anytime soon, even if you're going to have any kind of unexpected disruption coming from one of our competitors. So I am pretty optimistic in that sense.

Yes, historically, remember domestic Brazil air travel has grown at about 2 to 3x GDP. So this year, the expectation of GDP growth here, according to Central Bank, is around 2.5% and that, consistent with also the ABEAR, which is the Airline Association here in Brazil, are expecting a demand -- domestic demand in the range of 5% to 7% and so that's really what's driving the profitability here in supporting both the yield as well as just the overall volume increase. And this has been bouncing up and down for about, I would -- since the fourth quarter of 2017, there has been this uplift -- there was a suppression last year with the trucking strike in the middle of the year, which basically collapsed the demand curve for about 4 to 5 months. And then we had the elections. But pretty much since the elections were over and the certainty on that was installed, this is a phenomenon we've been -- like I said, I think in the longer sense, it's been since October of '17 pretty solid. But since November of '18, it's been even more solid. And this year also, Carnival is in March this year. It was in February of last year, and so that was a positive for extending the summer travel season here in Brazil an additional month. And so the year-over-year comparisons for the Q1 will also be held flat due to the fact that we gained the month of February on to the high season for 2019.

Okay, that's great. Can I just -- just one other quick -- just squeeze in one here on your new services to the U.S. The only thing I wanted to comment, I thought it was interesting in your press release you sort of highlighted the fact that you're the only airline that offers flights from Congonhas to the U.S. You listed other markets, but the U.S. among international markets, which presumably you're marketing these flights as one-stops over Brasília and Fortaleza. And I'm just curious if you are actually carrying decent loads that originate in São Paulo that make their way up to Orlando and Miami.

Yes. I can tell you, without giving any further strategic disclosure, that having 2 digits load factor being raised here in Congonhas to travel to Miami and Orlando, mainly via Brasília. So we have less than 1 hour connecting time in Brasília, which makes this product pretty attractive to the travelers living in the neighborhood of Congonhas Airport, which means the highest portion of the local market can spare easily 1 hour avoiding the traffic between Congonhas and Guarulhos, and having a quite pleasant experience connecting in such efficient airports as Brazilian. So we have a considerable portion of our load factor in those flights being raised here in Congonhas.

We -- as Kaki was saying, the taxi time from downtown São Paulo to Guarulhos Airport is longer than the turnaround time in connections out of Brasília. So we've -- GOL has, over a period of several years, built up a significant presence in Brasília, and we -- so we have a lot of connectivity there. I took the flight up to Miami on Sunday. You get on the plane here at around 7 in the morning, and you're in Miami at about 3:30 in the afternoon. With a super quick connection in Brasília, it's not unlike what some of you guys maybe would experience in an airport like Panama or some of the airports where it's designed to do a quick connection. And so -- and it also with us, keep in mind that, for the passengers as well, we're taking advantage of -- there's the compliance angle. It's 30 minutes to the airport, it's a quick check in. It's a domestic check in. They do a precheck of your passport and stuff so that -- and then we have an expedited process in Brasília when you do the quick connection. But then also, we're basically capturing the demand from the middle of Brazil up. So those passengers don't have to come all the way down to São Paulo, Guarulhos, they just kind of plug in there and shoot up to Miami and Orlando. And there's a lot of VFR traffic because there's a lot of integration with Brazil from a family and small business perspective with South Florida. So it's a lot of -- it's not the core business traveler that would be traveling out of, say, São Paulo or maybe Rio up to those markets. It's also a different type of customer, which is -- which are business owners and demographically, using air travel but it's a different targeted market in terms of this VFR traffic between South Florida and Brazil. And so that's a niche that we've been focusing on in the context of having a competitive advantage in the operations from a cost perspective and then of course, on the other hand, in the case of Miami and Orlando airports, we're helping with Delta in terms of connections on -- quick connections on Delta flights, so when you get off the other end, there's a quick connection onto a Delta flight if you're connecting somewhere else in the Southeast of the U.S. as well as we're using -- we're sharing infrastructure there in Miami with our partners, Delta, to keep costs low, the check in and the baggage handling. We have 2 maintenance employees in Miami. That -- the extent of our GOL employees in Miami, there's 2 maintenance and we're leveraging on our partner's infrastructure. And so the breakeven load factors for us tend to be lower than the competition.

Our next question comes from Roberto Otero with Bank of America.

The first one is a follow-up to Duane's question regarding Avianca Brasil. I know it's a situation not under your control but what do you expect to be the most likely outcome from these ongoing negotiation with the lessors and the final say from the Brazilian judges, also taking into consideration what the Cape Town Convention says? And the second question is regarding Smiles. If you could provide us the latest update regarding the ongoing process and the discussion with the independent committee. That's pretty much it.

Thank you very much for the question. It's really hard to predict what's going to happen or the next steps involving this legal dispute. I believe that Cape Town is, legally speaking, a sovereign issue and sometime, I think that the lessor's willing to get the planes back. We'll have access to them. I don't think that it might be anytime soon, considering the news that we got from the press. I mean we have basically the same source of information that you do have this morning. But following our interpretation, our understanding on the legislation and we believe that the Cape Town agreement is senior, is sovereign, over any other legal aspect. And I think that sometime the lessors will get the planes. But it's really hard to predict that at this moment.

Yes, in terms of your question on the status of the discussions with the independent committee, Roberto, we're executing the process in line with the terms informed in the announcement that was made in December. We've been pleased with the level of expertise and professionalism exhibited by the independent committee in our discussions, and we're continuing to work with them constructively and cooperatively towards a transaction that benefits all shareholders. And as soon as we have the important developments, we'll communicate them to the market as per the applicable legislation here in Brazil. But thanks for the question.

The next question comes from Victor Mizusaki with Bradesco BBI.

This is Paula on behalf of Victor, and we have 3 questions. The first one is during the conference call back in October, GOL said that Smiles would struggle to grow, given all changes in their competitive landscape. However, Smiles reported a really good result in 4Q '18, this change -- how do these results change your view for Smiles?

Sorry, the -- sorry, what was your name again? Sorry.

Paula.

Paula, that's a great question. Obviously, our statement in the call on October as to Smiles' structural growth challenges is a long-term perspective and not meant to address specific periods where external effects can impact and swing results one way or the other. We think that in the Q4's -- last year and in the Q4, Smiles management continues to do a great job, including capitalizing on a market window that has recently been created by 2 specific areas: one is LATAM's ongoing process to acquire the float in Multiplus; and as was mentioned on the previous question, Avianca Brasil's filing for judicial reorganization, Chapter 11 here in Brazil. These situations create an uncertainty around the business plan and the long-term outlook for 2 of Smiles key competitors, LATAM's Multiplus program; and AVB's -- Avianca Brasil's Amigo program. Now this has allowed us -- this has allowed Smiles to capture disproportionate growth. I would say, 2 things that I think are worth nothing: one is that both of the situations -- both of these situations I just described, while they create an opportunity for Smiles, are actually long-term consistent with our view that Smiles has a structural challenge to grow as a stand-alone entity, as we've mentioned in the October call that you're referring to. In the case of LATAM, we believe that a full integration of Multiplus into LATAM will place Multiplus in a structurally advantaged position by completely aligning the interests of the program, the loyalty program and the airline. And in the case of Avianca Brasil's Chapter 11 filing and its effects on Amigo, we believe that, that situation has highlighted the shared credit risk between airlines and their affiliated frequent flyer programs and that will make it more difficult for programs to finance themselves and their working capital on a stand-alone basis. So we're keeping our eye very close on the working capital situation of the loyalty program. The second thing that I think is worth noting is that highlighting the ongoing challenges of growth when you look at -- when you guys look at this in your analysis, when you compare historical performance of loyalty programs, when you look at comparable periods, you see that revenue growth came at the expense of substantial margin compression, especially at the net income level. And so in the case of Smiles, even though gross billings grew nearly 20% and redemptions grew over 5%, net income, excluding the onetime events which you have analyzed, they barely grew 3%. So this trend relates to the curve and where we are in the cycle. We continue to believe that the long-term growth and profitability for Smiles will be more and more challenging, and the results announced by Smiles in 2018 don't change our view of the merits of the reorganization for both GOL shareholders as well as Smiles' shareholders. But thanks for the question. It's a complex issue, and I think it merits some careful consideration. I think you said you had 2 questions? Or was that the question?

For the second question, it's B3 rejected your proposed structure to list GOL at Novo Mercado and it would make sense to launch a tender offer for Smiles.

Yes, as stated in October of last year, our public offering and also our tender offer -- delisting tender offer remains as an alternative, but we still believe that a structure involving a Smiles' merger brings more benefits to, and it is also better for Smiles' minority shareholders. And it's this rationale that guides our discussions with the independent committee.

Okay. And my third question is, the local press mentioned that the Constantino family would be okay to lose control of GOL as part of the plan to [lease] Smiles and integrate the company. And what's your view about this?

No, you're referring to a press article last week. I mean, it's highlighted in our notice to the market last week, the news in the press last week was produced without GOL's participation. It wasn't based on any concrete facts, and as we said in the notice, we strongly recommend, strongly recommend investors not to make any investment decisions based on that news.

The next question comes from Dan McKenzie with Buckingham Research.

I have a couple of housecleaning questions here. First, what should we be putting in our model for CapEx this year and next? And then separately, as a housecleaning question that's tied to debt, at the Investor Day I think you guys pointed out that the plan was to amortize roughly BRL 2 billion in debt this year with free cash flow. And I'm just wondering what the average interest rate of the debt would be that likely gets retired here?

Yes. Good questions. Well, on the CapEx, we've provided you guys guidance on that. This year, the operating CapEx of around BRL 650 million a year, and just to highlight that, that does not include aircraft -- CapEx for acquisition of new aircraft; we have sale-leaseback, the '18 and '19 deliveries off the order. To the extent that we would do -- we'd start to do finance leases where we would basically put in mortgage financing on those aircraft, we then could have some outflows from our own cash for predelivery deposits. But all of that -- all of that aircraft CapEx, the airframe, the engine as well as the PDPs, is 100% financeable given the secured and unsecured mechanisms available to us. But those -- that number is not in the CapEx, that is, the CapEx, the BRL 650 million we're providing there, is the operating CapEx, which is basically maintenance CapEx, engine overhauls, product enhancements. That's the guidance that we've provided there. In terms of the second question, with the continued liability management that we're doing and the debt amortizations, our focus there is -- on the dollar side, it's best with coupons in the high 8s, almost 9%, there's a little bit there. And then the remainder of that, the big chunk of that, is a combination of our Brazilian debentures, which it's a variable rate, for today have a rate of around 9% in reais and then some other financings that have been done for CapEx, which have the rates of kind of 5% to 6% in dollars. So the net-net effect of that, it's the debt that's going out has a cost to us in the income statement of around 8.5%. But we are, today in a market environment in Brazil with interest rates of around -- of below 8% and as you know we've -- the bond deal we did in 2017 -- I'm sorry, 2018 -- 2017 -- December of 2018, January, has a 7% coupon and a part of the user proceeds on that are what we've been using to do this liability management on the dollar debts that have costs in the high 8s to low 9s. And so we are getting an interest savings there, which I think where you're going with that, which can impact earnings. On average, between 100 to 150 basis points on the liabilities that we're reducing is generating a reduction in interest expense cost of around 100 to 150 basis points. But another way I could say that is that, as I think we've mentioned on calls in the past, is that we're working to get the interest expense component on our business, on the -- ex the effects of IFRS 16, the interest expense on our balance sheet bounces around 5% of revenues. And so one way you can also think about that is that we're targeting to get to roughly 5% of revenues, the overall interest -- outflow of interest expense on the business as compared to our revenues to be about 5% of the total and that structurally will be kind of where we want to get in terms of optimal capital structure. So that's another way I can tell you to think about it. Now having said that, you guys have a little bit of work now to do to redo models and projections in the new accounting standard of IFRS 16. And so all of our numbers going forward, as of January 1, including the guidance we provided -- the kind of update on guidance we provided today, that's all on the new accounting format of IFRS 16, so you'll see a net financial expense now for this year of BRL 1.2 billion. That includes the aircraft's lease component. So embedded in that number is the other interest expense, which today is in the range of BRL 500 million in terms of what I just mentioned; and then the other BRL 700 million is the interest expense component in the IFRS 16 methodology on the lease contracts. That's something we can also talk about going forward. As you guys adjust your models to the IFRS 16 format, you have to make those adjustments, including in the net financial expense line, which is we've re-presented that in the guidance that we provided this morning.

That's very comprehensive. And then just for a follow-up question here. With respect to the economic recovery, you guys referenced, the recovery expected to be pretty even throughout the country, or are there parts of the country where the demand backdrop is stronger, parts of it where it's weaker? I'm just wondering if you might be able to sort of compare and contrast sort of the São Paulo, Rio versus the rest of the country. And then just one other kind of big picture question. At the Investor Day, it was -- I think it was pointed out that the structural reorganization of Smiles could improve margins this year. And I'm just wondering what's embedded in the current outlook? And I'm wondering -- with respect to the guide. And I'm wondering if you can provide some perspective of what that upside could potentially look like.

So I'm going to start by answering your question on the economic recovery, and that question gives me the opportunity to better clarify why we have emphasized so much our privileged position to make the most out of that movement. Being the market leader among the 8 -- in 8 among the top 10 airports in Brazil, we have also a clear advantage in our offer to the business travelers. And these are the first ones to fly more and it is exactly what's going on right now. So if you consider that this top 10 airport, they are basically located in the south -- southeast part of our country. They together stand for more than 70% of the total traffic. It's likely that this positive demand at the beginning of the year has been generated by a much higher dynamic in the business segment. And therefore, GOL has improved its results by capturing the largest portion of these customers, was the combination of our network. And the product that we have developed along the last 4 years position ourselves at the highest position in the customer -- in the business traveler choice to travel, it's their choice to travel. So now what we are facing or what we are finding in the market is a much higher level of business activities than we experienced in the beginning of the last year. And that's what is sustaining these higher yields. Personally I believe this is a positive trend supposed to continue over the following months. So Richard is going to comment on the Smiles' structure that you have asked.

Yes, I mean, I'm not sure if I totally got the question, Dan. But the -- maybe you can just repeat it.

Yes. No. I mean, yesterday, I think it was just pointed out that the structural reorganization of Smiles could improve margins. And I'm just wondering if you could maybe provide a little bit more perspective around that. What, if anything, you might have embedded in the guidance currently? And what that potentially could look like, post any restructuring -- or post the restructuring?

Okay. I see, I see, I see. Yes, I mean, there's nothing in the guidance related to an outcome on the take-in at this point as -- and it really won't -- it won't have any impact on operations. The benefits that will come from that or a combination of, if you will, the synergies or the free lunch, if you will, that gets eliminated, comes out of better efficiencies on taxes. At GOL -- at the airline operating company, we have $1 billion of NOLs which today are only compensated against the profits of the airline, post merger, the large amount of profits that are at the Smiles subsidiary. In Brazil, they have to be compensated based on the tax ID of each individual company. You can't share them across a group of companies even though you control. And so that is a big source of cash flow and earnings once the merger would be affected. But we don't have any assumptions on that right now. The leakage, if you will, on just that item alone, it varies but it's grown to a rate of over BRL 200 million a year. It's a combination of higher taxes on revenues that the Smiles' subsidiary pays as well as full income tax. And so those synergies are self-evident and are only possible via a merger. And so once we have an outcome of that, yes, that would generate some substantial cash flow as well as earnings accretion and allow us to better manage our taxes and NOLs across the group. There's a lot of synergies as well, as Kakinoff mentioned, on better optimized revenue management, better competitivity versus what our main competitors are doing. And then also as well, cash flow that comes out of some other components as well. But as we said, we're -- that process is ongoing. And it's not going to be a couple of months before we have greater visibility on that, and we'll update you guys once we have greater visibility on that.

Next question comes from Pedro Bruno with Santander.

Could you comment on what's behind the upward revision on the guidance in terms of margins or perhaps confirm my impression that it relates to the VAT tax cut recently announced by the São Paulo government? I'm talking about the 1 percentage point increase on the -- we can talk about the EBIT margin. That would be the first one.

Yes, you're correct. Your impression is correct, that comes out of a lower net price per liter for jet fuel. You saw us revise that down by around BRL 0.10 per liter, and that's the change -- the only change in the guidance was that, which has -- had roughly a 1-point -- 100-basis-point impact on our margins and then the corresponding roughly BRL 0.10 impact on earnings per ADS, as was disclosed in the release that went out this morning.

Richard, and then a second one, if I can. If you can also give a little more color on what's behind the guidance in terms of jet fuel and FX. And FX of course, you provide the jet fuel component but in reais. So it would be interesting to have an idea of what's behind -- or what would be the impact of the currency there, perhaps talking in terms of average either at FX or could be Brent or WTI for 2019 versus 2018? That would be great.

Yes, sure. We don't divide those numbers because you guys in the markets come up with those numbers on estimates for currency and oil prices, and we use those averages in the data we provide to the market. Obviously, we work with other types of forecast here because those are, I mean, external inputs, dollars and oil prices -- and oil. Having said that, oil -- basically, through our combination of hedging and capacity management, we've taken the oil -- the upside oil risk off the table. We're hedged on our 2019 oil -- fuel -- oil consumption, about 60% in the low 60s WTI and -- which should be kind of high 60s Brent. And so if we were -- we have the scenario of oil prices above that, we would be generating gains on our hedge portfolio. Of course, the capacity dynamic allows us to have a fair amount of recapture or pricing power onto yields, which is buoyed by the very rational supply demand balance as well as the excess demand that's been coming into our domestic market as a result of a variety of factors. But having said that, we here at GOL, we're bullish on oil. Based on our process and our forecasts, we expect oil, at the end of this year, above $70 Brent, and that absolutely reflects on how we're approaching hedging. On the currency side, we're just using the same averages you guys work with. I think what you'll see in -- if you just kind of back into it from our numbers, you'll probably see something between 3.6 and 3.7 average for this year for currency in those forecasts, but feel free to use your own forecasts for currency and oil into our -- the matrix of a lot of detail metrics for -- to help you guys do your models. But having said that, historically, there is a very high negative correlation between oil prices and currency. And so if we do get an appreciation in oil, it's likely that we continue to get appreciation in the currency. But you guys are better than -- the best to come up with what you think the right FX is to use there. The comment I would make on that is that our first line of defense on the currency is what we do on the revenue management side. And our ability to have pricing power comes out of what's going on in the capacity side in the industry. Obviously, we're the largest domestic player so we have the biggest impact on capacity, but we have other competitors and a lot of intense competition in the market. And so the overall rationality of capacity in the market will ultimately determine how we're able to manage margins through any volatility we might get, say, in a currency, if there's a rapid currency depreciation and our ability to adjust fares over the booking cycle. But if the depreciations of the -- or appreciations are normal, in other words, if the variation in oil price and currency is within normal volatility, that's generally captured in the regular yield management. How we approach hedging here, it's designed to protect us against the dislocations when all the correlations tend to go to one. And then you've got a period of 3 to 6 months where you've got to manage through abnormal volatility. But the key driver and the key thing that I encourage people to focus on, and you see this in the monthly traffic stats for the whole industry, is what the supply demand balance is in the local market. And historically, when we have RPK growth in excess of ASK growth, in other words rational capacity, in our market here in Brazil, and this is statistically significant data for the last 20 years in the market, which is as long as we've been operating in it, we have a 70% correlation of Brazilian yields with the U.S. dollar. And so our yields are highly dollarized when we have a rational supply demand environment. So the key variable you need to focus on for that is how well we're doing on that balance of supply and demand. And that's ultimately going to determine how everything else falls in line. Of course, as you know, we do a lot of proactive hedging, both in oil as well as currency to buy us some time to adjust and ultimately, we're working to -- for a margin outcome. And so the margin guidance that we provide to there is what we're working for across the board, capacity management, revenue management, hedge management, it all works together in a coordinated way to help us achieve what we're guiding on margin. But not any one variable on itself in isolated matters. But the most important variable is obviously the capacity. That's how I would answer that question and guide you guys in terms of how we're thinking about that in the management of our business.

The next question comes from Savi Syth with Raymond James.

I was wondering if you could provide a bit of the color on the -- kind of the key cost items and how you're thinking about them in 2019 and 2020 that kind of drives your CASM -- CASK, ex guidance?

Sure, Savi. Yes, it's a good question. I think the main way that we think about, especially CASK ex fuel at GOL, is what we're doing on aircraft's productivity and dilution of fixed costs. That's really our key focus here at GOL on the cost side is productivity. And so we're working -- as you've seen in the last many quarters, we've been consistently increasing our aircraft utilization, and we're on our way back to roughly a 12 hours a day of utilization, which for us, here in our business, is about 11 flights a day when you put in turnaround times and the maintenance, it's roughly a 24 hour a day operation. And so we're always working to try to maximize the productivity out of the aircraft in general. And also this year, we're starting to get more of the effect of the MAXs coming in. And they have a higher productivity overall in terms of having a slightly -- 9 additional seats on the aircraft as well as a longer stage length. And so this year to next year, we start to get a little bit more of that effect where the capacity that we're putting on is coming out of this upgauging as opposed to adding additional fixed costs. And so we're getting a better fixed cost dilution. And so this year, we are basically going to be achieving around a 3% to 4% increase in productivity through that effect I just described, which, if you assume currency stability or appreciation, basically covers us for inflation. In other words, the normal, call it, 3% to 4% -- inflation this year in Brazil is running, and we've been running it at all-time lows, kind of below 4%. So we basically have inflation covered with what we're working -- what we're achieving on the productivity side. It's a combination of just increasing utilization and then as well as the effect of the MAXs coming in and the upgauging on the NGs. And that effect will continue. We want to say that this year, 3% or 4%, next year, 3% or 4%, that will continue as we transition the MAXs into the fleet. And that's pretty much across the board in terms of the nonfuel part of the equation. That's the real driver. Generally in Brazil, we have to deal with annual inflation and cost of living adjustments. So we're always dealing with the inflation impacts on our costs. So the way that we're keeping these costs stable at this roughly BRL 0.13 nonfuel CASK is out of that effect. And it's structural, and it's something that obviously we've been working on many years as we've developed the MAX coming into our fleet. But just to make a comment, that also impacts the fuel as well as -- because the MAX aircraft, as you're probably seeing in companies like Southwest and Ryanair, in your coverage of U.S. and European airlines, that we're getting the as-advertised fuel economy on the fuel consumption of -- for us versus the 800, it's about 15 -- about 1-5%, 15% on a per ASK basis. And that's significant, especially as that's the biggest component of our cost structure. And what you'll see as you adapt your models now to IFRS 16, with the moving of the -- with the full movement of the aircraft component below the operating line, the fuel component now has a larger weight -- has a larger ponderation percentage, if you will, in the overall cost structure. And so the fixed cost dilution is even more evident, but as is more important, the fuel savings. And so that's how we approach it. It's really these 2 angles. One is that the productivity and the absolute lowest fixed cost possible. And then a huge focus as well on the fuel management from an operating perspective to make sure that we're squeezing every millicent out of that. And those 2 components dovetail very nicely with the MAX coming in. The MAX is kind of like the perfect machine for us to operate that, in terms of how we operate it in our network. And that's probably what a year ago we think about 95% of the day is those items that we -- and we're always working on optimizing that current projects, medium-term projects, always focused on that. And so that's basically our real house. And that's where we think we excel and it's a source of our competitive advantage.

That's helpful color. And just on that, is the payroll taxes reversed? Is that not a meaningful impact then as we kind of think about the cost side?

We just lost the mic here. On the payroll tax, I mean, that has been on the docket for a while for that potentially to be reversed. Keep in mind that it has an impact on revenues as well as costs, and there's a net effect.

Yes. Actually, today obviously, you're not going to have it, but if the government has that, they would like to further analyze the possibility of having a, I would say, a more comprehensive plan involving more companies and sectors that should be that in a more structural way. So at the moment, we are not considering anything because the fiscal situation in Brazil is pretty critical, and we cannot assume that this -- this is a certain, it will be soon -- it will be available anytime soon.

So every year, we budget that it's going to go away. And I know it's like the guidance we provide you every year -- last year, I mean, every year, we budget that it's going to go away. And so if the effect of it going away, in terms of the -- when we say it will go away, it has an impact both on net revenues as well as the costs. The costs go up, but then the net revenues will also go up a bit because of how it works. And so that net effect is in our guidance, but what Kakinoff was saying is that it -- I would say it's a 50-50 chance this year that it goes away or it doesn't. But it's not in the first half of the year for sure, it's definitely in the back half.

Got it. And just a quick slightly longer-term question. As your balance sheet improves and you kind of take a more strategic view on financing, is there a right mix of operating lease versus kind of debt finance aircraft, because right now it's more heavily related towards operating leases? And I was wondering if that would change over time?

Yes, we are changing a bit. We're like -- in the first cycle we did, which was the 80 aircraft we did of NGs, which started arriving here in 2006, and that cycle is basically finishing now. We had a policy of -- somebody's catching a flight there -- we had a policy of 50-50 sale leaseback finance lease. And the idea -- the concept there is the flexibility to get out of operating lease aircraft in our first phase was higher than the finance leases. And that was evident, I think, in our 2015, '16 downsizing. As you know, within a 6-month period we're able to reduce 29 aircraft, 9 of them were finance leases and 20 of them were operating leases. And so we're able to get together with our leasing companies and make a quick adjustment. And that flexibility is a little bit higher in an operating lease contract than a finance lease. Having said that, in this next cycle, which will happen over the next 10 years, which started in 2018, we're going to have 135 MAXs. Our plan is to do 60% finance lease and 40% operating lease over the course of the cycle. And so that would be roughly 70 to 80 finance leased aircraft over the next 7 to 10 years. And probably, Savi, in the third cycle, which will be, say, 10 years from now, whenever the new version of the Boeing 737 comes out, we'll probably be going to something like 80-20, 80% finance lease, 20% operating lease. But it's a little bit of our ownership mentality here where we like to take ownership of the aircraft because some companies don't take ownership at all, including some of our competitors, or the opposite, which is all ownership like you might see in a Ryanair or a Southwest, where they have high -- 90%-plus level of finance leases. We're still growing into having the majority of the fleet be owned, and I think the MAX period for us will be that transition. But the '18, '19 orders if you see, were sale leasebacks. And part of that reflects -- the other component where we like to have are afoot in both market, is we can take advantage of the supply and demand factors for aircraft in both markets. In other words, when there's a robust demand in the sale-leaseback market, we can make money in our market. And when not, then we can always count on the finance lease mechanisms, which have export credit guarantees and other mechanisms, which are becoming more diverse in the current -- in this next cycle. And then we can have that kind of as a backstop. But -- so we like to take advantage of the supply and demand in both markets, which happen over a longer cycle than in the day-to-day of just the pure airline transportation business. So it's another part of our business, it has a different dynamic, more of a long term. And we think we've been able to -- and the way we've done it in the policy of part finance lease, part operating lease, have been able to create a lot of long-term value and been able to unlock it when we've needed to unlock it. So a lot of -- we'll end up being -- we're done with all the dispositions of the NG portfolio, we will have realized around $500 million of gains on that part of the business, which came at a very important part of the cycle for us and kind of the trough, if you will, of the Brazilian airline cycle, which was 2016, '17. And so what I'd like to say is that, that provides -- that part of our business provides some nice downside protection for the business, for creditors as well as shareholders when we need to tap into it. But we do -- but it does take a long cycle to build it up. And we're finishing the cycle on the NG, starting the cycle on the MAXs and so that'll continue to be an interesting component of the business over the cycle. But obviously, it -- I really -- it does create some challenges to try to project it and predict it because we're taking advantage of the market, and we've had -- in '16, '17, '18, '19 a lot of our profits have come out of that and then we'll probably have a period of '20, '21, '22 where it will be the majority of the profits will not be coming from that at all. They should be coming from the core demand in the airline transportation business. And then when we get to the other end of the cycle, kind of 2025, '26, '27, we will have built up some substantial equity in the MAX portfolio. And at that point in time, if I'm talking to you on the phone, we'll probably be having a similar conversation about what we're doing with the equity gains built up in the portfolio then. And so it does create some challenges for those that are looking at our business with more of a short-term focus.

The next question comes from Rogério Araújo with UBS.

I have a couple. So the first one is a follow-up on your '19 guidance. So if you exclude the sale leaseback gains and also the demand and expenses that are one-offs, your guidance implies a 6.5 percentage point margin increase year-over-year. And in your calculation, this would imply between 6% and 7% yield expansion year-over-year for 2019. So my question is, does it make sense in our calculations? And is GOL expecting a significant expansion in ticket fares this year if this is related somehow to Avianca Brasil's current situation or to a demand improvement, how you see your future bookings? So this is my first question regarding yields implied in your guidance for '19.

Rogério, actually that's a mix of all the things I have just mentioned. It has a more benign market, it has [some shifts] to consider already from Avianca Brasil to ourselves. And the economy is fastly or faster than other segments recovering in our specific segment. And you have also a higher penetration, a higher market share in the business segment, which give us higher fares in comparison to last year. So definitely we are positive and more bullish regarding the market and mainly our performance, which might be benefited by the Avianca Brasil effect. But also a considerable portion of that enhanced performance comes from our own sales structure, revenue management strategy and mainly the product, which has been considered by the business travelers are more effective than any other player.

Yes. One other comment, Rogério, be careful when you compare the '18 numbers to the '19 because the guidance numbers we're presenting now for '19 are in IFRS 16 and there's about a 5-point increment in the new methodology. On Page 16 of the release, we provided a table which shows the difference between 2018 as reported and what it will look like in IFRS 16. And it's about a 5-point change on the operating margin. And so, for example, the 2018 pro forma EBIT margin in IFRS 16 was 17.6%. And so there's not -- and then our guidance for the 2019 is 18% in the same methodology. And so there's not a whole lot of increment there in the '18 to '19

(technical difficulty)

where you have to transition for that now because that's how all the reporting is doing. But yes, you are right that we are -- and we're seeing this, we are assuming yield and RASM -- RASK growth 3 -- 2 to 3 points above inflation. And so there is a big source of the -- of that is coming out of the underlying demand and the supply demand balances, which is allowing us to continue to expand yields above inflation. And then also some of the effects I mentioned in the answer to Savi's question which is the increase in the productivity that we're seeing in there. The other -- second main driver there is -- in the margin expansion, is the increased utilization, the MAXs coming into the fleet and the better productivity we're getting on the fixed costs. And so all that is kind of driving that slight increase in the margin. But at the end of the day, it's -- when you exclude extraordinary effects and so on, it's like a 2-point increase in margin, apples-to-apples, '19 over '18.

Did this -- so -- let me go through this again, sorry. If you exclude sale leasebacks and this -- and you -- if you also adjust it for the IFRS 16, this would be about a 7-percentage-point increase year-over-year. Is that correct?

No, that's not correct. I think what you're missing there is like the effect of the -- when you talk about the asset management part of our business, the net effect on '18 is about BRL 350 million, right? So that's about, what, 3 points of margin. And so that's the number. If you wanted to kind of back it out, you could back out 3 points of margin from '19 if you wanted to do that. But we manage one business. And so that -- that's how we manage the business. As I was saying, we don't -- how we get to the margin is a function of how we manage all of our businesses. And we have a lot of flexibility on how we can manage those. And so yes, if you were to -- if you wanted to exclude a number from '18 related to the asset management part of our business, it's about -- it's a little over 3 points of margin. And so that's the number you should use then to maybe make your calculations in the context of '19 and the real growth in margins.

Okay, it sounds good. I'm going to be happy if you can discuss this later again, I can...

Yes, sure. No problem. No problem at all.

So the second point is the financeable CapEx. If you include that into your -- if your CapEx for -- if your guidance for CapEx, how much would it be like in 2019 and maybe '20? So including financeable CapEx, how much would it be in '19 and '20?

Including financial CapEx? I didn't follow you on that, sorry.

So if you include 100% of the CapEx, including the aircraft that you are going to receive, and do financial leases, if you include everything, how much would be total investments in 2019? That's the question.

All right. Well, in 2019, we don't have any financial leases. All of our '19 deliveries are sale leasebacks. So I'm just trying to understand your question. I didn't follow your question, Rogério.

Okay. You said that your CapEx guidance for 2019 and '20 does not include CapEx for acquisition of new aircraft and...

Okay, I got you. I understood what you said, yes. What I was trying to say there was the following, is that we have been -- in the first part of our orders it's -- that CapEx there is what we call kind of operational CapEx or maintenance CapEx, product CapEx, that's the number that we're guiding there. The decision on the fleet financing, you'll know that when we do it. And so what I was just saying there was that, for example, if we end up doing, for example, some finance leases on the back end of 2020, we've basically made decisions on all of our aircraft deliveries until the second quarter of 2020. And when we do that, for example, if we were to announce a finance lease package for a number of aircraft, say, 5 aircraft, then that would create an aircraft CapEx, which would then be financed with secured and unsecured financing. We haven't made the decisions on those yet. And so when we -- so no decision on that or on those 2019 or '20 numbers. If you would just take the PDP component of if we were to go between [half] and 100% of our deliveries in an individual year in a finance lease format, that's anywhere from $50 million to $75 million of outflows for PDPs. But keep in mind that how we do the financing on the aircraft, it basically gets to pretty close to 100% LTV. And so when the aircraft CapEx is enormous, it's in the billions over the life of our order, it's all 100% financed. And so you would see a number for CapEx coming in through the aircraft acquisition, but it's all 100% financed with secured and unsecured financing. So it doesn't generate any cash outflow for us. And so the way we're providing the guidance is you can understand what the underlying CapEx that's required for the airline operations business, but it really doesn't relate to the aircraft financing cycle. Also because we have not made any decisions yet with respect to finance leases, we do expect to make these decisions between now and September. And so I think by September of this year, we'll provide some visibility on what 2020 and 2021 will be looking like from an aircraft acquisition perspective. But right now, we haven't made any decisions on that. So it's hard for me to guide on that because we could also end up in a format where we keep doing sale leasebacks for '20 and '21, in which case none of this would flow through that line item. But it's all 100% financeable with low-cost sources of funds. Generally, in the secured component of our aircraft financing, we're getting 12-year money at [45%] cost of funds, all in. And then we complement that with a little bit of unsecured financing, which ends up having a blended cost of kind of 5% to 6% with an average maturity of around 10 years. And so it's a very well-organized finance part of that business, which doesn't generate any pressure on our liquidity management in the business.

The next question comes from Petr Grishchenko with Barclays.

I guess I wanted to follow up first on Avianca discussion. There's some conflicting reports on what could happen to Avianca capacity, particularly to slots in some major airports. So maybe if you could outline kind of scenarios of how you think the market could evolve, if let's say Azul or LATAIR captured this capacity?

I think -- actually, I wouldn't like to speculate on possible scenarios because we are talking on about a competitor, which is fighting to go through this situation, and we have no intention to consider [speculative scenarios] because we would like to drive the public opinion nowhere, but strictly follow what's going on and try to understand how the market will naturally accommodate around this situation. Because actually, nobody knows. So you -- I mentioned before that there is legal dispute and Brazil has a quite robust legal system, but unfortunately, at this moment, this lack of visibility of clarity raised several speculations. Regarding the slots and possible outcomes in the -- as the most congestion airport, I think that those were -- the less where Avianca Brasil would give up on its current footprint. So I mean that we would possibly see a much lower capacity of Avianca Brasil in the market before we -- they would give up on the slots that would significantly change the landscape in the airline segment in Brazil.

If you look at the January data, which is public, I mean, ABB had a reduction of domestic ASK, 7% to 10% negative, reduction, minus. And that company had been growing at around a 12% run rate on domestic ASK increase. And so if you take the delta on that versus expectations, it's almost a 20% reduction in the run rate capacity growth of that company. And that's just based on the data -- the traffic data, the public data that's out through January. So that might be one way for you to think about how that can be impacting the overall supply demand in the market. And as Kaki said before, we're not changing our domestic capacity plans for this year. We do have the flexibility because -- we operate one aircraft type on one unified network. And so we can shift capacity between domestic and international, and we're always working to maximize the overall profitability of The network, with a capital T, The network, one network, including the international, it's all one asset, if you will. And so we can adjust capacity based on wherever we can get the best profitability on the allocation of our aircraft over the full network. And so we've a lot of flexibility to do that. But we also don't see in the market anybody changing their capacity plans based on what's going on. Having said that, we are experiencing now a phenomenon that we haven't seen -- maybe you have to go back to -- I don't know, maybe I've to go back like 2010 to have an excess demand environment, which is what we're living in now. That also relates to the overall airline cycle, which has nothing to do with the comings and goings of anyone individually. And remember that as well, I mean we are also dealing with the demand environment. It's the most powerful component that is -- the capacity environment is helping, and we've been working very hard over the last 3 years to get to where we are in capacity, and we feel like we're in a good position with the combination of the market as well as the fleet plan to flex around whatever is going to come our way over the next year or so.

Got it. Very helpful color. The second question. I mean, I appreciate your comments on financing, they're very helpful. But looking at amortization schedule for this year, it looks fairly smooth. Is there any expectation that you'll access either international or local DCM this year?

Well, no. We don't -- I mean, we've already done everything we want to do on unsecured debt. Most of our work going forward is going to be on secured debt. Having said that, we're an airline, and we're always going to look at where we can optimistically improve our balance sheet. But anything we would have to do would have to have a lower cost of capital than the liabilities already in our balance sheet or we'd have to have more of a component, which would improve our credit ratios. So right now we don't see anything in the international unsecured debt market that would meet that. As you know, also, Brasil interest rates now are at record lows. The issue is the tenor, it's hard for a company like us in a domestic market to raise money beyond 3 years, but money is available to us today in the Brazilian market at around 7%. And so some of the stuff that we're looking at tends to be more on the shorter end, on the working capital. But it's starting to become more optimization on the pure debt side than on the -- than on structural because our 2025 maturity basically covers us, so everything we want to do as it relates to aircraft acquisition. And we've been using that to clean up everything we can on the liability management side. The only thing we have left over is the 2022s. We have a call in January of next year and then the term loan, which we plan to amortize in August of 2020. But of course, we'll obviously -- we'll always look at things opportunistically as a way to either improve our capital structure, equitize our balance sheet or improve our credit ratios in line with our ultimate objective to get back to a BB- credit ratio.

Excuse me, this concludes today's question-and-answer session. I would like to invite Mr. Kakinoff to proceed with his closing remarks. Please go ahead, sir.

So I would like to thank you all and incentivize whoever is considering to come to the Brazilian Carnival. We do have quite attractive fares to the biggest party of the world. So have a nice holiday to you all. Thanks very much for your attention. Bye-bye.

[See you on Carnival].

This concludes the GOL Airlines' conference call for today. Thank you very much for your participation, and have a nice day.