SÃO PAULO, May 13, 2020
/PRNewswire/ -- GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL
and B3: GOLL4), Brazil's
largest domestic airline, today provides an Investor Update
for April. As the pandemic situation develops, GOL will continue to
provide monthly updates of results and liquidity to its
constituents and stakeholders in the spirit of transparency. All
information is presented in Brazilian Reais (R$). The information
below is preliminary and unaudited.
Given GOL's current liquidity levels, lowest cost structure
among its peers, and overall financial position relative to
competitors, the Company is in a robust position with over 10
months of cash reserves to shield and strengthen it through this
crisis. GOL believes it will be well-positioned in the market in a
recovery due to its domestic network that serves both business and
leisure travelers. Today, the Company is in a competitively strong
position and sees the opportunity to expand on that in a recovery,
within a smaller and more structured industry.
Cost Reductions and Cash Reserves
GOL made the necessary cost reductions quickly and shored up
liquidity to withstand the crisis. To preserve cash, management
acted on a variety of cost-saving measures, including the deferral
of heavy maintenance costs and over 6,000 voluntary employee leaves
of absence (~40% of its workforce).
With limited visibility into the recovery, GOL's current
planning scenario assumes (-45)% y/y 2020 capacity, including
(-30)% y/y by 4Q20, but it has the flexibility to respond to
prevailing demand trends.
The Company is maintaining its level of conservativeness in its
cash burn forecasts, which is prudent given the likely longer
demand recovery curve, especially for international travel (which
accounted for around 15% of GOL's flight capacity before the
pandemic). On these conservative assumptions, the Company estimates
that it has over 10 months of cash-on-hand, assuming that all
financial expenses and debts are paid in full.
On the basis of GOL's current liquidity levels, as well as its
flexible fleet management model which enables it to offer the
lowest cost structure among its peers, and its consolidated network
in Brazil, the Company believes it
has a strong advantage in a recovery relative to its
competitors.
Capacity
The Company has grounded 120 aircraft (~92% of its fleet)
since March 28 and flights in April
were operated from the Guarulhos airport in São Paulo to all of
Brazil's state capitals and the
federal capital in Brasilia, which
represents 7% of the April 2019
schedule.
By the end of May, operations are expected to be at 12% of last
year's schedule, with the planned re-opening of the bases at the
Foz de Iguaçu, Navegantes and Maringá airports, and the
re-initiation of a limited number of flights from the Congonhas
airport in São Paulo to the Santos Dumont and Galeão airports in
Rio de Janeiro.
With seven B737-800 aircraft returns in 1Q20 and another four
B737-800s planned for 2Q20, GOL plans to return a total of 18
leased aircraft in 2020 (and can return up to 30 aircraft in
2021-22). Given the expected softer demand and the need for even
lower lease costs per seat-kilometer, the Company is currently
assessing a fleet reduction focused on its 23 B737-700s (15% of
total seats). Additionally, GOL has reduced 2020/2021/2022 Boeing
737 MAX deliveries by 14/20/13 aircraft and capex by
R$200 million to a total of R$300 million for May to
December, with plans to fully finance aircraft capex/engine
overhauls remaining in 2020.
Cash Consumption
Gross Cash Operating Costs: GOL
reduced its gross cash operating costs from R$9 million/day in
April, and expects R$8 million/day for May, which excludes
revenue, ATL refunds, and non-aircraft debt payments. Cash-cost
payments for general debt not tied to aircraft added
R$2 million/day in April. The
combined R$11 million/day is an improvement on its
initial plan of R$12 million/day, which includes the impact
from ticket refunds and employee costs.
Net Cash Operating Costs: GOL had a net cash burn of
R$6 million/day in April, which
includes revenues of approximately R$5
million/day. With the implementation of the government's
Provisional Measure No. 925, most passengers are rebooking and
taking vouchers rather than refunds, limiting net revenue-related
cash outflows. Payroll costs were further reduced with cuts in
management salaries, reduction in hours and a higher number of
voluntary unpaid leaves. And there was a favorable contribution
from cargo operations.
For the remainder of 2020 (May-December), assuming revenues from
the above-mentioned scenario, no ATL refunds, ongoing
renegotiations with employees, lessors and suppliers, and that
financial expenses are paid in full, the Company estimates a net
cash burn of R$5 million/day, an amount as of today that beat
our expectations of 30 days ago. Including the full payment of
debts not related to aircraft, the Company estimates a net cash
burn of R$11 million/day, which provides GOL with more than 10
months of cash reserves.
Liquidity
As of April 30, the Company had
R$4.0 billion in total
liquidity, which implies over 10 months of cash on hand (excluding
refunds and restricted cash). Including the financeable
amounts of deposits and unencumbered assets (highlighted in the
table), GOL's liquidity sources would be approximately
R$7 billion.
The Company is in discussions for R$750
million to R$1.0 billion in
financing secured by unencumbered assets (at an LTV of 50-60%). It
currently has R$1.7 billion of
unencumbered assets.
In March, GOL reached an agreement regarding compensation for
the grounding of the Boeing 737 MAX and order book restructuring,
under which it received R$0.5 billion
of cash in April and retains a total present value of R$1.9 billion, which it will receive over
the coming years. The Company has no expected expenditures for new
aircraft over the next 24 months.
Currently, GOL has approximately US$100
million invested in a portfolio of 17 million barrels
of oil for the monthly periods from May 2020 to December 2022. Approximately 65% of the Company's
portfolio is in out of the money call options (US$55 average cap price) with premiums paid for
in prior periods. The remaining 35% of the portfolio is in zero
cost collars with Brent puts that are immunized at US$20 and
that are fully marked-to-market and fully invested in deposits with
top-tier counterparties.
Key Metrics – April 2020
(preliminary and unaudited)
Liquidity
|
04/30/2020
|
∆ March
2020
|
Total
liquidity
Cash on hand
(ex-refunds/restricted cash)
Deposits
Unencumbered
assets
Net debt/LTM
EBITDA
|
R$4.0
billion
10 months
R$2.5 billion
R$1.7 billion
3.0x
|
-5%
+11%
+3%
+13%
+0.6x
|
Net Cash
Burn
|
April/2020
|
∆
March/2020
|
Cash operating
costs
Other cash
costs
Total cash
outflows
Cash
inflows
Net cash
burn
|
R$(9)
MM/day
R$(2)
MM/day
R$(11)
MM/day
R$5 MM/day
R$(6)
MM/day
|
-73%
-182%
-96%
-15%
-159%
|
Fleet
|
April/2020
|
∆
March/2020
|
Number of grounded
aircraft
Grounded aircraft as
percentage of total fleet
Operating aircraft
(average)
Flights per day
(average)
Destinations
|
120
92%
11
50 (7% of
2019)
27 (8% of
2019)
|
+88
+67p.p.
-88
-470
-73%
|
Operating
Results
|
April/2020
|
∆
March/2020
|
ASK
(million)
Load
factor
Gross
revenue
|
239
79%
R$138 MM
|
-92%
+8p.p.
-80%
|
Customer Experience and Personal Safety
GOL has reinforced all of its procedures to ensure the Health
and Safety of its Customers and Employees, with increased attention
to the cleaning of seats and armrests, safety belts, trays, floors
and walls.
In addition to complying with the already strict standards of
sanitation for civil aviation established by the regulators, the
Company also implemented additional advanced measures for aircraft
cleaning and sanitizing during ground stops and overnight stays,
including the use of a hospital-grade disinfectant for the service
galleries and all areas of intense use in the cabin, including the
cockpit.
GOL's aircraft have HEPA air filters, which eliminates 99.7% of
particles such as bacteria, viruses and other impurities on board,
allowing the circulation of purer air. The Company has also
distributed gloves and masks to Employees, in addition to making
alcohol-based gel available to the crew and Customers on the
aircraft. The use of masks on board is mandatory effective
May 10.
Through its strong relationship with travel agencies and
entities that represent the tourist trade (ABAV, ABRACORP and
BRAZTOA), GOL maintained its sales leadership in all segments, with
emphasis on corporate travel according to ABRACORP data. In 1Q20,
the Company obtained the best rating on the Consumidor.gov.br
portal, leading in terms of the solution index, the satisfaction
index and the average response time.
Comments
Fixed Cost Structure Adjusted to Today's Demand: GOL
quickly concluded the adjustment of its fixed structure, both
operational and capital, aligning it to the cash flow forecast for
the coming months. The Company's LCC operating model allows it to
be leaner. GOL is highly confident that it will exit this crisis
with enough safety and redundancy to provide with an adequate cash
cushion.
"We have returned to our initial years of operation as a full
low-cost, low-fare airline, and that allows us to be both realistic
and optimistic. The Company has one of the most competitive cost
structures worldwide," said Richard
Lark, GOL's CFO.
Prepared for a Slow Recovery: GOL is prepared for a
slower recovery with low visibility. If demand recovers at a very
slow rate, the Company's flexible single-fleet type operating model
will continue to be matched to passenger demand generated in
Brazil's principal business and
leisure markets. Management will continue to make an assessment of
the new level of demand and potentially turn to additional
rightsizing of its cost structure for the new level of supply. This
expectation may change with an increase in sales of more than 20%
week-over-week.
A Highly Seasoned Team is GOL's Main Advantage: the
Company's management team has successfully managed many crises,
transformations and acquisitions. GOL is working hard to win the
fight today, so that it wins in the future.
As Brazil's largest domestic
airline, the Company is preserving its: (i) long-term strategic
mindset; (ii) liquidity; (iii) adaptability; and (iv) workforce,
maintaining the Health and Safety of its Employees and
Customers.
The Company benefits from fast decision making and decisiveness.
GOL is building even tighter ties across its ecosystem of
stakeholders, with transparency in communications, which will
contribute to stronger outcomes. The Company is re-inventing its
Customer experience to continue to provide the safest air travel in
Brazil.
"Our Company is extremely prepared, not only to confront and
overcome the most difficult obstacles, but also to learn from them.
We have become stronger, more agile and united. And I am absolutely
sure that GOL will learn from this crisis, forging us into an
airline even more capable of carrying out its essential role for
society," concluded Paulo Kakinoff, GOL's CEO.
About GOL Linhas Aéreas Inteligentes S.A.
("GOL")
GOL serves more than 37 million passengers
annually. With Brazil's largest
network, GOL offerscustomers more than 750 daily flights to
over 100 destinations in Brazil
and in South America, the
Caribbean and the United States. GOLLOG's cargo
transportation and logistics business serves more than 3,400
Brazilian municipalities and more than 200 international
destinations in 95 countries. SMILES allows over 16 million
registered clients to accumulate miles and redeem tickets to more
than 700 destinations worldwide on the GOL partner network.
Headquartered in São Paulo, GOL has a team of approximately 16,000
highly skilled aviation professionals and operates a fleet of 131
Boeing 737 aircraft, delivering Brazil's top on-time performance and an
industry leading 19-year safety record. GOL has invested billions
of Reais in facilities, products and services and technology to
enhance the customer experience in the air and on the ground. GOL's
shares are traded on the NYSE (GOL) and the B3 (GOLL4). For further
information, visit www.voegol.com.br/ir.
Disclaimer
This investor update contains
forward-looking statements relating to the prospects of the
business, estimates for operating and financial results and growth
prospects of GOL. These forward-looking statements, which are
subject to change without prior notice, reflect mere estimates and
projections and are based exclusively on the expectations of GOL‟s
management at the time the forward-looking statements are made.
Further, these forward-looking statements depend substantially on
external factors, many of which are highly uncertain, including (i)
macroeconomic developments in Brazil and volatility in exchange rates,
interest rates and other economic indicators, (ii) developments
relating to the spread of COVID-19, such as the duration and extent
of quarantine measures and travel restrictions and the impact on
overall demand for air travel, (iii) the competitive environment in
the Brazilian airline market and government measures that may
affect it, (iv) fuel price volatility and (v) the risks disclosed
in GOL‟s filings with the U.S. Securities and Exchange
Commission.
Unaudited information
The information relating to
March and April 2020 contained herein
has not been audited or subject to limited review by GOL's
independent auditors. As they are still subject to review by the
Company's independent auditors, the information relating to the
months of March and April 2020 is
subject to adjustments and changes, which may cause the results,
performances or events hereby disclosed to be substantially
different from those to be reported in the GOL's quarterly
information and the limited review report by the independent
auditors. Nevertheless, the Company does not anticipate that
adjustments or changes to the information herein disclosed will be
necessary.
GOL Investor Relations
ri@voegol.com.br
www.voegol.com.br/ir
+55 (11) 2128-4700
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SOURCE GOL Linhas Aéreas Inteligentes S.A.