Gol Linhas Aéreas Inteligentes S.A. (GOLL54) Earnings Call Transcript & Summary

Good Thursday morning, everyone. Thank you very much for coming. I hope you enjoyed our Top Gun mood. Actually, it's the Top GOL mood. I was wondering who of our pilots, whether Sérgio Quito or Celso was the one landing, so good in Congonhas. Congratulations, by the way, Celso. He's claiming this achievement for himself. Thank you very much for coming and joining us at our GOL Investor Briefing here at our headquarter at Congonhas Airport in São Paulo. Those ones coming from other countries, you're probably got by -- caught by surprise by facing such low traffic, which is not unusual. That's one of the reasons why we decided to do this by the beginning of the year. So possibly, you're going to see São Paulo in a completely different way than you used to -- to do. Here in our training center, we are where GOL's safety culture dominates. Also, I would like to say hello to our investors in the U.S., Europe, the Middle East, Asia and Australia, who are participating via webcast. Webcast participants can send questions at any time during the presentations by clicking on the question mark button on the upper left of the webcast platform. We look forward to receiving your questions, you all. Today's GOL Investor Briefing will feature a review of airline industry trends and an in-depth look at GOL's policies, strategies and growth plans. The presentations will be led by senior management, supported by IATA and Boeing executives, to whom I would like to again say very welcome. We expect to have an interactive session today with our formal presentations as well as the Q&A, as we share with you the status of GOL's value creation plan, where we are currently and where we want to go over the next few years. On the next page, #2, of the introduction, I show our disclaimer regarding forward-looking statements for this presentation. For those of you following from long distance, we will call out the page numbers as we present today. For those of you on board with us here, I hope you all have a comfortable experience. Just out of the door to your right, you have a lounge with coffee, restrooms down the hall, and there is a nice space off to the left if you need to make a phone call. As for the materials at your seat, if you want to mail them to your office, please fill out the form inside the GOL log shipping box. At the end of today's briefing, please leave it with the assistant in the simulator room where you checked in, and we will ship it to you for free. Here on Page 3 is the framework for today's investor briefing, during which we will review and discuss with you investing in GOL Airlines using a device we call GOL's 5Gs: great market, great management, great product, great operating model and great value creation plan. For those of you who made the journey to our headquarters at the end of today's briefing, you receive your GOL Wings, along with a special surprise that will help you experience GOL. Here on Page 4 is the schedule for today's briefing. We will kick off with an overview of the Brazilian air passenger market from our special guest, Peter Cerda, IATA's Vice President. Then after a short coffee break, at 10:45 a.m., GOL's Chairman will brief you on our purpose, team and industry, after which I will review our competitive strengths and strategies. Before lunch, our Vice President will review our revenue and operations. Lunch will be served onboard style here in the auditorium, during which Boeing will elaborate on our aircraft competitive advantages. After lunch, our CFO will detail our financial strategies and value creation plan and share some benchmarking with you. We will have time for Q&A at the end of each segment. And at 3:30 p.m., we will have an extra half hour for additional questions, including webcast participants. Today's briefing ends at 4:00 p.m., after which we will have available 4 30-minute guided tours to: one, our control center; two, GOL Labs; three, our Congonhas maintenance hangar; and four, our Congonhas cargo facility. Each walking tour is limited to 10 persons and sign-up lists are on the wall in the lounge, actually have the wall and have some on the desks. So please remember to sign up during the coffee break. We have people there who could help you to find the sign-up lists. With that introduction, I would like to invite Peter to the podium. Peter? Thank you.

Kaki, thank you very much. Constantino, thank you for the kind invitation into GOL team. Ladies and gentlemen, good morning. Once again, my name is Peter Cerda. I'm IATA's Regional Vice President for the Americas. In case you don't know who IATA is, we are the International Air Transport Association, the global trade association for the world's international airlines, representing roughly 82% of international travel. Our mission is quite simple: lead, serve and represent the airline industry. And I'm very glad to be here today to talk about Brazil, and we think it's a success story that is occurring and will continue to translate into benefits for our industry in the coming years. Over the next 20 minutes, I'll talk about the air passenger market. And for those on the webcast, I'll be moving on now to Page 6 on the deck with the section entitled Brazil Air Passenger Market. Before we take off, we do want to show you a short video of Brazil's aviation, the value that it brings to the Brazilian economy. [Presentation]

The Brazilian aviation industry is indeed reaching new heights. Over the next 20 years, the demand for air travel globally is expected to grow at 3.9% per year. And at this rate, air travel globally will double from the current 3.8 billion passengers per year to just under 8 million -- 8 billion passengers by the time we reach 2038. Over the same period, passenger journeys in the South American region are expected to grow at 4.1%. So the regional growth will actually outpace the global pace. You see that Brazil is expected to pass Japan becoming the fifth largest domestic passenger market in the world. And this is important for Brazil and important for the region. It will become one of the main regional and country hubs in the world. And moving to the next page, on Page 9. Brazil will add 106 million additional passengers and be a market of close to 200 million passengers per year. And when we look at where Brazil was only 15, 20 years ago, it is quite impressive what the industry has been able to do to connect this country within and without. The good news in Brazil today is that we have a pro-aviation government. We have strong international hubs in São Paulo-Guarulhos, in Rio, Galeão, and Brasília. We have strong airlines. And this will lead to anticipated average growth over the next decade, around 4%. And this is another positive trend for Brazil as we move forward. The ability for the Brazilian industry to grow faster will depend on our airport concessions, the infrastructure and the policies. And this will permit airlines to continue to invest, grow their network, provide better passenger experience. Brazil's ability to grow at a faster pace is also going to be contingent on the actual Brazilians traveling. And so you can see here, today, Brazil's domestic travel in terms of passenger per year is actually very, very low. We look at the numbers comparable to other South American countries, it's less than 30%, 80% less than North America in the U.S. and Canada. The proportion of these populations who travel by air is still very low, and we expect this to increase in the years to come, with better lower fares, the middle class increasing and more connectivity. This is even more striking when we look at the size of the country. The geographic size of Brazil is similar to the contingent 48 states in the United States. And today, it's not even comparable, but the potential is certainly there when you look at the growth, the middle class increasing in Brazil over the next several years. Travel has become much more affordable for the Brazilians who need to connect within the country. And this penetration will certainly increase air passenger volumes over the next several years. Airlines will bring air travel to Brazil, and they are bringing it to Brazil today. When we look at today's market, Brazil -- here in Brazil, we have 6 domestic carriers who connect to over 80 destinations in Brazil, and we have 52 international carriers who are connecting the rest of the world, 68 destinations. Brazil is better served today than in any time in its history in the past. Today, a Brazilian can be in any part of the world within 24 hours, again, something that could not take place years ago. This brings more ties, more business, more opportunities for Brazilians to learn about the world, to compete around the world and for the rest of the world to learn about Brazil. Next slide. So the Brazilian airline industry is comprised of 6 domestic passenger markets, which I already talked about. And you look at the next potential -- sorry, we're having a little issue here. Okay, there we go. The airline industry supports over 800,000 direct and indirect jobs in Brazil and represents 1% of the GDP, which contributes to over $19 billion of value to Brazil's $1.9 trillion of GDP in 2018. And over the next 2 decades, the airline industry is anticipated to increase in terms of GDP. It will increase by 20%. We go from 1% to 1.2%. And as you can see on Page 12, the air transport market in Brazil is forecast to grow by over 100%. This will result in an additional 106 million passenger journeys in Brazilian networks by 2038. And this demand will support approximately $38.7 billion of GDP and almost 1.4 million additional jobs when we compare it to today. A portion of this growth will come from an increased number of passengers on domestic networks from and to Brazil, but also traveling public that come from the international side. As you can see on the next page, Page 13, Brazil's international flights from through Latin America, the U.S. and Europe. The downside is, from 2013 to 2018, traffic between Brazil and the United States and Canada experienced a significant contraction. However, when we look at flights between the Middle East, Europe, Africa, with Brazil, air connectivity actually [ grew ]. And this is important, particularly as these points of contacts became major hubs to Asia, an area of which was flourishing. And this is important for Brazil, as it improves connectivity with the economies of India, China, Japan, Australia. And this, again, is important for the health of Brazil. We strongly believe that aviation is an economic enabler for the economic health of this country. The expected increase in demand will also drive change in passenger priorities. Particularly here in Brazil, passengers have different ways of traveling now, which I'll show on Page 14. As the usage of air travel increases, as in other markets, passenger priorities will change, and they're changing all around. Passengers require seamless travel. They want an easy travel through immigrations, through security lines. They don't want disruptions. And when there is disruptions, they want better management of handling. We need to address the needs of passengers with disabilities, which is becoming a major issue, and the industry has focused significantly in this area. Moving to Page 15. As the demand for air travel in Brazil increases, the challenges to grow will also increase. And this has been a country of certain challenges in the past. We have challenges in the regulatory environment, the high costs and charges that are imposed in the industry, airport and air traffic infrastructure, and political and economic stability. Again, these are all challenges, but we see them as opportunities moving forward in really showcasing the potential that Brazil has. Moving to Page 16. And with the help to address these challenges and in order for aviation to play that role as a catalyst for this socioeconomic development in Brazil, our organization has set the following priorities. Working closely with our airlines and our industry stakeholders, we plan to focus on the following pillars. One is going to be on the side of infrastructure. There has been significant focus on infrastructure in the last couple of years but with the doubling of traffic over the next 20 years, we need to ensure that this planning begins today so we can have the right infrastructure, the right terminals, the right aerospace to manage that incoming influx over the next couple of years. We need to make sure that the governments work with the industry, and instead of taxing and raising charges, actually reduce. And we have demonstrated, this government, many governments, when governments play a proactive role and let the industry run as a business by reducing taxes and charges, you actually have an increase in passengers coming into the country, which actually generates more revenues for the economies. We need smarter regulations. We need governments and the civil aviation authorities to work in regulations that are proactive that will protect the interest of passengers but be fair to the industry in terms of how we run the business. Safety and security, an area where Brazil has been a leader and continues to be a leader, but we cannot let our guard down. So focus will continue to be placed on enhancing and making safety even safer and making sure that the security procedures that we have in the region, in the country, will prevent any threats to the [ state ] and safeguard our industry and make sure that we can continue to fly in a manner which is conducive and meets the needs of our customers. As you can see on Page 17, we're also working with the airline industry -- I'm sorry, keep going. We're looking on the side of the environmental sustainability. The industry is well aware that we have a responsibility. And we have set and invested quite a lot of time and investment to ensure that industry is responsible for climate change. Under CORSIA, the aviation industry will spend over $40 billion in projects that address climate impact that are affecting the industry. Part of this effort is investing in sustainable fuels. And as of June of last year, more than 180,000 flights took to the air using these sustainable aviation fuels. And we expect more to be done, and we expect many of our key airlines around the world that they will go down this route. We also need to help with the government to provide the right resources and the right infrastructure that will give us the ability to use more sustainable aviation fuels in the future. But we expect that number to grow in the years to come. One of the best examples of the initiatives that the industry has done over the last several years, you can see on Page 18, a flight today produces 50% less fuel or CO2 carbon emissions than that same flight did in 1990s. And this has been made possible with better infrastructure, better investments, better use of technology, updated operational measures and much better infrastructure. In addition to this investment in sustainable fuels and technologies, airlines have also invested quite a lot in more modern and more efficient fleet of aircraft. And today, in Brazil, we have some of the youngest and most efficient fleets being used by our airlines in the world. And this is a tribute to airlines such as GOL and others who have invested in this area. We are also consistently looking at reviewing flight procedures and finding ways to optimize the airspace. We're going to have more airplanes in years to come, and we're putting a large amount of focus in that area. And we're not excluding Brazil. Brazil is playing a big part in that -- in the aerospace optimization. The airports here in Brazil are also doing their part by looking at more efficient ways to improve the system, building more efficient runways and terminals, using high-speed taxiways and reducing taxi out-times, and a better use of utilization of the airport hours. With this, I want to conclude my briefing. From our perspective, the potential growth of Brazil is quite optimized. We are very, very encouraged with the government that's in place, the focus from our member airlines that are really focusing on customer connectivity, service, efficiency. That expectation that we'll have 106 million additional passengers by the time we get to 2038, we believe it is a real possibility. What we are asking from the government and our stakeholders are the work needs to begin today to make sure that we have the right policies, the right infrastructure in place for that growth to occur in the years to come. With that, I end my presentation. If you do have any questions, I will be happy to answer them. I think you just need to raise your hand and a microphone will be provided to you.

Rogério Araújo from UBS. So could you talk a little bit more about the connectivities, the potential increase in capacity and connectivities in maybe South America in the next decade? And which countries should need -- more benefit with that?

So as I mentioned, we expect connectivity year-over-year from now to 2038 to increase -- 3.8% to 4%, depending on the market. Brazil will most likely have the largest growth in terms of passengers. We'll go from 100-plus million passengers to about 200 million. So a huge amount of potential in connectivity is going to be here in Brazil, both domestic and international. We also have other markets: Chile, Peru, Colombia. Colombia has been very strong over the last several years. But a lot of this will be dictated on having the right policies, the right costs and the right infrastructure. And you look at Mexico, for example, which was supposed to construct a large international airport to become a major hub, now that project has been sidetracked. So that puts limitations on the growth potential in the case of Mexico, for example. What we see here in Brazil with good hub structures that have been put in place in Rio, in São Paulo, in Brasília. And now more direct connectivity with places, Recife and Natal to other points within the region and outside the region, that is going to also permit us to give us more growth in the future. Also, and I imagine Boeing will talk about it later, but the manufacturers have also done a very efficient job in terms of the types of airplanes that they're building. We won't have to travel long distance with double-aisle planes anymore. We'll be able to do that with single-aisle airplanes, smaller airplanes, which will give us more opportunities to open to secondary and third markets that don't exist today. And that's where we have a huge potential in Latin America. Unserved markets, which we've been in the past a bit controlled going through hubs, we're going to be able to decentralize that. So in a market where you have a middle -- a region -- a middle class that is increasing, like is Latin America, with better connectivity, the middle class increasing, social reforms that will be favorable, which is another area that we were being very vigilant, we feel that the future is going to be quite optimistic. Brazil, Colombia, Chile, Peru. We'll have to see what the reform changes are in Argentina now with the new government. But as a region, we've also always been very aware that sociopolitical-economic changes occur very frequently. And the industry, we've learned to adapt to those little hurdles that come our way and adjust, and we'll continue to adjust.

Savi Syth with Raymond James. I was just kind of curious, if you look at Brazil specifically, what are you -- what have you seen -- or what are you most excited about that has changed that has occurred more recently? And then if you look at the priorities that you talked about, what is the most urgent for Brazil would you say?

So I think where we've been most optimistic over the last several years is the regulators' ability to bring civil aviation -- Brazil civil aviation closer to the global standards. So that's one of the things that the industry has been asking Brazil for many years is, you need to start looking inwards and start applying global best practices. The industry is dramatically changing. The needs of our customers are different from what they were many years ago. And many regulations that we had here in Brazil were very antiquated. That's been a regional problem in the past. The biggest challenges that we foresee in the future is probably going to be an issue of cost and taxation. And again, this is more of a regional issue, but it's something that we need to address here in Brazil quite aggressively. Brazil needs to be competitive in terms of cost and charging. The airline have done their part in reducing their fares. But many of these fares are masked because of the high number of taxations that we have. We're still highly taxed in the fuel side, a country that produces fuel, but it's charged as an imported commodity. So the cost and the charges side is something that we need to make sure that are kept in check. We need the government to see the industry as an economic partner, an economic enabler rather than what we call the traditional cash cow. It's an easy industry to tax because airplanes will continue to come. And we're seeing a changing of mindset from the industry. Airlines will come if it's competitive. Airlines will grow domestically or internationally if it's going to be financially beneficial. But if it's not, you will see contractions in the market. And we're seeing that in markets in Latin America, where imposing taxes or not permitting the market to act freely, is actually a deterrent.

Felipe from Crédit Suisse. What do you think is going to be the future of global alliances? We're seeing more and more bilateral agreements instead of following the normal -- the historical behavior. So what do you think is going to be the future?

Yes. It's interesting. For many of our governments, they still treat alliances as something new, and they're learning about it. And we keep telling governments, alliances have been around for 20 to 30 years. Our industry is evolving consistently. And it evolves because the needs of the customers are shifting. Alliances we don't feel will disappear, but we are going to see more joint ventures. We're going to see more acquisitions or more investments in different companies. Latin America is a very attractive region right now for that. But we're going to see more JVs occurring. We're going to see more business-to-business between companies on a one-on-one basis, more than we've seen before. Now one thing that we are somewhat concerned about is the role that governments will play in this because, again, depending how a government goes about approving antitrust immunity and permitting airlines to do different lines of business, that can be positive or negative. We saw what happened in Brazil -- sorry, in Chile, where Chile has traditionally been a very open market, and a JV was denied, and that has had a ripple effect on the industry. So again, on a global basis, alliances will not disappear. We do expect more JVs, more financial investments in companies from other companies. But in this part of the world, we have to be watchful for some of our governments in terms of how they will let the industry continue to progress.

Peter, Mike Linenberg with Deutsche Bank. I have 2 questions, 2 unrelated questions. First off, is IATA doing anything with the government as it relates to the consumer litigation here in Brazil? We're now -- it's becoming chronic to the point -- I mean I come from a country that's viewed as being highly litigious and, I think, in the U.S., the amount of lawsuits from consumers against the U.S. airlines is roughly 1/1000th of what it is in Brazil. And so anything on that front? Because it's obviously very costly to the industry. And then my second question, when we look at the IATA growth rates, both for Brazil and around the world, let's call it, 4%, I believe we're producing pilots at a rate that's roughly half that. I think mechanics are also at a rate that's roughly half that. We're clearly facing a pilot shortage today on a global basis. We're also probably dealing with the mechanic shortage. Thoughts on that? What is IATA maybe doing to help address that? And maybe even your thoughts on the company -- where the OEMs are? Where they're moving towards? Maybe single pilot or even autonomous airplanes, which I think would be great for the airlines, maybe less great for the pilot unions, but your thoughts on all that.

Okay. I'll have to watch out, there's a couple of pilots here. On the first one, it is probably one of the major headaches that we have, the litigation issues here in Brazil. No other country in the world has the scheme that Brazil has. And if you talk to not only the Brazilian carriers, the international carriers, a huge percentage of their legal costs are here. And we're talking -- most of these airlines have 1 or 2 flights a day. So it's not that you have 25 flights a day. And that's a deterrent. And that's where it comes back to government policies. How do we go about it? For us, it's become a major issue. It's a very complex issue, much more complex than we thought. We've brought the issue to Brasília. It requires a number of legislation changes. At times there's not an appetite, promoting the view or showcasing the benefit that aviation has to government is a tricky endeavor that we've been going with here in Brazil. It is something we feel we'll overcome. We have the regulatory bodies that are working with us. Well it comes down to federal government, it comes down to Congress, it comes down to the judicial system to change. And at times, what they're looking at, what they're focusing on is not necessarily what we think are the priorities. It is something we will continue to push. I don't want to give too much away because we are looking at other means. Maybe some political pressure from the exterior. I think it now becomes something: is Brazil in compliance with the conventions and how do the bilaterals come into play with these type of litigations? So we need to look at different ways. But we have tried to educate Brasília on the matter. There are ways to go about it. And again, I don't think an airline will say -- or we will say that we should not be held accountable when a level of service is not provided. But the laws that are in place today are so penalizing. I think they are so much out of the control of the airline community. Even how we do recourse on some of these accusations are very, very complex. So it is a priority. It is something that is a difficult issue. Now I'll say, even though I'm here at GOL, it will be very difficult to get new entrants into the market, ultra low cost, I'll say, if you continue to have reforms like that. They just won't come to a market like this. With high cost and reforms and regulations, it's a deterrent more than attracting. But it is a major issue. The second issue was on the pilots? Yes, it is a major issue that we have. Within IATA, we're facing a challenge. Aviation -- the aviation industry is not sexy, it's not attractive anymore as it was so many years ago. One thing that we are looking more is how do we push ourselves more, how does the industry become more attractive within universities, how do we begin to work more with the university to start planning for our future pilots, future mechanics. Because you are right, there -- while I can talk about costs and reforms, if we don't have the resources to fly planes, to fix planes, engineers, that double-digit growth that we're looking at over the next 20 years is going to be very difficult. You look at the number of airplanes that are going to come into the system over the next several years, we're going to have a shortage. And with developing regions like Latin America, if we have to compete with Middle East or U.S. or China, we're going to lose. It's just the economies of scale, what a Turkish carrier or a Middle East carrier or a Chinese carrier can offer compared to what we can offer in this part of the world, even in North America. So it is something that we're looking at. It is becoming a priority within IATA's Board. We understand the issue, but we also have to change the mind shift of how we're perceived. We have to make this -- the industry more attractive instead of young -- college or going into university looking at IT or other markets that tend to be more attractive now is how do we bring it and steer them to our market again. Did you have one more question? That was it? Yes.

Josh from Morgan Stanley. You talked a little bit about your efforts to promote lower taxation, lower charges and also to promote greater environmental sustainability. Could you just talk a little bit about whether you think those 2 objectives could come into conflict in the future? And also the different initiatives you're seeing around the world in Europe and elsewhere to eventually sort of tax air travel at a higher level based on CO2 emissions?

We go from one pendulum to the other. Europe is an extreme case right now that we've been very vigilant, we're very concerned about it. IATA is investing quite a lot of money into defending the position of the industry. We have not done a very good job as an industry communicating what the industry is actually doing. As I mentioned, an airplane traveling today produces 50% less CO2 than it did in the '90s. But at the same time, our footprint is also increasing, where more planes are flying, more people are flying today than ever before. So climate change is a major agenda item for us. The industry clearly understands that we have a responsibility. We need to invest, and you are probably hearing many airlines are now publicly coming out with different types of initiatives. So the industry is taking a proactive approach to communicate the actions that we're doing. In terms of the cost issue, we are a global industry. The region Brazil competes with the entire world today. Brazil doesn't compete with the U.S. or Argentina, Chile anymore. Brazil is competing with Doha, Australia, China to attract business, to attract tourism. And the only way you can be competitive is have a good product, good services, good infrastructure in the country and at reasonable prices. The downside that we have in Latin America, in general, is we have competitive pricing. But when you start adding the layers of taxation, it outprices us -- it outprices us to other markets. So it's very difficult to compete when you have a ticket that may cost you USD 100, but you're paying $70 in taxation above the $100. And we've showcased some examples, and I'll give you an example that we always showcase, which we should probably stop showcasing so much, Cartagena de Indias in Colombia. It was a very popular touristic destinations for Colombians. You didn't have a lot of international because it's very expensive. The municipality decided to bring down the taxes from $97 to $36. Within 9 months, KLM, Air Europa, American and -- Air Europa, Air France-KLM started operating there. From one day to another, it became a hot -- from a hot bed of Colombians going there to a hot bed of international. But that's what will happen when you bring down the taxes and cost. You become competitive. You can compete. And in the long run, as in the case of Cartagena understood, they were gaining a lot more than the $50 to $60 that they were losing in the airport tax. They were gaining it from other areas. It is a serious problem. In Argentina, they're imposing a 30% tax on all tickets sold. So think about a country that's in recession. If that pass -- if that Argentine wants to travel to Brazil, for example, their ticket is going to be 30% more. If they book their hotel in Argentina, for Brazil, it's going to be 30%. If they rent a car, it's going to be 30%. So right now, what you're doing is making it so difficult for Argentinians to travel outside the country. And that puts a huge burden on the airline community because airlines are not looking into flying one directional. You want to fill the airplane going down and fill the airplane coming out. So Argentina will become possibly unattractive over the next couple of years because of this type of reform. And that will contract or reduce the growth in that country with a taxation of 30%. So it is a major issue that we see in Latin America, the issue of cost and taxes. How we balance it out with the environmental issue? The industry will have to adapt. It's a matter of time that we will see regulatory policies being put in place in Latin America. We are by no means ignorant to that, and we will have to adapt. But what we hope is, the policies that are implemented, that will work with the industry. And that's the one thing that we do always ask the government. The policies that you do or you're evaluating, please bring the industry. Let us be part of that solution. Bring the global best practices. Because the last thing we also want in this part of the world is that we begin to implement regulations that again may hurt the industry in the long run.

So, Peter...

[indiscernible] there'll be many chances throughout the day, we're not going to [indiscernible].

Peter, thank you very much. So we'll now have a short break. If you agree, we'd like to be back at 11:05. So 10 minutes. So you have here at the right side a lounge, so you can have your calls or restrooms. Thank you very much. [Break]

So thank you, again. I would like to invite our Founder and our Chairman to the podium. So Constantino de Oliveira Junior, please.

Good morning. Welcome, and thank you for participating in our meeting today. It is 79 degrees at 11:00 a.m. here at GOL's headquarters at São Paulo Congonhas Airport. And greeting to those of you participating via teleconference. Look like it is 46 degrees at 11:00 p.m. in Tokyo, 69 degrees at 10:00 p.m. in Hong Kong, 79 degrees at 10:00 p.m. in Singapore and at sunset in the UAE, 41% (sic) [ 41 degrees ] in Switzerland and 54 in Paris at 3:00 p.m. and at 2:00 p.m. London time. 75 degrees at 11:00 a.m. in Santiago and Buenos Aires and at 9:00 p.m. -- I'm sorry, at 9:00 a.m., Lima. 36 degrees at 8:00 a.m. in Boston and New York City. 62 degrees at 8:00 a.m. in Miami. Actually, 18 degrees at 7:00 a.m. in [ Chinatown ] and 52 degrees at sunrise in L.A. These are the main locations where GOL has a significant capital partners, from which we have many managers and analysts listening into today's meeting, and we would like to welcome them also. Today, it's my pleasure to brief you on 3 important determinants of our results over our almost 2 decades of activities: GOL's purpose, GOL's team and GOL's industry. So let's go. Let's go to Page 22. Next Wednesday, GOL will celebrate 19 years transporting passengers, during which GOL has transported almost 0.5 billion passengers. And Page 22 highlights some of our accomplishments. GOL, the pioneer of the low-cost business model in Brazil is among the leading low-cost carrier worldwide. GOL costs are over 20% lower than its closest competitor. We revolutionized air travel in Brazil and made it possible for over 35 million Brazilians to fly for the first time. We have adopted our products to both the leisure and business segments in Brazil, to both economy passengers as well as high-value customers. We serve over 100 destinations and have the best and most defensible position in the main airports in Brazil. We are the airline tech pioneers in Brazil, developing products, innovations such as mobile check-in, geolocation and onboard WiFi. And the leading loyalty program, Smiles, with 16 million members. Our over 15,000 strong team is doing a great job of minimizing the impact of the MAX delays, and we generated record revenues of BRL 13.8 billion in 2019 and 18% -- or 22% growth over 2018. Moving to Page 23. At GOL, we create value through our purpose of being first for everyone. We pursue our purpose by realizing our vision of being the best airline to travel on, to work for and to invest in. Executing our strategy of offering the best service at the lowest operating costs in which we provide customers affordable fares, where 70% of the tickets sold on GOL are below $90. Achieve the most reliable and lean operations with the highest utilization, the fastest turnaround, on-time performance, high safety standards and the lowest lost baggage. Operate a flexible business model, successful managing market volatility and serving diverse segments with market leadership in both leisure and business traffics. Have a strong brand awareness, including Brazil's largest loyalty program. Our way of being and doing is dictated by our shared values, which are, safety, our #1 value that guides all of our actions; the lowest cost; our Team of Eagles, the best in Brazil aviation team; our intelligent solution and technologies; and service that makes us the best option for the customer. The execution of our strategy, on Page 24, is led by a purpose-built team that has more than 60 years of combined tenure at GOL. They execute a plan, a proven operating business model built on the lowest unit costs, the best product and customer experience and a well-designed value-creation plan. Kaki has worked 10 years at GOL, initially on the Board and the last 8 years leading the GOL team as a CEO. Edu has been with GOL since our first flight in 2001 when we were in a garage, starting the company, and is responsible for sales and marketing. Celso was recently promoted from Head of Planning to VP of Operations. He has 17 years at GOL, including the 2 years he invested in his Boeing 737 pilot training. Richard has worked with us for 18 years now, first as our CFO from 2003 to 2008 and then for 8 years as our Board member and in 2016 he stepped off the Board to reassume the CFO job. These executives lead a high productive team with a solid track record and are united by a unique corporate culture. This team is aligned with the shareholders via long-term incentives for strengthening our productivity, increasing competitiveness in domestic and international markets, expanding internationally, delivering sustainable long-term growth with capacity discipline and increasing our Net Promoter Score. Kaki will elaborate more on our areas of focus a little bit later. Here, on Page 25, I show how our network has evolved from our initial flight in January 2001, when our fleet had 6 aircrafts connecting 20 destinations; to 2010 when after our integration of Varig, we had 125 Boeing 737s flying to 67 destinations; to 2019 when after the addition of 45 regional destinations. GOL has the broadest and most extensive network in Brazil. Today, as the largest Brazilian domestic airline with a fleet comprised of 137 Boeing 737s flying to over 100 destinations, including 16 international cities, we operate almost 900 flights a day. We have by far the strongest network in Brazil. We connected the core cities, flying the most travelers between airports where other players have difficulty entering. It has taken us 2 decades to build this network, and we believe it is irreplaceable. On our network, GOL provides excellent service to our 45 million individual customers, driving customer loyalty and yields. We have a high on-time performance and business travelers are highly loyal to us. High loyalty is the result of continuous and meticulous work and identifying who is our customer, and what are their expectations for service, product and price. Edu will elaborate more on this later. For those of you that might be new to the Brazilian market, here on Page 26, we provide some helpful maps. Our network will continue to evolve to address Brazil's unique geography and demographics. The Brazilian population lives mainly along the coast due to terrain and lack of highways and railways to interior of the country. Linking the coastal population center with the integral resource centers requires a lot of air travel. Brazil's continental size makes air travel the most cost-efficient way to serve business and leisure customers. Brazil's GDP is highly concentrated in the Southeast region, and its distribution drives a natural tendency towards airline network overlap, leading to continuous yield pressure. Most economic activity takes place in the heartland in the southeast, where 69% of Brazil's GDP is and in the land of opportunity on the northeast coast. The frontier we will over the next 25 years move from the agro business to the agro industry stage. And the middle lands are about to begin moving to agri business stage. Regarding demographics, here on Page 27, there are 2 important drivers that confirms Peter's observation regarding our market. The Brazilian population is getting older. In '13, the population was 201 million with 7.4% above the age of 65. By 2040, the population is expected to be 230 million with 18.5% above age of 65. And by 2060, it may be around 230 million with 26.7% above the age of 65. And the Brazilian population is getting healthier -- or wealthier, sorry. We are experiencing movement between social classes, and GDP per capita is increasing, currently at around $15,000 per year. Around 30% -- it's around 30% above what it was when we launched GOL, when we started our operations in 2001. We are starting to see higher GDP growth and increasing disposable income as we emerge from the deep recession of 2015 and 2016, and this is supporting higher domestic passenger demand growth, and we expected growth in domestic market passenger traffic of 6% to 8% for 2020, as you can see here on Page 28. While Brazil's highways are not conducive to high-speed driving and passenger rail transportation is not existent, air travel infrastructure is improving. Many of our main airports were recently modernized and more privatization are in the pipeline. Improved air traffic infrastructure is important for growth. GOL has a huge capability to feed foreign carriers and to transport their passengers arriving in and departing from the main airports -- international airports in Brazil, like Guarulhos, Galeão and Brasília. GOL operates over 90 codeshares and interlines with leading airlines from around the world. We sell tickets in 140 countries around the world and about 4% of our revenues comes from international carriers. If you consider only the American carriers flying currently to Brazil and those who already codeshare and interline with us, GOL could easily triple the amount of revenues between North America and Brazil. And our plans includes more international growth. Here on Page 29, you can see how GOL has grown its international network to contribute over BRL 1 billion per year to consolidated revenues. Last month, we celebrated the 15th anniversary of our Argentina operations. And also, we reinitiated our flights to Peru. And Celso will elaborate more on our international expansion plans on his presentation. Moving to Page 30, where I would like to share my confidence on why I believe GOL will outperform the industry. First, GOL is the best-positioned in Brazil of retaining a revenue premium, increasing aircraft utilization with more capacity deployed on the most profitable routes, with premier alliance partners in each region of the world and with a favorable competitive environment. Second, GOL has long-term advantages, such as leading airline, cargo and loyalty brands. A loyalty business with unparalleled reach driving customer’s insight and brand strategy, delivering profit share above capacity share. And third, our single Boeing 737 fleet has the highest utilization in the world and produces the most unit revenues at the lowest costs. And fourth, our seasoned management team, GOL is the only airline in Brazil with a controlling shareholder with a significant investment and commitment to the business. And GOL is the only Brazilian airline with expertise in our economic cycles. Moving to Page 31. To wrap up on GOL's proposed team and the industry, I would like to summarize using GOL's 5Gs diagram, as Kakinoff mentioned in his initial presentation. Great market. Brazil is the fifth largest domestic market transportation in the world with a high expected growth. If you invest in airline, you cannot leave Brazil out of your portfolios. Great management. GOL has the most proven management team in our industry. Productive, highly efficient and experienced in managing our economic cycles. Great product. GOL's high customer satisfaction, measured by NPS in the 40s, demonstrates our commitment to delivering an optimized value proposition to all customer segments, including premium business travelers. A great operating model. Our cost advantage is significant and sustainable, supported by standardizing in single fleet of Boeing 737 aircraft, which is also the most productive aircraft. And a great value creation plan. Regarding the great value creation plan, Kakinoff and Richard will elaborate on this particular G. GOL's unique plan makes it well positioned for growth and you're going to be able to hear about that a bit later in more details. I think that we have -- we still have 5 minutes for questions. So if you'd like to make questions, please take a microphone and stand up your hand.

Mike Linenberg with Deutsche Bank. Sort of how do you think maybe strategically that with Delta no longer your partner, right, you probably have a good feel for what their playbook is in Brazil because you worked closely together for some time? Thoughts on their objectives or strategy with LATAM and how that could impact you? And also, as you think about strategically going forward, some of the things that you were developing either with them or their partners like the Fortaleza hub, Air France-KLM flying into that market from Europe, longer term, they may not be your partners since they're part of the Delta ecosystem. How do you think about that? And does your -- how much does it impact your strategy sort of thinking as we move forward? I realize it's kind of a dense question, there's a lot in there.

Yes, Michael. Regarding the movement from Delta to LATAM, that's in terms of our financial numbers and the strategy that moves a little bit on -- in terms of strategy because that gives us the possibility to deal with other American carriers. And considering that Delta generates -- our relationship with Delta generates a small number of revenues. That means less than 0.5% of our revenues. And considering that the other players that flies between Brazil and U.S., they have almost 3 or 4x more seats or more offered on this route. That -- see, that means we see an opportunity for growth considering that Delta is no longer our partner for this region. And so I see that movement for GOL as an opportunity. I don't see that as a problem or an issue, for sure. Regarding how that LATAM will develop their business, I think that they are very professional and capable to do the right things. Delta is a great company. Also could help them in some other ways. But I don't think that will change our challenging -- our competitive landscape or the challenge that we have ahead to execute our plans. Regarding Air France-KLM, we just signed an agreement for -- and renew the agreement with them for the next 5 or 7 years -- 5 years. And we are still developing our relationship and build a seamless -- trying to build a seamless service and provide a better service for our customers, including Fortaleza hub. So it's difficult to say anything now regarding Delta and Air France because their -- as you mentioned, they are part of the ecosystem of Delta, but their relationship with us is intact. That means we are still working hard. That means we are going forward and we are still developing some initiatives to build a better product to our customers. So I don't think that the movement between LATAM and Delta will change our plans that could bring us more growth opportunities in the near term.

Savi Syth, Raymond James. Junior, when you started GOL, it was like kind of this low-cost carrier and kind of a new concept into the market. And as kind of GOL has evolved, it really kind of moved to providing kind of a very attractive corporate product as well. It seems like kind of the next leg of big growth in Brazil might be getting back that leisure growth. And just kind of wondering how GOL positions itself or sees this kind of next leg of growth as it -- what's the next evolution, I guess, for GOL?

Nice question. Thank you. From 19 years until now, I think that the technology develops a lot and give us the opportunity to treat each passengers differently. That means we have been able to provide the right product for the right passengers at the right time. That means when you are business travelers, you are paying for a high ticket price, for example, probably, you're going to be -- sit on a better seat than the people who are price-sensitive and that are looking just for price. And this type of management you can do with some artificial intelligence. And so there's no reason why we could give no special attention for business travelers, for our frequent flyer. So since then, we have been developing products that allowed us to recognize this client and give him exactly what he's looking for. He is not necessarily is a price sensitive. But at the same time, we keep our costs lower and lowest than our next competitor in terms of cost. So we have been able to provide both, good service and product for our business travelers, low price for leisure travelers. And just to give you an idea of how you can measure that, our aircraft configuration. We fly Boeing 737-800 with 183 seats. The maximum seats that we could transport with this aircraft is 189 -- we have 186 and the maximum is 189. So we miss 3 seats to provide 5 rows of seats with more space, more room for legs and with higher value for our business travelers. So I'm giving you a kind of example where we can do with some intelligence, we can do some movements that keep us competitive in terms of costs, but being able to provide service for both leisure and business travelers. So just to answer, I think that GOL is better prepared to take advantage of this leisure wave that will come soon and due to our network so we can connect them very fast in that multiple hubs like Guarulhos, Congonhas, Galeão and Brasília and Fortaleza, and that allowed us to really build a strong network and bring these passengers to our planes.

Dan McKenzie from Buckingham Research. I also had a similar question, and that's on the leisure demand. It seems like there is some latent or some latent demand on the leisure side, that's been absent that potentially could come back. And I appreciated the slide on the geographic regions of the country. And as you just kind of think about that part -- the leisure segment part of the business and the potential for that to grow perhaps faster just on the recovery of the business, I'm just wondering if you can elaborate a little bit more in terms of what you're seeing from kind of the middle income segment of the Brazilian economy, the expansion of credit into that middle income segment? Some of the key factors that you're looking at for growing that part of the business?

Yes. That's interesting because, for sure, as I said, we have been able to provide right product for these customers that is flying for the first time probably is flying almost once at 2 years or 3 years. So this is not the habitual client that we have. But considering that this market could come from the country side because when you talk about the purchase power that is increasing, especially on this agri business and agriculture region. And for this specific traffic, we are building a strong partnership with small carriers -- regional carriers, which operates ATR 72 and Caravans to expand our network and achieve these new passengers that will come on this era of leisure traffic growth. So I don't know if you -- I answered your question, but... is it okay?

Just a reminder for people speaking on the -- that are participating on the webcast platform. If you have a question, you can send it through that platform, you click on the question mark on the top left of the platform and then we'll receive that and read the question to the presenters. And so feel free to do that. And I say that because we have 71 people on the English webcast and 51 on the Portuguese webcast, including 1 that made a point to remind us that it's -- he said it's actually below freezing in New York City this morning. So it's minus 3 Celsius in New York. So he was correcting us there. But if you have a question there, at each one of these segments today, the last 5, 10 minutes is going to be a Q&A on that segment. And at the end of the day, at 3:30 São Paulo time, 1:30 p.m. New York time, we'll have a large group Q&A. So we look forward to getting your questions to the extent that you want to send them. Thank you.

This is Lucas Barbosa from Morgan Stanley. My question is regarding the Smiles incorporation. I just want to hear your thoughts on the time line, if you think up to now everything is on track to deliver the time line that was presented around a month ago.

Thank you, Lucas. Yes, yes, the time line is still the same. And I think we are executing, that we are doing steps by -- step-by-step. And we expected to see this as exactly as the chronogram that was announced when we started this deal. So no news regarding that. Victor?

Victor from Bradesco BBI. I have 2 questions. The first one, the federal government lifted foreign ownership restriction in Brazil. And I'd like to see -- I mean, if you can share your views, if it would make sense for GOL to move to Novo Mercado? And the second question, we start to see a lot of companies trying to capture value from, let's say, kind of a fintech operation. And I'd like to see -- I mean, if you can share your views, if there's an opportunity for GOL in this side as well?

Yes. Regarding the foreign restrictions, we don't see -- we are not -- we have no plans to bring GOL to the Novo Mercado at this time. We don't see any benefit for our shareholders or for the share considering that we have been executing a strong value proposition plan. And so I have no plans to move at this time. Regarding the second question, it was...

The fintech operations.

The fintech operations. Yes, there is a lot of fintechs and initiatives that is knocking our door and we are trying to understand what would be the better option. Also, the banks -- the traditional banks are moving themselves too. They are not waiting for the fintechs to capture the market alone. But we are considering many possibilities, but I don't see any game change at this time. But as we are hearing a lot here at GOL we developed what we call GOL labs. These are IT labs that our people think about all the possibilities where we can link with or develop something. We are -- attend to the fintechs and the potential for that, especially when you see Smiles as a company. But today, we have nothing really important that I can tell you could make changes in our plans.

And actually, yes, it's a good question. Part of -- maybe hold that question to the end of the session and let us know what you think. Because along the presentations today, you're going to see the aerotech side of GOL not the fintech, the aerotech. Okay. Stay tuned on that.

I like that, aerotech.

Aerotech. The question here from the webcast from Duane Pfennigwerth of Evercore. He wants to know how you would characterize -- what are your thoughts on the yield environment in Brazil now that the industry has fully absorbed the shutdown of Avianca and returned to net growth?

I think that probably yields will stabilize. I think that considering that during this -- during 2019, the industry offering was almost flat. The capacity growth was almost 1% or something like that. I think there's a little compression for the market. That means without this -- any capacity growth that benefits the yields during the -- especially the middle of the last year or third or fourth quarter. I don't think that yields will keep this trajectory of increasing. But at the same time, I see there is a capacity discipline. We have to -- for sure, we have to understand our competitors' movements. But we see a capacity discipline in the Brazilian domestic market environment, and that will help us to keep a healthy yield in the industry. All the companies are now very professional. All the companies works on the public market and has, I would say, a very disciplined capacity plan for the next few years. Now I move back to Kakinoff, as the CEO, to do his presentation for you today. Thank you very much.

So once again, I'd like to remind you that whenever you would like to sign up for the tours, you have the chance to do that outside, right room, where you have the papers to sign up.

For some reason, the maintenance tour is full. I don't understand that. But the -- again, the tours there are -- there's one to the Gollog cargo operations, which is right here next door. I think that's -- we've got -- this is going to be very interesting. We have the -- Edu will take the group over there and the director of that operation can present you a lot of the interesting things we're doing there. There's another tour to the GOL lab facility maybe. Did you sign up for that one, Victor?

Not yet.

You've got to now. The -- that's also right here next door. We have -- GOL has its own innovation lab inside of GOL. We've had it for a while. You're going to see some things today on that. That might be interesting for people who are interested in the Aerotech part of GOL's business, which is very present today. Actually, how many people checked in today, just to check on the face recognition technology in the check in, in the morning? You guys were able to do that? A couple of you guys. Yes. Well, actually, a big group, yes. That's part of it as well. For those who checked in this morning at GOL, they were able to check in at the entrance using GOL's face recognition technologies without any ID. They came right into our headquarters. And then the final is the operations tour. GOL recently refurbished its operations control center for all of GOL's global operations here in São Paulo. And so those are the 4 tours. So please sign up. The reason is just because we have limited -- limited to 10 people for each one. And so if we need to make any changes there, we want to see that just because we have 30 different buildings here inside of GOL and each one of those will take about 20 minutes. And so please, during the next break, make sure you sign up for that. Thank you.

Actually, we are about to measure our individual popularity among you guys. So therefore, please sign up on the GOL labs because that's going to be the one I'm going to lead, and I promise it's going to be interesting. So in the next section of today's investor briefing, I will cover GOL's strategic and competitive strengths, sharing a few of the actions we as managers take to improve and sustain our growth and profitability. On the Page 33, GOL's competitive strengths and business strategies show up as results for our customers, our employees and our investors. As you can see in our achievements for the last 13 reported quarters. Income is up significantly. Cash flow generation is up consistently and the leveraging is driving credit ratings improvement. And our most recent results, as you saw in yesterday's investor update are highlighted here on Page 34. In 2019, we achieved new records in passengers, loads, net revenues, margins and cash flow. Also, we had notable achievements in reducing our leverage below our policy limit of 3x. Reaching earnings per fully diluted ADS of $0.45 in dollars and in Net Promoter Score which measures what our customers think of GOL, of over 40, a remarkable benchmark among the LCCs worldwide. In sum, we had an outstanding year. As GOL has made the necessary investments in its product, its technology and its fleet, we are well positioned to capture the lion's share of economic recovery and continue to unlock equity and credit value as the market reporting adjusts during 2020. These results derived from GOL's strengths and our recent strategies on which I will brief you here on Page 35. GOL's strategy positions it to outperform due to its unique strength deriving from lowest cost operations. GOL achieved the highest aircraft utilization from the newest and most fuel-efficient Boeing 737 fleet. That's an international new benchmark. The right product. GOL offers the best value proposition to customers via the most attractive product and experience and the best fares. The GOL product leads both the corporate high-value customer segment and the leisure economy segment at the same time. And the right market. Over the next 2 decades, Brazilian air travel should add over 100 million traveling passengers per year, growing to 200 million passengers traveling every single year. The air travel market in South America should grow by a CAGR of 4% in the next 20 years, serving a total of 730 million passengers, which is an additional 370 million passengers compared to today. GOL's winning operating model that produces the lowest unit cost and the highest yield revenues, when combined with our 90 strong alliance partner network, has positioned the company to expand its network in South America, the Caribbean and the U.S. GOL's main strength is its position as one of the lowest cost operators in the world, dominating a local network. And that's really important to mention, to highlight in order to resume some of the answers already delivered by Junior when questioned about the alliances. We also do believe that the alliances might weaken along the following years. But that position created the strategy of keeping independent -- keeping ourselves independent, give us always the opportunity to shift from one airline to another, likely enhancing the business conditions that we had before. And this is what we do expect to happen along the following weeks regarding the North American corridor and could happen to any other region of the world. Whenever there will be competition there, we will be presenting ourselves as the most attractive network either to carry or to feed this partner network. So the productivity, as you can see in this chart here on Page 36, that show GOL's 2 largest operating costs as any other airline, fuel and people. On the left side is fuel efficiency. Over the last 5 years, our liters consumed per revenue passenger kilometers decreased 13% from 40.4 to 35.3 liters per RPK, our lowest ever. On the right side, is employee efficiency. Over the last 5 years, our revenue passenger kilometers, RPK, per employee increased 12% from 2.3 million to 2.6 million. Low cost always wins, but cost advantage alone has not given GOL its leadership in both the corporate high-value customer segment and the leisure economy segment. I show you why, here on Page 37, where I brief you on GOL's secret sauce. When some people think of low cost, they think of the attributes of the lower half of this slide, attributes related to high operating efficiency and high productivity. And here also, I would like to highlight another aspect. Last year, 2019, we sold approximately 36 million tickets. Out of those 36 million, 20 million were sold at a fare lower than BRL 100, which means considering the current exchange rate something around $25 to $30. If we would isolate that figure, 20 million tickets sold at a fare -- at a level fare of BRL 100 and we would start from the beginning, a new airline or a newcomer, just to emulate the same figures that company would need to start its operation flying more than 40, 4-0, 737s from the very first day. They would need to operate also from the very first day at least 300 flights just to emulate. And that would alone position ourselves among the top 20 low-cost airlines in the world, if we would just separate that figure. And in that case, we wouldn't be a low cost. We would be an ultra-low cost. You can easily compare what are our fares with those ones. So that's the basic strength. That's the pillar created by the lower -- or sorry, the biggest portion of that iceberg, not saw by the customers. The customers are paying attention for the 10%, 15% of our total costs. Those who are fully dedicated to attract and enhance our position towards the business travelers, those are paying 3 to 5x higher fares than the leisure ones. So we have this structure. We are fully prepared to capture any possible and likely growth among the leisure travelers that are about to come, considering that the Brazilian -- or Brazil will resume its economic growth. But also, at the same time, we have been capable of being and keeping our position as the market leader among the business travelers. And that is further related to our network strength, but also 100% attached to our product concept, which is explained or delivered by this only 10% to 15% of our cost. GOL would be the leading ultra-low-cost carrier if it stopped at these attributes, at the attributes below the waterline that you can see there. While GOL is among the best in these attributes, they represent 85% to 90% of the GOL's costs and are not observed by the passenger, as I mentioned before. They alone are not sufficient to serve the Brazilian market with scale because we have these 2 big groups being equally important to perform the figures that we have delivered so far. The additional 10% to 15% that GOL adds makes the difference in the experience of the passenger. Offering attributes such as onboard service, loyalty program, entertainment, comfortable seats, like the ones you are just experimenting right now, giving GOL the competitive edge. We continuously evaluate the attributes that represent value to the passengers to determine which investments to make. Our model is 85% to 90% ultra-low cost, and we add specific attributes that allow us to extract a leading share of customers' wallet and higher yields without jeopardizing our capability of being the market leader among those ones less capable of paying higher fares. This is one of the key strengths of the GOL model, which was considered really hard to get until 5, 6 years ago, and we are glad to show and to demonstrate that, that model has driven the results that we all have followed along these years. Our significant investment in the GOL product, over $200 million from 2013 to 2018, allowed us to capture the lion's share of premium business and economy leisure customers who both value the experience we offer. And the results speak for themselves, as shown here on Page 38, where you see how the investment in the GOL product has translated into superior revenue productivity. Over the last 5 years, we increased net revenue per flight by 68% from BRL 31,000 to BRL 52,000 and increased revenue per employee by 41% from BRL 594,000 to BRL 837,000. One of the keys to our solid track record in cost efficiency and revenue productivity has been our focus on constant tech innovation. And on the next page, 39, I brief you on how innovation and [ savings ] are at the core of our high-efficiency culture. The GOL innovation process allows us to identify, select, test and develop both incremental and disruptive opportunities. Our digital services for our customers include the best and most complete airline app in the world. You can't find in any other airline one service through its app which is not available in our own app. Actually, in-country, we have some exclusive items such as the geolocation telling you whenever you're going arrive later than expected at the airport and give you through the mobile phone, through the app, the opportunity to, at that time, to rebook your flight later. If you come earlier than expected, and we do have an empty seat in an earlier flight, you are also going to be invited to take this earlier flight without paying any single cent in addition. This is fully developed by our own team, the GOL labs, and available to every customer who allows us to send him or her push notifications after monitoring its geographic location. Exclusive services such as the selfie check-in, biometric boarding, like the ones you have just experimented here and the flight changes, seat assignments and a wide array of additional services. Tech is our top priority here and serves our goals of service and sales. In terms of sales, GOL is the fifth largest e-commerce company in Brazil, which is by -- which is one of the largest e-commerce markets in the world, offering several different platforms, covering all customer needs. As for service, GOL covers the complete customer journey, identifying and enhancing the touch points, maintaining a continuous process for delivering the best experience. A great example of continuous innovation at GOL is Gal, our visual customer service assistant, who recently made her debut in airports around Brazil and will now join our meeting. So welcome. [Presentation]

You have just witnessed the kind of experience which is already available to all of our customers at Guarulhos Airport. We are running now the third consecutive month in piloting this new concept. So to our international and domestic customers flying at the busiest airport in Brazil you can also have this kind of service and another 80 different interactions already available by Gal, which has its artificial intelligence, learning every single day how she could improve the customer assistance. And I can tell you that reinforcing our low-cost structure, she is getting one of the lowest monthly salaries that we are paying in our company today. Our use of tech gives GOL a competitive edge such as our pioneering use of facial recognition technology. GOL first introduced this feature to customer journeys in 2017 and was the world's first airline to enable check-in through the use of selfies. GOL's facial biometrics technology for boarding currently being tested at Rio de Janeiro's International Airport, allows passenger verification at the gate in less than 1 second. Following the tryers -- the trials, I'm sorry, boarding aided by facial recognition will be extended to domestic flights at other Brazilian airports and the online check-in database will be integrated with the biometric boarding system. Several of you used this to check-in for today's briefing. Please tell me later how was your own experience. Based on technology provided by full-face biometric solutions, this system was developed in GOL labs, our innovation lab. GOL labs is located here at our headquarter and some of you will visit it at 4:00 p.m. with the best guide that you could get in this company today on the tour that you signed up for during the coffee break or later. GOL's customers live and work in many different places. Here on Page 42, I brief you on a very important competitive strength of the GOL product, our network. Our highly integrated network gives us the leading position in key airports and routes with further room to grow. GOL's network covers most of Brazil's GDP. And it's a high-value network focused on higher-yielding business traffic. We are the #1 airline for business travelers already for 5 years in a row. GOL is well positioned and dominating the major economic and population centers in Brazil. We are the leader in the main domestic airports, Guarulhos and Congonhas in São Paulo, Brasilia in the Federal Capital, Galeão and Santos Dumont in Rio de Janeiro, Salvador in Bahia. These airports represent nearly 80% of Brazilian domestic traffic. Our network is expanding and diversifying and upgrading. We have codeshares and interlines with over 90 alliance flying to Brazil, as mentioned before, generating new and additional connecting traffic on GOL's network. We can't highlight enough, we fly where people want to fly. The highest density routes, the most important cities. We have the highest share of passengers on these routes, which allows us to drive pricing. And because these routes are as dense as they are, we have a buffer for new entrants. All of GOL's strengths are aptly summarized in the GOL's virtuous cycle highlighted here on Page 44. GOL's business strategy has given it a very strong market position in Brazil and South America, and is built around several core strengths, a strong balance sheet, the lowest unit cost, premium yields and a unique brand and culture. Our balance sheet is strong. We are properly leveraged to optimize cost of capital. Our lowest cost derived from and world-leading utilization of our single fleet type of 737s. Our offering of the best service and value proposition in the market derives from the best product, great customer experience, network flexibility, including leisure, corporate, regional and international leadership in the busiest airports, dominance in short-haul routes and high-density markets and a high on-time performance and flight completion. And our brand and culture are unique, as I will highlight here on Page 45. GOL is a company of opportunity, and we offer interesting career paths to recognize and value. People who are with us a long time and people who come from other companies who now work united with the strong GOL culture. Examples how our workforce relates to and impacts GOL's culture included there, acceptance of role -- [ roles ] us as innovators and agents of change, promoting shifts in the way Brazilians fly, in a continuous base. A strong focus on low cost and high quality, one of the main pillars of our company. Constant redefinition of low-cost operations and popularizing air travel in South America. Consumer-friendly attitude. Simplified and efficient customer service. Provision of safe, on-time operations and participation in profit sharing and stock options. In summary, it's great to work with GOL. And here on Page 46, I would like to share with you some of our culture and employee communication initiatives. GOL has a detailed welcome package for new employees since the very first day, introducing our culture and training there to deliver the main pillars of our value assets. Alignment with GOL's objective objectives. Formal delegation, documents where goals are negotiated and bonus agreed clear to every single person among the 16,000 Eagles of our team. High crew member satisfaction service how GOL measures up. And national awards in human resources. For example, GOL was recently recognized by the Exame, an Abril magazine for [ CSR ] as one of the best companies to work for in Brazil. Our culture also extends to being a socially responsible company committed to sustainability, as highlighted here on Page 47. Not only is GOL one of the greenest airlines in the world, we continuously invest in becoming more sustainable. Some highlights of GOL's commitment include implementation of an environment management system. FAA 145 repair certification. Reuse of water and all effluents generated are treated. Pioneers in biofuel technology, we are the leading company in South America in such technology and greenhouse gas inventory, the GHG protocol. The graph on the right shows how GOL's $5.4 billion of value added was distributed in 2018. Around 30% went to employees and 7% went to shareholders. Increased operating cash flow generation, we will continue to reduce indebtedness and increase that value distributed to shareholders over the next few years. Beyond the governance requirements of ADR Level 3 and the B3 Level 2, our practices include tag-along rights in change of control, permanent audit committee, mandatory offer if over 30% of economic rights are acquired. So basically, they are the same level of commitment delivered by an even higher level of governance as mentioned before. We reinforce our accountability with various stakeholders through actions like 7 different committees fully dedicated to support the Board, adding transparency and credibility. We provide annual sustainability reports based on global reporting initiative guidelines. As highlighted here on Page 48, we report relevant ESG information to investors in accordance with the sustainability accounting standards for the airline industry. GOL continually looks for ways to become more fuel efficient and adopt efficient technologies. We reduced operating cost by utilizing a standardized fleet and reduced fuel consumption and GHG emissions. As you know, the 737 MAX 8 consumes around 15% less fuel than the 737-800 NG. To improve upon our strengths, our current focus is on delivering sustainable growth with capacity discipline and a strong balance sheet, strengthening our productivity by maintaining aircraft utilization above 12 hours and maintaining a CASK 25% lower than competitors; increasing Net Promoter Score, NPS, by being the easiest to use and the most affordable in the market; expanding internationally and regionally by leveraging our competitive advantages and delivering a high-quality product with the lowest unit cost; and increasing the [ competivity ] of our team in all markets. You can also expect further strengthening of our balance sheet and even more optimized capital structure, increased tax efficiencies, higher interest coverage and a credit rating in the BB category, which is our current target. GOL's unique positioning and market relevance is complemented by value maximization decisions that generate synergies to support and reinforce its positioning. And on Page 50, I would like to summarize the use in GOL's 5Gs once again. Great market over the next few year -- few years, I'm sorry. Air traffic demand in Brazil should grow at around 6% to 8%, a market we're leading at the level of 38% to 40% market share. Great management. We are the most proven and seasoned management team in the Brazilian airline industry. And here, I'll talk about my colleagues in this company, which I probably have the honor to help to develop this fantastic trajectory already for 19 years, aligned with shareholders and with a clear purpose to be first for everyone. Great product within the leisure and business travel markets. Our product and services delivered a desired balance between low fares and high-value customers attractiveness, including safe air transportation. Simplified processes based on low cost, [ low-risk problem ] is purchasing and boarding, high punctuality, new aircraft and technology and motivated and friendly employees. GOL is the perfect fit for the Brazilian market, great operating model. We are committed to lower unit costs and higher international heaviness. Our MAX order will generate more equity in the balance sheet and great value creation plan. We will further deleverage our balance sheet with an optimized capital structure. Our target return on capital is 25%. We have time now for a few questions. If you'd like to ask a question, just please raise your hand. I'm glad to notice that there are already several questions.

Savi Syth from Raymond James. You laid out a really good case of how GOL is well positioned in Brazil and how Brazil is somewhat unique as well within the region. Just wondering if there's opportunity to kind of take your expertise and learnings and to put that in kind of other areas, other countries in the region to kind of build something and what it would take for you to do that?

Definitely, we are constantly researching, benchmarking and looking after new opportunities in different markets. If you would be talking 2 or 3 years ago, you would be more, I'd say, positive on how the -- politically speaking, how the region would develop. If we analyze it, what has just happened to South America, considering in the last 18 months, we were all took by surprise on how unstable this region, traditionally volatile, has become. So to be very, very honest, at the moment, I'm glad that we did not take any other position to further expand our presence in the region, but flying perfectly more flights than we were doing before. From our Brazilian based structure. It seems to be, at this moment, the smartest move to be taken and the one which is protecting our continuously growing return on capital. This is our strategy so far. I believe that's the reason. If you tell me Venezuela could become a great market, I would say, yes, how long it's going to last this political instability in Chile? That's going to be now a harder answer to be given. So I believe that we are at the right place, and we are very well positioned to capture most of the benefits or the opportunities created in the region without the need of moving our operation or expanding locally to other countries.

[Foreign Language] Rogério Araújo, UBS. Sorry, I am speaking Portuguese. Yes, a couple of questions here. No, I forgot. One question is on LATAM. It admits it underinvested in the past years and now it has this strategy of regaining market share in the corporate division. So how does GOL see that and how to react to that as well? This is the first question. The second, you point out that one of GOL's focus is on increasing exposure or increasing the capacity in international and regional routes. If you could give further detail in regional routes exposure and increase and also, if at some point in time, GOL could use another type of aircraft? And there is also this decrease in ICMS tax in the states that is fostering you from adding new regional routes. So if you could talk a little bit about the regional strategy would be great.

Okay. I start from the end because that seems to be the easier to be answered. We have expanded our regional network basically every single year since the company started its operation. We are -- just last year -- to mention, we have introduced 6 new markets. And here Eduardo and Celso can help me to remind them. So -- please speak loud. We started Passo Fundo, Cascavel, Vitória da Conquista, Araçatuba, Sinop and there are more -- Cabo Frio, now we have just introduced it. And that's our regular pace regarding the regional markets. And it's pretty much based on the following strategy. Whenever a regional market becomes dense enough to justify a 737 operation, we will be there. And we do not foresee any reason to give up on our pretty successful strategy of operating a standardized fleet to address markets, those are combined less than 5% of the ASKs currently offered in Brazil. So that gives me the opportunity to say with a very high level of confidence that we do not envision any change in our standard fleet strategy in any rate. Even to capture more opportunities, it wouldn't be necessary. You can analyze the successful partnership we have developed so far with companies like VoePass and TwoFlex. We are now flying in the Rio Grande do Sul and Paraná to more -- or to additional 16 regional destinations, those were not attended by [ gold medal ] and we are feeding our own network without bringing to the company the additional cost of operation -- operating a different set of planes. So that seems to be even more now a winning strategy than it appears to be before. Mentioning the ISM as tax reduction, we capture at the moment 95% of all regional state ISM opportunities those were created without bringing any other new plane to our -- I mean, any different plane to our fleet. So I believe that the regional markets will continue to grow and the regional opportunities too, and we will further replicate the strategy implemented so far. There are more opportunities with VoePass with TwoFlex and also with new companies that might company -- sorry, that might come to the Brazilian market at this specific segment because with a set of few planes, and not that expensive planes, you can start a new operation in Brazil. I don't know any other market where regional operators such as TwoFlex and VoePass, can be successful without being connected to a major airline. And also I do not know any other market where a low-cost carrier gave up on its strategy of operating some of the fleets to address regional markets and continued to be as successful as it was before. And then the other question was related to LATAM. As said, we do respect all of our competitors. And I believe, and here this is more a personal comment, because it's pretty much related to the founder culture, the family Constantino, which has positively influenced the company since its inception almost 20 years ago. We have always kept and we will keep our humble behavior of respecting, studying, analyzing every single competitor at the same time that we will continue to reinforce the assets that give us the opportunity to say that publicly, openly since the very first day, we do appreciate competition. GOL itself is the result of an open market. Until the year 2000, the price strategy or the price -- the fares in Brazil were built based on a price buildup structure when the airlines were protected by the government policy, and they were just showing their cost structure and then the fares were established. We defended competition since the very first day. We openly said that the market should be or the restriction on foreign capital should be lifted. So I think that competition is going to get tougher. Yes, that's the natural development of this kind of business, and we are ready to face it. It has happened already, and we have kept our corporate travelers intact with regards to our market share, even increased it. Is there anything else I forgot to answer?

Paulo, it's Lucas Marquiori from BTG Pactual. My questions kind of relates to Junior's presentation as well. You guys said that you are now in a position to negotiate with other U.S. carriers as well, now that Delta is not a partner. Could you give -- is there any updates on that? I mean I know that American Airlines looks like a perfect fit today, right? But can you expect anything new on that on sooner or later? I mean how are the conversations going on with them right now? And secondly, and I do know you have been asked that before, but are you guys willing to sell a part of the company to reach this future partnership or is going to be only like a interline agreement, a codeshare or a JV, what's going to be the nature of this?

Okay. Now I need to start this answer again to a more personal perspective from the management, because a decision to -- either to sell or keep any stake comes basically from the Board and from the controlling shareholder. But that would be the moment where we wouldn't like to recommend any kind of stock sale or share sale, basically because we are envisioning a clear upcycle ahead of us, which will positively affect our results. This is not our forecast. This is our belief. This is our commitment too. So this, I will not comment on shares or stocks movement from the management's perspective, but I don't believe that would be the most beneficial movement towards the company at the moment, considering the point in this upcycle that we are living. Certainly that could be changed based on different scenarios or proposals. But what we are really figuring out at the moment regarding these North American carriers is a clear possibility to further expand the number of seats available to our customers by 3 to 5x just because either American Airlines or United, they are 2 to 4, 5x more or bigger than Delta here in the Brazilian market. And they are better located, geographically speaking, in 2 of the most important hubs in the United States from a Brazilian perspective, which is Miami and New York. So that's a promising movement to be for the developer. And personally, I believe that in a short period of time, we will be able to communicate some positive news to our customers, shareholders and to the market by enhancing our partnership with these 2 North American carriers. I mentioned enhancing because we do have already interline agreements with both of them. So the next steps will be certainly designed and decided along the following weeks to be announced soon, okay?

We have a question from the webcast from Duane from Evercore. Can you talk about how long you expect the codeshare with Delta to last, when will these be winding down? And can you remind us what GOL's commitments were on engine maintenance side, how much volume were you pushing to the MRO?

Yes. So, Duane, thank you very much for the question. There are some legal aspects to be addressed regarding the codeshare with Delta. So I wouldn't like to comment on them at this moment. To us, they are under discussion. I hope you can understand. And to the MRO, we are about to mention something on it on Celso's presentation. I wouldn't like to give any previous teaser. The answer is -- it's part of the Celso's presentation, but the answer is $100 million a year, as Richard is just highlighting here, okay?

Dan McKenzie from Buckingham Research here. Again, of course, the part of your presentation that caught my attention was the 25% return on invested capital. So I'm just wondering if you can elaborate a little bit more on that because there are investors out there that take 1- to 3-year investments. And if you're sitting in front of an upcycle, how are you thinking about the financial metrics that underpin that 25% return on invested capital? This year, they are 19% operating margin, are we looking at 18% to 20% margins from your perspective over the coming 3 to 5 years? Or at least what's embedded in the goals as you talk to your senior management team?

We believe that we can further -- you can understand that should not deliver any kind of different or new guidance to the market beyond 2020, which is the one that we made public, that you are commenting on more -- on the areas of activation where we believe that we can extract that return mentioned. We -- as you see here, the market is now pretty benign and favorable to that. Whenever you see cycles like this, the GOL's network shows up and the main -- one of the main catalysts of these kind of results because we are transporting both segments and leading among them. I mean, at this moment, we do see a considerable additional amount of business travelers preferring to fly with us and paying higher -- significant higher yields than they were paying before. If you consider that the Brazilian GDP basically kept stable or even negative along the last years, whenever you see -- whenever you take the most conservative GDP forecast for the next year, let's say 2%, it's going to bring us a 6% to 8% additional demand. You know that we are already operating at a level of -- a load factor level of low 80s, which is one of the highest. And we can, we have the capacity with the structure to carry more business passengers than any other carrier in Brazil. So that was -- that drives one considerable portion of this return improvement that we -- I have just mentioned. The second is we are -- have challenged ourselves, our management, to further reduce our cost per unit. And we have a strategic plan to do it. By strategically I mean something that we [ wouldn't ] like to give more clarity or disclosure because that's a kind of differentiation. But through technology, we strongly believe that we can go for it. And finally, the financial structure of the company, which will be further detailed by Richard. So the combination of these 3 things give us the confidence to target the return that I had just mentioned. I guess, that's the one -- the last question for this session -- please Felipe, you'd like -- go ahead, sure, sure. I'm just trying to keep that, because after the individual presentations, we're going to have another Q&A session with everyone. So every question will be answered, but please, Felipe ], go on.

So first on the airports and hub strategy, you showed a graph with your leadership in some hubs. Sometimes, it's a leadership, but it's very close to the second runner-up compared. But in the case of Galeão, you are by far the leader. Do you see any opportunity of building another -- other hubs like you have in Galeão, so having a leadership with a big gap versus the second because I think this is a very good market position. And how do you see, not only the GOL's strategy, but the competitor's strategy in terms of holding a leadership or increasing a leadership in the hubs. How do you see this evolving ahead and the capacity growth plans? Are they adding -- do you see more disputes in certain hubs and less disputes in other hubs? How are you seeing these dynamics? That's one. And second is more related, so capacity growth scenario for GOL and the markets in 2020. You have easy comps in 2019. And when you combine this with the yields, the opposite, you have hard comps growth, so how do you see this evolving for 2020?

The yields -- we are considering the yields to be kept stable, as also was mentioned by Junior, but we could get -- it's not part of our forecast. But we could have some surprises in that field too, because if you take the not-so-conservative scenario, let's say, the GDP will be slightly above 2% growth, it's likely that the business travelers' market will be even stronger than we are forecasting. So that could be a positive news coming out of our guidance. But your question is possibly the most important one should be monitored by every Brazilian airline shareholder from now on, is how the industry will behave regarding capacity discipline. This is something that GOL is trying every single day to positively influence. By positive, I mean, to keep a sustainable growth ahead of us, ahead of the whole industry. So it's pretty much natural mainly in this industry that every single competitor believes that it has the only successful plan in the market, and that allows him or her to decide to increase capacity above reasonable levels. We are, as market leaders, showing how much we do care for sustainable growth and therefore, we are clearly demonstrating the rationality behind our capacity expansion plan. It's 100% attached to the domestic economic growth. We don't believe that any other movement will result in healthy yields to the whole industry. So we had made these kind of statements pretty clear, and that is going to be our growth culture ever. This is what we had utilized to deliver this, however you announced it, 6% to 8% capacity growth to the next year because it's based on the historical growth of 2 to 3x GDP and we are, by saying so, assuming that our GDP growth for next year is around 2%. So it is something to take proper care of. And also, to be fair, it's important to mention that it's more critical when we are talking on overlapped routes. If we are considering -- if we would exclude the regional growth from that equation, I am pretty positive that the next year industry dynamic will be at a very healthy level as it has been so far. So that was one question. What was the other? Sorry, Felipe.

Airports and hubs.

Airports and hubs. The strongest competition at this moment is happening at the Guarulhos hub. This is where the Avianca's capacity were more aggressively replaced by everyone. So the yields there are under pressure. We do not see that phenomenon happening in any other -- or not so aggressive in any of the other hubs. How a hub is born? It's something that would better answer the first question. We are always considering where geographically our company would be better represented and serving more dense -- more dense markets than those ones already being served by our current hubs. I don't see any clear potential in Brazil but the current ones being already operated. So we do not envision at this moment a new hub on top of the Fortaleza, for example, that we have just developed, okay? So thank you. At this time, I would like to invite Eduardo Bernardes, our Vice President for Sales and Marketing, to the podium, who is going to further comment on some of these aspects, too. Please, Eduardo?

Thank you, Kaki, and good afternoon to all of you here at the GOL Training Center. And hello to those of you participating from around the world via teleconference. I'm Edu Bernardes, and in addition to selling tickets, I also spend a lot of time on GOL's revenue strategies, on which I will now brief you. Over the next 20 minutes, I will review our strategy for customer segmentation, product, distribution, ancillaries, cargo, loyalty and brand. At the end of my segment, we will have a few minutes for questions. As everything we do at GOL begins with our customer, it is with the customers that I begin here on Page 52, please. GOL's personalized product offering in price, route and services makes it unique in Brazil. Brazil's lower income, under-penetration, continental size and high seasonality do not allow focus on one single customer type. To maximize revenues, GOL's segmentations strategies serves 2 different customers, Rodolfo and Lais. We understand the needs of both, and we know how to offer the right product, the right service and the right price tailored to each one. Rodolfo, it's our corporate customer. He is responsible for 27% of the volume and 50% of the revenues. For him, network and services are determinant, and our portfolio serves all Rodolfos, the frequent, the occasional and the eventual. Around 40% of the corporate customers are loyalty members and around 22% are large corporate, such as bank and multinational companies. For those customers, GOL has over 700 contracts and 300 global accounts. For the 47 eventual with small corporates, we offer VoeBiz product, a one of a kind in Brazil. GOL is the leader of corporate travel in Brazil since 2015. On the other side, we have Lais, our economy customer. They are responsible for 73% of our volume and the other 50% of our revenues. For her, price is determinant. And our low cost enable us to provide a low-fare product to stimulate and capture all economy travelers. While the aircraft service and network are the same for Lais -- are the same, the price for Lais is priced in the manner she buys her ticket. On the next Page 53, I will brief you on how innovation drives our customer segmentation and contributes to our ability to offer products and services that improve our customers' experience. We recognize each one of our customers, and we create customized communication offering the right product at the right time in the right place, while generating value for both the customer and GOL. In 2019, successful segmentation generates results for GOL such as product improvements and brand reposition that helped us to attract 250,000 new HVC customers. More accurate demand measurement in the launch of 9 new destinations, a 25% year-over-year growth in the share of Brazilian frequent flyer revenues and a 38% share of the Brazilian corporate market according to the Brazilian Association of Corporate Travel Agencies. In 2020, GOL is developing a new personalization technology using big data and omnichannel tools that will improve analytics and allowing us to capture more data and delivery at 360-degree view of our customer in all communications channels. With our centralized data, we can customize any action in combination with the statistical modeling offering an even better experience for customers as well offering tickets, ancillary products and customer service all in real time. An essential component of our segmentation strategy is our product strategy, which I will review here on Page 54. Members of our Smiles loyalty program more easily accumulates redeem and upgrades. They can access VIP lounges around the world, earn courtesy tickets, get free checked baggage, special seating and airport priorities. Smiles Diamond customers have access to the GOL premium lounge, priority check-in and boarding and differentiated onboard service with free meals and alcoholic beverage. Are you comfortable in your seats? Are you? GOL is the only airline that offers premium economy with the middle seat blocked as you guys can experience here, to international destinations. We are the only airline that offers the GOL comfort seat with an extra 4 inches of leg room and 50% more reclining. We are the only Brazilian airline that offer female's toilet and exclusive overhead luggage compartment. Although customers have access to free live TV with the best programming in the market, an exclusive platform of updated movies and series, free organic snacks, coffee, juice, soft drinks and water and onboard food menu and high-speed Internet with package options ranging from sending message to streaming. The GOL premium lounges are located at Guarulhos and Galeão airport, the most important international hubs in Brazil. GOL is the only airline with domestic and international lounges at these airports. GOL customers have private toilets with showers, a special buffet and a bar, where they can relax over a caipirinha, as I hear many of you have. That's what I hear. On this page here -- on this table here on the next Page 55, we're going to show how GOL has positioned its product offering as the best value proposition in the Brazilian market. GOL offers the most attractive product, the best experience and the best fares for business and for leisure customers. We offer the most convenient flight schedule and a highly integrated flight network for fast connection times. That customers love the experience of traveling with GOL is reflected in one of the highest Net Promoter Score in Brazil at above 40s. We align GOL's products and service with the attributes [ best ] customer most, be they price-sensitive or premium, as you can see here on Page 56, please. The GOL product offering matches with the nature and needs of each type of customer, both the price-sensitive and the premium travelers have their own GOL product. As you are now briefed on GOL's segmentation and product strategy, I will proceed to how we sell our product to our customers, our distribution strategy here on Page 57. Our customized communications include the right distribution channel for each customer. Our distribution strategy is based on Internet and APIs. Our multilingual sales channel includes websites, mobile apps, directly connections, sales call center, airport [ ticket counters ] and global distribution system, GDS. Approximately 90% of our passengers' revenue, whether booked directly by the customer or booked through a travel agency, is booked in the GOL online platform, making GOL the global leader in online booking. Around 42% is sold directly to customers and travel agencies represents 58% of our sales. Travel agencies are important partners, and we segment them by specialization such as store operators and TMCs, travel management companies. Our sales expenses as a percentage of our revenue is currently running just below 7%. And over the next few years, we expect to reduce this by as much as 1% based on a new distribution platform that will also improve our customer experience. Moving to the Page 58, where I describe how GOL maximizes passenger unit revenue, our PRASK. GOL's revenue management strategy includes the offering of over 23 different fares for each flight differentiated by restriction and sold over a 330 days forward booking curve. Dynamic yield management allows GOL to maximize unit revenue, [ simultaneous ] from one demand business passenger that usually buy less than 7 days in advance and a price-sensitive leisure passenger that normally buys more than 60 days in advance and also maximize our ability to upselling alternatives. To improve even further the optimization of our PRASK, we are investing in new technologies and advanced analytics, and I will brief you on this starting here on the next Page 59. GOL has built a strong position of strength, results of a superior positioning in product brand, customer services and network as well as excellence in operation and best-in-class process in marketing, sales and revenue management. We believe our new sorts of competitive advantage will come from making GOL a leading tech airline, innovating through digital analytics and embedding new capabilities in agile new ways of working. On the next Page 60, I will show the main pillars upon which GOL's digital analytics transformation is organized. GOL aims at improvements in customer excellence, revenue growth and operational efficiency through embedding data analytics in every component of our business, building our world-class tech function and developing agile and new ways of working. Within the helm of revenue management, our objectives are here on Page 61, especially -- specifically to boost performance and create competitive advantage through advanced analytics. To build one source of truth, leveraging information and signals in an integrated way to foster a data-driven culture and systematically incorporate advanced analytics into the GOL organization. Our investments in new technologies and advanced analytics will allow us better optimized GOL's PRASK including revenues from passengers and ancillaries. Since the adoption of IFRS 15 in 2018, our reported PRASK includes all passengers ancillary, on which I will brief you here on the next Page 62. In our average ticket price of BRL 350, GOL earns an additional BRL 32 from checked bags, WiFi, onboard food and drinks, the GOL Comfort Class, carry-on bags, priority check-in, call center assistance, seat assignments, flight changes and trip interruption insurance. On the next -- on the right side on this page, you see that our ancillaries revenue have been growing at a compound quarterly growth rate of 6%. GOL's last 12 months' growth revenue from passengers ancillaries were just under BRL 1.3 billion, approximately 9% of the total revenues. With that, I covered the many strategy for maximizing GOL's PRASK, GOL's passenger revenues account for approximately 93% of its total revenue. In addition to passenger revenues, GOL makes an additional 7% of its total revenue from its cargo business, Gollog, which contributes 3% of our revenues and its loyalty business Smiles would also contribute 3% of revenues. I will now brief you on our revenue strategies for cargo here on Page 63, in addition to ancillary revenues earned from passenger traveling in the cabin of our aircraft. Through our cargo business Gollog, we earn revenues from customers transporting cargo in the excess space in the baggage hold of our aircraft. With a 25% market share, Gollog is a leading player in air cargo; second in Brazil after LATAM's cargoes, 36% share. Gollog delivers cargo to over 3,600 cities in Brazil and to 12 cities abroad. In 2019, Gollog generated revenue of just over BRL 400 million from a very diverse client base, as you can see here, on the next Page 63. Please, next page. Gollog's clients are leading companies in the health care, clothing and automotive industry. Gollog customers can have their product picked up and delivered to their door or use the convenience of one of our 117 stores around Brazil. We have several cargo warehouse facilities around Brazil, include one here in our headquarter, that some of you will visit at 4:00 p.m. today in our tour that you signed up for during the coffee break. Gollog is growing its client bases. And for 2020, we expect a 14% increase in revenue on 89,000 tons of volume transported. E-commerce revenue growth will be around 75%, and we expect 130 more franchise units nationwide. By 2022, our plans are to grow Gollog to 9% of our total revenues. Finalizing our briefing on GOL's other revenues here on Page 65, I will review our revenue strategy for loyalty. The Smiles product is a component of the GOL value proposition, as the top of mind brand amongst all loyalty programs in Brazil. Smiles is a great tool for attracting frequent flyers, who consider the loyalty program as the third decision factor for ticket purchase. Smiles members fly twice as much as a regular non-Smiles customers. And a good portion of the load factor is from Smiles member in accrual or redemption operation. GOL not only improves travel experience by offering Smiles miles to customers, but also offers to Smiles customer over 900 global destinations, access to VIP lounge around the world, courtesy tickets, free checked bags, special seating and airport priorities. In 2019, our loyalty programs attracted over 1.6 million new members, increased by 26% its base of top-tier customers. When we talk about top-tiers, we're talking about Silver, Gold and Diamond. And grew by 59% considering only Diamond customer. In addition to GOL, 15 airline partners and 18 retail partners, our services providers bring Smiles customer a wide range of possibilities for the Smiles redemptions. When the proposed competitive realignments are completed, Smiles will be better positioned to take advantage of market growth due to better attractiveness of the product, the quality of the membership bases, its exclusive relationship with GOL and the GOL global network partners. On the Page 66, award for our revenue strategies for passengers, for ancillaries, for cargo and for loyalty makes the GOL brand very well recognized among current and prospective customers. In 2019, not only was the GOL brand top of mind for the second consecutive year, it increased its lead over the #2 player, LATAM. The GOL brand is strongly connected to the revenue strategy that I review for you, and it is tied to the priority and top-quality services in everything we offer. As Kaki highlighted with his iceberg diagram, I'm sure you all remember, these additions to the GOL's product have enabled GOL to become the only low-cost carrier in the world to conquer a leading share of corporate customer, without compromising its absolute cost advantage. Thus and I highly -- and I highlight here on the Page 67, GOL's revenue strategies ensure high engagement and the best customer experience. Our continuous and customer-focused innovation and truly digital business create a customer experience that builds loyalty. Over the past 5 years, our NPS has increased to over 40. In our recent Black Friday sales, there was that GOL is the preferred airline in Brazil. Before finalizing our briefing on GOL's revenue strategy, I want to share with you a short video that will give you an idea on how we are communicating our value proposition to the Brazilian market, please? [Presentation]

Just to give an idea on how we are communicating to our customers, we're going to have a time to talk a little bit during the breaks. Please let me know what you think about our position, we'll be more than happy to receive your feedbacks on that also. To wrap up this segment on revenue strategy, I'd like to revisit GOL's 5Gs diagram. First one, great market. Brazil is the fifth largest domestic market globally and should double in size over the next 20 years. GOL has great room to grow with fleet renew over the next 5 years. The second thing, great management. I have 19 years' experience at this company, and I'm more excited than ever for this great current opportunity. I'm sure we're going to keep our successful trajectory from now on also. Great product. GOL has the most attractive product and experience at the best fares. GOL has a unique segmentation strategy and the most complete product offering of any low-cost carrier around the world. Great operation model. 19 years ago, this month, GOL begun popularizing air transport in Brazil, allowing more than 35 million customers to fly for the first time ever with us. Great value creation plan. Part of GOL's product is like Ryanair with very low fares, like Kaki said and also Junior. With another part has offerings similar to American Airlines, allowing us to win and retain large corporate customers. Now we have time for a few questions. If you'd like to ask, please raise your hand and we will take the microphone to you. Thank you.

It's Mike Linenberg here with Deutsche Bank. I have 2 questions. So I was actually surprised that your GDS share or you're just using the GDS as a form of distribution is still only at 5%. If we look at some of the developments around the world, as airlines have matured, you probably are well aware of the fact that Southwest now feels compelled to go back into GDS', they are focused on corporate. Ryanair a few years ago when they launched the Always Getting Better program, they moved back into GDS'. What -- because you are predominantly domestic and you also have a good lock on corporate here, is there a compelling need for you to go back into GDS' or is it more of a function of you moving into international markets? And if you do more international, then you will absolutely have to be in a global distribution system. That's one question, and then I'll ask the second.

Okay, the -- of course, the GDS, it's very important for our international strategic expansion for the domestic market. We were the first airline in the region, and I would say in the world, to develop the [ directly ] connections. I think we took the opportunity here in Brazil in 2003, when we start to work closely with the corporate markets, and they were really complaining about us not being the GDS'. That helps us to develop what we call today NDC leading by IATA efforts. It starts for GOL in 2003 with, we call, [ directly ] connections. We allow, especially the travel agencies to come into our distribution system or our PSS directly without having the necessity to go through the traditional GDS. We have been developing since 2003. 98% of our sales in Brazil for the travel agencies, they are using this technology. The other 1%, they go directly on GOL's website where we have a specific area for the travel agencies. For the international market, our strategy is a little bit different, one is we have not the same presence as we do here in Brazil. So we develop GDS connections, where we allow travel agencies around the world to be connected with us via GDS'. For that sense, we have 5% to 6% of our sales on the GDS'. But we also have our website selling ticket directly to our customer in some markets that we operate by ourselves. For that sense, we still have the GDS'. We are in the middle of a process discussing about what will be our new distribution system in the past. But even if we change from our actual provide, the new technology that is available even for the traditional PSS system as Amadeus and Sabre, they allow the airlines to keep the [ directly ] connection. So we truly believe, even we decide to change our PSS to develop our ancillary opportunities. Is that clear?

And just one quick second one on bringing Smiles back into the fold 100%. What is that revenue opportunity because it feels like when you look at what airlines are doing around the world with CRM, credit card and loyalty, it's now much more compelling to have the loyalty company within as it relates to dynamic pricing and revenue management. And my sense is that you're not able at this point because there are 2 separate companies with 2 very different objectives and shareholder bases and boards, you're not able to maximize that potential and given the size of your company and the size of that loyalty base, it feels like the opportunity could be, not tens of millions, but maybe hundreds of millions of revenue acting as one voice or one force. And so I know we don't talk about that, that much. We talk about Smiles, we talk about the tax leakage and some of the structural benefits, but it does feel like that once that's folded in, there is real sizable revenue opportunity once you're the 100% ownership?

Yes. First of all, we have to think about the loyalty. Being together will help us to improve even more our capability to make more customers loyal to us. As I told you during the presentation, nowadays, we have almost 40% of our customers fly on GOL that are either redeeming miles or burning miles on our flights. Okay? So we have almost 40%. So we do have an opportunity to grow the amount of customers loyal to GOL and Smiles. This is one important piece. And working together will help us on this development. On the side of revenue, there we can optimize even more our revenues working together. As you know, there is a contract between the 2 companies today, and we have to follow that contract. And sometimes we see opportunities that we cannot go for because the contract says something different. So working together as one -- only one company will break some of those barriers, allowing us to better forecast, to better optimize our flights, offering even more spaces in some flights that it's important for GOL to use the Smiles portfolio base. And on the other side, we're going to also be able to reduce some offer in some markets that we can sell tickets in a higher price than we sell considering the actual contract we have with them. So there are a lot of opportunities we expect this transition to go as fast as it's possible.

Dan McKenzie with Buckingham. One housekeeping question and then a question sort of on the regional operations that Junior referenced. So for the -- and I apologize for the quarterly question here, but the revenue beat for the current quarter was pretty substantial. I'm just wondering if you can provide some perspective around that beat revenue to the -- relative to the initial outlook. My sense is that, that's a sustainable trend heading into 2020, of course. The second question ties to the regional strategy. It's pretty small, but I actually was looking at the schedules data before the today's presentation. I think it's maybe a 1/10 or 2/10 of the overall seat schedule. But how do you see that as a growth opportunity? How do you see that connectivity helping to drive your system PRASM? And if you could just talk a little bit about your early wins or early successes tied to that?

Let's start with the regional strategy, talking about GOL's flights initially. The GOL regional flights, the level of connectivity with our network, it's over 55%. So more than 55% of our customers departing from those regional markets, they are in connection. They arrive to our hubs and then they go to other destinations. So it shows how powerful is our network and how powerful is our hub structure. So we are very happy with the initial results from the GOL's regional operations in those regional markets. And then there is the second piece of these regional markets, the partnership with VoePass and TwoFlex. In some specific markets, the connection ratio, it's over 75%. Because we are talking about a very small city, in some cases, especially in case of TwoFlex, we are talking about very small city in the countryside of Rio Grande do Sul and Paraná, where the customer, most of the time corporate customers, which also helps us on our portfolio of routes, like corporate business, it's very important to have a very robust portfolio of route. So we have corporate customer departing from these small cities in the country of Rio Grande do Sul and Paraná, connecting with our network and flying to those more important markets that was highlighted by Junior and also Kaki. So the regional expansion will help us on improving our portfolio, at the same time bringing more customer to the environment. Is that clear? The first question, please?

[indiscernible]

Okay. Okay, yes. We are -- actually, we are in a ramp-up period because we just launched some flights. So there is a ramp-up. Some markets, we see good results in the -- already in the first 3 to 4 months, and we believe it's going -- we're going to maintain -- sustain those markets because we have a very, very efficient network. The product that we are offering in those markets are very efficient and very high quality. I'll give you an example. Playing on my favor, I born in Araçatuba. Araçatuba is one of the regional cities that we just launched. Actually, we launched on the 4th of December. So it's less than -- a little bit more than 30 days. I born there. And I've been working here for 19 years, and I was trying to convince the management to put the flight in Araçatuba because, of course, I always believe Araçatuba would give us a better result. Our flight departures at Araçatuba 7 a.m. arrives in Guarulhos at 8 p.m. right in the -- in our hub time for Guarulhos. More than 65% of our customers are connecting from Guarulhos. So it's amazing, and they fly and then we fly back to Araçatuba at 9:45 p.m. So the network for those regions -- not only for the regions, but the GOL's network at all, we -- the guys from network planning, they really did a very, very nice planning for those regional routes because we have to understand the traffic, if it's coming to the country or if it's going to the in-country side. So I think the quality of our network together with the product, service and customer experiences is going to help us to really build a strong results on those regional routes. Okay?

We can go with that? At the end of the day, we're going to [indiscernible] About the Q4 [indiscernible]

Q4. Okay.

Edu, it's Savi Syth from Raymond James. Just 2 kind of clarification questions really. On the first one is, [ when you broke ] the business and leisure and you kind of treat leisure as price sensitive. But also kind of increasingly apparent with just globally, how the airlines or segment in the plan is there is a kind of high-value leisure and then a very price-sensitive leisure. So I'm wondering if you can give a little color on what that make up might look like and what that trend looks like? And then just a second question on the cargo, it's -- I think you said 3% of revenues today and 9% in 2022. Is that really being driven by e-commerce? Or is there something happening in GOL itself that's kind of driving that faster rate?

Okay. We're going to -- our -- we are expecting the e-commerce to grow, right, for the next year 75%. So e-commerce will be the biggest growth for Gollog's business, okay, in that sense. When we say about the corporate and leisure customer, I truly believe the leisure market, we recover a little bit in the next years. We recover because the unemployment rate is declining, the market situation is improving. So we're going to see, again, some important growth on the leisure market. And we are very well prepared to receive this growth because we have the best product, the best service, the best technology. The way we are using advanced analytics in order to identify our customer needs and where our customer is, it's going to help us to drive even better results on the leisure market. Together with that, we have the best relationship with the travel agencies in the country. We have the best relationship with the travel agents. At the same time, we have the best commercial team relating to these travel agents. We have a team that is spread all over the country. We are the only airline in the country that has commercial team around every state in the country. We trust very much on this sales force scheme that we have in Brazil, helping us to develop also the leisure market. On the other side, the corporate market, during our conversations with the most relevant customers for GOL, which are banks, consulting companies, car industry, agricultural companies, we feel that they are all more -- they really believe that they are going to be able to implement several projects that they were put that was on hold during the last 2 to 3 years. So that new projects will help us to see some growth in the corporate side. At the same time, the investment that we have been doing in product and services, especially for the corporate customer, will keep us growing our relevance for those corporate customers. We are going to go for share of wallet instead of market share. We are focusing -- increasing our presence on those corporate customers that are already loyal to GOL. We have more than 700 corporate contracts, 300 of them are global companies. We also have the best team to support the corporate customer, together with the best product and the best service. And so we believe we're going to be able to capture the biggest piece of this growth on the next years.

Okay. Well, we're going to go to the next segment now. But if you have any other questions for Edu we can get it at the end of the day. We'll have half an hour at the end of the day, just to get to keep on schedule as we want to get to the lunch session as well. So you guys aren't too hungry here. So with that...

With that, I will invite Celso Ferrer to talk a little bit.

I will start. Okay. Hi, everyone. I'm aware that investing in airlines with their varying operating models is very complex. And in my segment into the investor briefing, I will make it easy for you to understand how GOL operating model generates value. Over the next 20, 25 minutes, I will walk you through our operational strategies, including fleet, efficiency, capacity and network. 19 years ago next week, GOL launched in Brazil an innovative LCC operating model that allowed GOL to win overall competition and maintain a significant and a leading market position. Today, this leading position serves as a base for growth on our core network, complemented by additional regional and international destinations, as we saw early today. And the GOL system is becoming even stronger, even more replicable, and with even more economies of scale, scope and density. To make it easy for you to understand the GOL operating model, I will summarize it for you here on Page 71. GOL Airlines is well positioned for sustainable long-term results, with an operational model built firmly upon a safe and security culture. The highly successful GOL operating model is based on a single fleet type, which combined with a high use of technology and achieves industry-leading aircraft utilization and productivity, fast turnaround times and the overall best operating performance and service levels. GOL high operating efficiency provides significant gains in seat inventory and operation management as the most adapt to the realities of the Brazilian market, giving GOL a high amount of operation flexibility and guarantees the lowest unit operating cost. GOL's optimized capacity planning is based on a persistent search for the optimal supply and demand balance, where the equilibrium is the objective. GOL's planning is based on a multiple scenario and permit fast reactions to the market changes. Capacity flexibility is a key competitive differential for GOL. Our current planning has deployed our ASKs capacity around 75% on domestic core routes, 11% on the domestic regional routes and 14% on international routes. As you see here then, you mentioned the 11% is around 11% what we call our [ gold medal ] regional markets. And last but not least, GOL network is unique because we have our slots, our positioning in the airports and our opportunity to create even more value. Our operating model is firmly rooted in safe, and as Junior highlighted, in its GOL highest priority and #1 value of this company. GOL safety and security culture begins with a modern and efficient fleet of state-of-the-art aircraft continuous with our strict and continuous maintenance ongoing, efficient training and finishes with a strict detail and result-oriented monitor aircraft and people performance. As shown here on Page 72, GOL's robust report system is one of the most powerful tool of our safety culture. Our flight data management system monitors 100% of GOL's fleet via 1,500 different parameters. And in the GOL system, employees provide constant feedback about hazards and errors that might pose a safety issue. Daily inputs from people working in everyday operation allows managers to take immediate actions, mitigate operational hazards and risks. In 2019, we received almost 6,000 reports, where the high incident of identified reports at above 95% is an indicator of our employees' high confidence in our GOL safe culture. Safety is truly our #1 value, and we are happy to see that our team is increasingly engaged. We invest continuously in research, technology and the deployment of our safety culture. And GOL safety practice are internationally recognized, as you can see here on Page 73. And since its founding in 2001, GOL has a stronger presence and proactive participation in international flight safety community as in -- recognized as a top-notch flight safety organization. GOL is thought of as the safety reference by many airlines and safety organization -- and safety organizations. We are a leading members of the most important safety councils, committees and working groups. We are part of the most sophisticated safety discussions worldwide, and we are recognized by authorities, academics and international organizations. Our safety policies and procedures have been consulted and studied by other airlines like Japan Airlines, Sky Airlines, Delta Airlines and mining company like [ Vale do Rio Doce ] or hospitals like [ Daher ] and Albert Einstein. GOL's safety and security culture and our highly successful operating model is based on a modern and efficient fleet of state-of-the-art single-type aircraft. And we would like to brief you on the main reasons why aircraft selection matters so much. Now moving to Page 74. The GOL operating model is based on a single fleet type, which combined with the high use of technology, achieves industry-leading aircraft utilization and productivity, fast turnaround times and the overall best operating performance and service levels. GOL's next-generation fleet is one of the youngest fast and most fuel efficients that can meet high utilization needs and has the lower maintenance costs. The benefits of a single fleet type are commonality and cost savings, deriving from a simplified maintenance and a smaller spare parts inventory. Operational flexibility, where scheduling is simplified and a higher utilization is achieved and lower labor cost from reducing training expenses and our employees becoming high knowledgeable about the Boeing 737. I can't emphasize enough the power of a single fleet type in terms of efficiency and flexibility. We have tested continuously the power of a single fleet type, all 737 fleet. It has been a very liquid aircraft and has helped us successfully manage in small and large disruptions, including our 2016 fleet rightsizing, and now the 2019 MAX delays. With our focus on a single fleet type, GOL has been able to innovate and adapt its aircraft to the Brazilian infrastructure. And here, on Page 75, I show you the competitive benefit of these innovations on a single fleet type, GOL codeveloped with Boeing in 2004 and launched in 2006 the short field performance, the 737-800 short field performance, our SFP. It's a package adapted to the NG to the requirements of the Brazilian shortest runway, such as Santos Dumont that we can see here in the picture in the downtown Rio de Janeiro. The 737 is the most efficient aircraft for Brazilian airports. And the big -- no matter if it's in the big hubs or in the regional airports. As evidenced in the graphs on the left at Santos Dumont, GOL carries more passengers per flights than any other competitor. Because of these innovation, over the last 13 years, GOL has added NG services to all major and smallest airports in Brazil. Meaning that GOL has the largest aircrafts flying into Brazil main airports, but also the largest plane flying into Brazil regional markets. Hence, the competitive superiority of the GOL fleet strategy. The Boeing 737 is the most efficient aircraft for the Brazilian operation, and it gives GOL significant advantage, which will increase further as we transition to the MAX. The same way we create the GOL effect that Kaki described, we will create the MAX effect. As our fleet transformed from 137 aircraft at the end of 2019 at a 5% MAX ratio to 151 at 38 MAX at the end of 2023. As you can see here on Page 76, this will bring a 13% increase in productivity, solely from the increased number of seats per aircraft. GOL average available seats will keep increasing without the passenger -- without impacting the passenger experience. The increase in the average seat count per aircraft is also important to bring incremental cost per seat to a very low level, which will result in a significant efficient improvement, bringing a 24% increase in the ASKs produced per month per aircraft, and our operating costs will be diluting across more ASKs. Additionally, when the MAX stand to join the fleet in 2024, GOL will be able to increase capacity in markets that are restricted in terms of infrastructure, or that are high density. The MAX 10 has a high commonality with the MAX 8, and we will reduce further our cost by adding an additional 30 seats. I'm now on Page 77 for those who are following along our webcast, which are deployed in a highly flexible manner to transport the leisure and corporate and international customers, achieving a high customer satisfaction that Edu briefed you and creates the structural basis for achieving the lowest unit cost. GOL utilizes its assets more efficiently than any other player. We achieved our world-leading aircraft utilization of over 12 hours -- block hours. Key components of our high operating efficiency are number one, our operational analytics department, our ops analytics department that uses big data in advanced analytics and new technologies to keep our process streamline improvement -- improving in management the disruptions that we face every day and optimize scheduling; and number two, our in-house MRO that uses predictive maintenance tool to maximize aircraft availability and keep costs low. Now on Page 78, I will brief you on our MRO. Since 2006, for over 13 years now, we own and operate an in-house aircraft maintenance center located in Confins in Belo Horizonte Airport. GOL 1 million square foot facility is the largest single Latin American and has 3 hangers, including our hermetic ceiling painting hanger, 6 shops and over 6,000 -- 60,000 square feet of parts storage and can handle up to 7 aircraft simultaneously. Last November, to generate a new source of revenue and reduce our costs, we expand GOL aircraft maintenance expertise to third-party airlines, through the launch of GOL Aerotech, a new business unit that provides GOL Aircraft and components, maintenance, repairs and overall to third parties. Our MRO is certified by a national and international regulators, including the Brazilian National Civil Aviation Agents, the ANAC, the U.S. Federal Aviation Administration, the FAA and the European Aviation Safety Agents, the EASA. With 760 employees and over 600,000 hours of availability per year, GOL Aerotech is qualified to perform maintenance service for Boeing models like the 737 Class, the 737 NG, the 737 MAX and the 767 Family. ACG, the Aviation Capital Group and Dubai Aerospace are among our first customers. And for 2020, GOL expect revenues of BRL 140 million from GOL Aerotech. Our in-house MRO help us to keep productivity high, as you see here on Page 79. Our average revenue-producing hours per aircraft per day is 1 to 2 hours higher than our peers. We are at over 12 hours per day of utilization per aircraft, meaning that GOL utilizes its assets more efficient than any other airline, while maintaining the best customer experience in the market. And here on the graph on the right -- on your right of this slide, you see the average number of passengers per flight carried by each of the main players under the Brazilian domestic. Our competitors have adopted very complex multiple fleet-type operating models in search of efficiency at the expense of a higher ownership cost. Over the last 3 years, GOL increased by 18, the average number of passengers per fly versus 15 and 5 at our competitors. So I ask you a question now, which airline is doing an efficient upgauging in the Brazilian industry? Also, together with good contract negotiations, our high asset utilization gives GOL the lowest aircraft ownership cost, as you can see here on Page 80. So GOL highest utilization gives its lowest ownership cost and high fuel productivity. I highlight these line items as they are the major costs, but many of you treat them as a nonmanageable. Here, you have revenue [ pax ] kilometer, which is the RPK, is the good capacity divided by the ownership cost on the left side of the page, and by fuel consumption. On the right side of this page, by fuel consumption -- I'm sorry, for the -- on the left side of the page, you have RPK per ownership cost, including finance and then operating leases, and here, RPK for fuel consumption. And you can see the big advantage we have there. This show that the 737 aircraft assets deploying GOL airlines operating model generates the highest revenue at the lowest cost. This is the power of GOL's operating model and help you to understand the reasons that give GOL the lowest unit cost and what produce such a significant advantage on the right page on Page 81 is a list of some of the main initiatives, projects and studies and developments that GOL has executed over the last 7 years to reduce fuel consumption. Fuel consumption optimization is a complex and continuously work. We are currently working on the new initiatives such as tankering models, improvements, the contingency fuel reductions, alternate improvements, extra fuel for taxi fuel, improved climb, route planning optimization, passenger weight profile and tax reductions that combined with the proven fuel performance of the MAX will bring an additional reduction in the GOL's fuel consumption of approximately 80% by 2025. GOL is a global benchmark in terms of fuel productivity. As demonstrated here, GOL has the highest ASK production of peers, as you can see here on the left side on this page. On to Page 82, where I show you GOL high-quality customer service. These 4 indicators are the best publicity available and unbiased indications of how we are perceived by our passengers. We also measure our Net Promoter Score, or an NPS, in the determination of the bonuses received by each employee. GOL has a very low-cost baggage index, and we are not only in front of our domestic competitors, but we are in front of the most regions. This is a very good result given then the very high connectivity that we have. In terms of customers' complaints, GOL is the best in the industry. Regarding our 2019 completion and on-time statistics, despite the impacts on the MAX and delays and an unexpected maintenance issue, the pickle fork on the 737 NG were really significant. We maintained more than 90% of our flights on time. Shifting gears now on Page 83. I want to talk about how GOL optimize its capacity planning. GOL matches it's ASK productions with demand and seasonality, giving it a sustainable cost advantage and flexibility. GOL has a mature and well-structured aircraft delivery and redelivery process. Our fleet plan matches capacity with demand. Our fleet growth tracks Brazilian GDP growth. Our contracts are structured to provide flexibility for a higher or lower market growth and to take advantage of it every opportunity. We have the ability to flex our Boeing order and redeliveries. And our fleet plan will take us to an average age of 6 years by 2024. The 737 MAX is the cornerstone of our low-cost operations and internationalization of our network. We finished 2019 with a fleet of 137 aircraft, 7 of which are the MAX 8 model. GOL has an order for 99 MAX 8 aircraft and 30 MAX 10s. We have flexibility to delay the scheduled return of our NGs, if necessary to address further delays and normalization of the MAX production. While we wait for the return of the MAX, we have supplied our network through additional leases aircraft and higher utilization of our NGs, which have a configuration similar to the MAX 8 with 186 seats. And now here on Page 84, we can illustrate. The graph on the upper left shows that we plan to grow from -- to 151 by 2023, when we will have 58 MAXs in the fleet. In our capacity planning, this is the optimal growth for GOL. And we have the contractual flexibility to meet higher or lower market growth by varying our fleet up or down by 10 to 20 aircraft, as we can see on the graph on the left-hand side on the bottom. The graph on the right shows how we manage the GOL fleet during the extraordinary year of 2019. While the MAX delays and the unexpected pickle fork maintenance presented challenges, our team minimized the effects by extending 6 expiring leases and contracting new leases for 19 NGs, and we also use our high-efficiency operation to increase even further our aircraft utilization by 1 hour, and thereby met our capacity objectives. So here, you can see from it October to December, the number of planes we took from the market to meet the high season demand. This high flexibility in our aircraft agreements is a competitive advantage, and we are excited about the coming months in 2020, where accelerating GOL fleet renew that will bring even more cost advantage to GOL. Moving now to Page 85. I will now brief you on the power of GOL's network. What makes an airline network defensible is flying routes that others cannot fly on the same way. This means having a relevant position at the best airports. And we have a big advantage here. On the left side of this slide, we show the shares at the Brazilian top 10 airports. GOL's network strategy focused on São Paulo, Rio de Janeiro, Brasília and Fortaleza as hubs. Rio, São Paulo and Brasília are the 3 most important Brazilian cities economically and politically. And GOL has over 43% seat share. These are important corporate markets, and we are the leader with significant economies of scale and density. GOL has a significant competitive edge. At each of these hubs, we serve the most destinations from São Paulo, the most destinations from Rio, where we have almost 70% share at the international airport and the best connectivity. And the most destinations from Brasília, where we have the best network of slots, with a high connectivity. Fortaleza is important geographically as the north to Northeast connection bank and is part of our international expansion strategy. Over the next couple of years we will be using our network advantage to expand internationally and regionally, as I show you here on Page 86. In 2019, GOL added 6 regional destinations, and we enhanced our partnerships with 3 regional carriers that added 34 destinations for GOL customers. The expansion has made GOL the largest regional carrier in Brazil as measured by ASKs. These new regional destinations have strengthened our overall network, increased connectivity and reduced GOL exposure to the high competitive markets. These destinations also generate even more feeder traffic from customer connectivity to our international hubs in Guarulhos, Rio, Brasília and Fortaleza. As you can see here on Page 87, our successful platform for international expansion is organized around the hubs where Brazil has highest demand concentration. Our hubs have 3 unique aspects. They enable high frequency with a better aircraft utilization and lower costs. Our higher aircraft utilization drives operating leverage and they enable GOL to open new destinations, such as Florida and Mexico. They lever expansion and network integration via 90 codeshares and interline agreements for a global distribution. GOL's international flights from Guarulhos and Galeão serve destinations in Uruguay, Argentina, Chile, Paraguay, Bolivia, Peru and Ecuador. Brasília serves Florida, Argentina and Cancun. Fortaleza also serves Florida, Argentina markets as well as Paris and Amsterdam via our partnership with France-KLM. This represents the main markets served by GOL. And here on Page 88, I show you the opportunity in each of these markets. Combined with our new aircraft, the GOL network is the best positioned to connect passengers into South America, as you can see here on Page 89. Last year, our international expansion was delayed by the economic and political instability in some of South American countries and the grounding of the MAX. We recalibrated our network plans and created different strategy to deploy our single fleet on a Boeing 737. I invite you now to determine how our competitors would allocate a widebody to a regional route. In 2018 and '19, we expanded our regional network. At the same time, we maintained our leading 26% share in the Brazil, Argentina Corridor, started operations to Cancun and Lima and launching flights to Quito, Miami and Orlando and maintain the structure and expertise to grow further in international markets when the fundamentals and expansions tools returns. The map on the left shows the range of the MAX departing from our hubs and gives you some hints about our long-term ambitions. I reiterate the importance of the MAX for this expansion regarding our U.S. operations. In 2020, we will plan to reinitiate operations with the right product, the MAX and the nonstop flight. And we expect to see good results with an even better position in Florida provided by our new partnership being negotiated. Here on Page 90. I will wrap up my operation review by revisiting GOL's 5Gs diagram. Great market. GOL is the #1 in the Brazil main airports and destinations, with a high hub connectivity. Great management. As both a pilot and as active, I'm proud of our team results in 2019, and I'm confident we will deliver even better results to investors in 2020. Great product. We offer the best experience of any domestic airline, even comparing ourselves to international carriers at the same time that we sold 20 million tickets last year at an average fare of $50. Great operating model. We are the lowest cost provider in Brazil with over 20% cost advantage over peers, and great value creation. Our single fleet of 737 enables high flexibility for regional and international growth. Our leasing and supply contracts are structured to provide further flexibility for the higher or lower market growth opportunities. Now we have time for a few questions before lunch. Savi?

Celso, just a quick question on the GOL Aerotech. Like, how quickly can that grow given with the current infrastructure? And do you have kind of the space to then expand that beyond? Because I'm guessing this is kind of a good high-margin business and probably counterseasonal?

Yes. Thank you, Savi. Actually, we have a spare capacity there already. So we have -- like I said, we have 3 hangers there. And even with the, let's say, the backlog maintenance that we have now on the NG, we will be able to dedicate a line since the beginning for third parties. So -- and then with the fleet renewal to the MAX, the transition to the MAX, the MAX will be flying in the honeymoon period, we expect to have an even more capacity to the third parties there. So we are ready to start growing the business.

Great. Hi Celso, it's Mike. As a pilot, you're obviously probably watching the whole MAX situation very closely. Suppose the Brazilian regulators decide to follow Boeing's recommendation now, which is that pilots, before they get onto the airplane, they should go through the full sim, how long is that? Is that a 4- or 8-hour process? And then presumably, all of your pilots would go through that program, how long would it actually take to put them through? And I realize or I recognize that you don't have to put them all through before you can actually start flying the airplane. I'm sure that you'd be segmenting them. But I'm just -- that process and maybe even a sense of the cost, right, because this is a cost that I don't think anybody is incorporating, at least at this point, in getting the plane back up. These training costs could be somewhat expensive. So it's sort of a multipart question on the MAX.

Okay. Thank you, Michael. Thank you. So we received that news 2 days ago. And the decision was a Boeing decision, actually. And so the FAA and the ANAC everybody will follow that decision. So we will be planning, let's say, to give, let's say, the right training for our pilots as soon as possible. I think there is still a discussion around the training requirements. The only thing we know is that now we will need a MAX simulator. From what we heard, it's like a 1-hour session for each pilot. For our -- in our case, we will be able to train the sufficient number of pilots to fly the 7 MAX that we have on the ground in only 1 week. So that's -- we are working close to Boeing to make sure we don't have an additional delays because of that. So we received that news with optimism because we don't think it will delay the process of the ungrounding. Of course, we will dedicate now a team to make sure that all of our pilots can meet the requirements to fly the MAX. It will take a while. It can take months. I don't think it's going to be many, many months, but it can take a month. We are working with Boeing and simulators provider to make sure that we are going to have the right number of simulators. But for the ungrounding process and start flying the plane again, I don't think we -- the time line will be delayed in our case.

Okay. Any additional questions? So we will have a big Q&A at the end. So we -- now, I think we can have lunch. So during the next segment today in which we will have the presentation from Jeff from Boeing, on the MAX, our flight attendants will serve you lunch, offering you our current premium economy onboard meal. So they are now wearing the new uniforms. And I would like to invite [ Callie ] is from Porto Alegre. We have a crew based in Port Alegre. Thank you, [ Callie ]. I would like now to invite [ Josangela ]. She's from Brasília. We have also our crew based in Brasília. I would love to invite now [ Josangie ]. She's from Rio. She is -- we also have a crew based in Rio. And [ Owen ], he is now living in Fortaleza. We launched the base in Fortaleza now with the network strategy that we have. And he was one of the first to hand -- to raise his hand and move to the beach. So this is our premium economy service. I hope you like it. And I think you're going to like -- this is the new one. You can see this on Miami Orlando flights as the Santiago flights, Lima flights, every flight with more than 2.5 hours international, you can see this serves in the front of the plane. So I hope you enjoy. And it's really more than B for best. You're going to see. So Jeff, I would like to introduce Jeff from Boeing that he'll now give you more color on the MAX and answer all our questions. Okay, in 2 minutes, we will start. You know where is the bathroom there, on the end of the corridor. So please feel free to make a really quick break. [Break]

I'm on Slide 93. My name is Jeff Haber. I work for Boeing. And I really enjoyed Celso's presentation talk about how great the MAX. That was really awesome. First thing I want to do is, I want to thank GOL for the honor and the opportunity to come here today to talk to you. It's an honor because GOL is such a great Boeing customer as you heard throughout the morning and afternoon. It's -- I'm not going to use the thing. I'm just going to walk around. So you're going to have to get used to me doing that. I want to talk about why it's a great opportunity. So a few days after Christmas, I was talking to my wife and she said to me, "Are you excited about your trip to Brazil? Excuse me, I'm getting in the way of the lunch service. Let me know. She said, "Are you excited about...

You are getting in the way of lunch.

I'm in the way of the lunch service. I'll stay over here. She said to me, "Are you excited about the trip to Brazil?" And I said, "Well, yes and no." I'm not that excited about flying because in the last 6 months, I've literally, literally flown around the world to talk to people about the MAX. I've been to -- and I'm going to forget a few things. I've been to -- I'm going to try to go backwards -- Nigeria, Kuwait, India, Australia, Thailand, Vietnam, Mexico City to talk to some other wonderful GOL investors, Dublin, and I got to go Beverly Hills. That was kind of nice. And it's hard but -- there's a lunch service. But it's an opportunity because it gives me the chance, even if I tell one of you, the facts about what happened with the MAX and what we're doing to make the MAX better. I would say 2/3 of what you see and what you read is not accurate. There are so many times when I want to pick up a shoe and throw it at my computer or throw it at my television because what they're saying is not right. And I want you to know, you can decide whatever you want after that, but I want you to know. So that's part of the opportunity. The other part of the opportunity is my career as a Boeing employee. Believe it or not, this happens every time, I do this like 3 times. I get like really emotional. My first day at Boeing, believe it or not, was July 10, 1979, which is a lot -- before a lot of you were born, looking at the audience, it was before you were born, I know that for sure. My first day at Boeing was July 10, 1979, and I have basically, therefore, given my whole career -- my whole career, my whole life to Boeing. I can't decide if it's a good thing or bad. I can't say if it's a good thing or bad thing. Some days it's good, some days it's not. But I have given my whole career to Boeing. And I want you to understand, nothing else at the end of my 30 or 40 minutes, whatever it is. I want you to understand that as a long time Boeing employee how we feel about -- sorry, I'm getting in the way of lunch again. I'll stand over here until lunch is finished being served. As a long time Boeing employee, I want you to understand how we feel about the MAX and how we feel about what happened. So that's what I'm going to do. So there will be a point at the end, I think where I'll take a few questions, but there's going to be a question section afterwards. We're on Slide 93. I decided I'd put on Slide 93 the GOL vision, "The best airline to travel, work and invest," and I've heard it this morning. That's pretty awesome. It's a pretty awesome vision. And so I stole it because it's good to steal things that are really good. So my presentation really has 3 parts. I'm going to talk a little bit to you about the -- am I still being -- is my audio working okay? Thanks. Wonderful. I want to talk to you a little bit about the 737. Then I'm going to talk a little bit to you about the competitive advantage that GOL has. You've heard a lot about it this morning. So I'll go pretty quickly through that, the competitive advantage of the MAX. Then I'm going to talk about this thing, it's actually called the Speed Trim System. It's not called MCAS. MCAS is not a system. MCAS is a function within the Speed Trim System. So that's one thing I want you to know. I'm going to talk about that. Then our plans to put the airplane back into service. That's what RTS stood for on the agenda this morning. And by the way, this morning -- see, I get out of the way of the lunch service, I'm a good passenger. By the way, this morning, I was referred to as a Boeing executive, which I think is really cool. Thank you, GOL management, because I'm not a Boeing executive. I started as a Boeing engineer on the 757, believe it or not. And so I'm a Boeing employee that's been around a long time. And it's my honor. It's my duty. It's what I was meant to do. I told this to my manager. He didn't give me a bigger raise. It's what I was meant to do, this year is to go around and tell people about the 737 and the MAX. So let's begin. This is Slide 94. I want to start briefly with why is the 737 so popular? How many 737s have been ordered? Does anybody know about...

8,000.

Who said 8,000? I'm really glad you said that because it's not correct, but luckily, it's low. So it's not 8,000 -- -- out of the way of lunch again. It's actually 15,000 737s have been ordered. Over 10,000 have been delivered. What makes it so popular? It's been around a long time. Sometimes -- I'm out of the way of lunch. Sometimes things are around for a long time because they're good. Good things stick around for a long time. I saw you are 41 years in the aviation business. So you're good. You've been around a long time. So what happens is, if someone says to you, "Isn't the 737 an old airplane?" Here's what I want you to say. "I want to get in 30 seconds worth. First, this is Slide 95. First thing, I want you to know about the 737 is that, like on our other airplanes, safety has always been our highest priority. If you take a look at the left side -- at the left side of the diagram, very, very left on the photo, that is the very, very first 737. That is 737 #1 in 1968. There it is on the left, I get to use the laser beam. There is the first 737 that was delivered, it was delivered to Lufthansa. It was a launch customer for the 737. And on the right is the MAX 10, and we've always talked about safety. As part of my world travels, I was in -- I'll never forget this. I tell this story a lot. I was in Hanoi -- the Hanoi Airport. And it just really struck me -- I was doing what I'm doing today. And it really struck me, I sat around in the Hanoi Airport waiting for my flight -- go ahead, lunch service. I sat around in the Hanoi Airport looking -- waiting for my flight, and I looked around at all the people, the thousands and thousands of people, the families, the kids, the older people, the younger people, and I said, "As a Boeing employee, these people are depending on us." These people depend on us to get them where they want to go safely. I forgot who did the presentation this morning. It was a presentation that said, making connections with the ones you love. Making connections with the ones you love. As a Boeing employee, we'll -- we never forget that. And safety is our #1 priority. So what makes 737 so popular? And with the MAX improvements, which I'm going to talk about later, it will be even safer than it was before. So safety. How do we make such a great airplane, innovative engineering? A lot of you don't know. If you look at the diagram on the left, the 737 pioneered what we call the stream tube nacelle. The original 737 was supposed to be twin engines on the tail. But a really smart engineer named Joe Sutter, who went along and also designed something called the 747, wonder what happened to that? They said, "No, let's put the airplanes -- let's put the engines on these stream tube nacelles under the wings, more efficient, less weight, a little bit wider. And today, we use on the right side, the LEAP-1B engine, 787-inspired technologies to make the airplane even 15% more efficient than the newest NG. So our airplanes are safe. We use innovative engineering, simple and reliable designs. This is Slide 97. The landing gear doors don't have any fancy mechanisms to get them to open and close. We just attach them to the landing gear. So we use the same thing on the old 737 as on the MAX. If it's simple and it works, leave it alone. So that's what we did. Innovative engineering, simple and reliable designs, a platform for new technology. On the left side of Slide 98 is the 737-200 flight deck. On the right side is the MAX flight deck. Take a look, take a look, even the people that are serving lunch. Take a look at that flight deck on the 2 airplanes. Is the one on the right -- does that look anything like the one on the left?

No.

No. Perfect. Great answer. That was not scripted. She was just walking down the aisle. I figured, what the heck. We use on the 737 on the MAX flight deck, we use -- those are 787 displays. They have all this room in real estate for new technology. It's a platform for the future. The way I like to look at it is, who knows today what a 25-year-old engineer is going to think of to put on an airplane to make it even safer: vertical situation display, we already have that; synthetic vision, have that. Other things, who knows. And we want to have the real estate available. So the MAX has a platform for new technology for the future. So to sum it up, if you've ever flown at all, you've flown on the 737. I used to ask people if you have never flown on a 737, raise your hand. But nobody has ever -- no one has ever raised their hand. Everyone has flown on a 737. 30 billion passengers so far, 30 billion and counting. So that's what makes the airplane so popular: safe, innovative engineering, simple and reliable designs, new technology and everybody has been on one. Now that's the first part of the competitive advantage for GOL. Let's talk about the rest of the competitive advantage for GOL. I'm going to get into some engineering charts. This is Slide 100. Thank you for doing this, Rodolfo, for putting the numbers on there. He put the numbers on, like while you were getting served lunch, and he was awesome. So here's a little history chart. I'm going to do a little Airbus bashing. It'll go quick. We like to call it competitive advantage, so we need to talk about the competitor. There's the Classic EIS entering the service in 1984. To compete with the Classic, Airbus came up with the A320 series. Then to make the A3 -- then to make the 737 Classic better, we came up with the Next-Generation 737, entering the service in 1998. We took the original 737, put some design improvements in to get an extra 6% of fuel efficiency. In the meantime, Airbus was doing some things to make their airplane better. You see how I had that go really slow, the effect. I wanted the effect to go slow because it took them a long time. Here, watch again. See how they go really slow? Oh God, are they ever going to get there? They got there. And then we launched the MAX to improve upon the NG, 15% fuel reduction from the newest NG; compared to the original NG, 21% fuel reduction. And if you heard nothing else this morning, because of the cost savings with fuel efficiency, 15%, 21%, wow, on the MAX. So that's competitive advantage: it's fuel. Another thing I wanted to mention briefly, and people don't really understand this, is our DNA as a company, the Boeing DNA. The NG was designed around '98, and it used the DNA from the 777. 777's on the bottom. It used the 777 flight deck design -- this is Slide 102 -- the 777 wing design, 100% digital design. And we took that DNA and we put it into the NG. Similarly, on the 87, the interior, the flight deck, the nacelles, we took that DNA and put it into the MAX -- and I almost fell there. So our airplane families, our airplane families work together using the common Boeing DNA. And if you have more questions, more details, I'll be glad to answer. So the next competitive advantage comes from something called -- this is getting a little engineer-y and wonky. This is called OEW per seat. OEW stands for operating empty weight. Slide 103, operating empty weight. What this is, you take the weight of the airplane, you subtract out the passengers, you subtract out the fuel, you subtract out the cargo, that's OEW, operating empty weight. It's how efficient has the airplane been built. That's what OEW is. And the way we like to look at it is OEW per seat. And if you look right in the middle of the chart on Slide 103, if you use the base as the A320neo, the 737 is about -- the MAX 8 is about 7% more efficient OEW per seat. So where is the advantage component for GOL? Fuel efficiency which comes from OEW per seat. Another thing we get with the MAX is range. And this is one of the things I want you to remember forever and ever and ever. This shows the range of the MAX family compared to the NG family. Any MAX, any MAX flies further than any NG. The MAX 10 flies further than any NG. Any MAX flies further than any NG. It's awesome. So we have fuel efficiency. We have range. We have commonality. It came out before, 98% commonality. This is Slide 105. 98% commonality, spares commonality between the family. We heard before about the utilization. I have a utilization chart coming up. Fast turn times. Keeping the airplane in the air, reliability. That comes from having a common family. That comes from having a common family. And the MAX is a common family. This is a chart -- this is kind of -- I think I should explain every dot on this chart. It'd take about an hour. But this is what we call -- this is like some engineering stuff here. This is called a fan chart. And if you want to know why it's called a fan chart, come and talk to me later, but I'm not going to do it now. This is Slide 106. Basically, here's all you need to remember: The bottom is how much it costs per trip. The left side is how much it costs for us per seat. So you have per trip on the bottom, per seat on the left. And all you have to remember is this: Down into the left is good. Down into the left is good. So if you look at the MAX family in blue versus the -- kind of teal versus the NG family in blue -- and then there is the competition. I'm not going to talk about them very much anymore -- the whole MAX family, down into the left. This is where that 20% cost savings comes in. This is why you get that 20% cost savings: fuel efficiency, more weight efficient, lower OEW per seat. It's awesome, okay? So that's where the competitive advantage comes from. We talked about this before. I won't spend a lot of time. This is utilization chart. GOL's utilization, 12.6 hours. Quick turnaround, reliable, common parts, 12.6 hours daily utilization. The more time the airplane spends in the air, the more money it makes for the airline. And of course, passengers are happier. So now the MAX family is complete and ready to help GOL even more. There is the rollout of the MAX 10. These are -- this is a candid snapshot on Slide 108 of Boeing employees at the rollout of the MAX 10, happened a few months ago. So the MAX 10 is ready. Well, that was the competitive advantage. That was the fun part. Now I want to talk to you -- and this is the part I think you'll really find useful because I think the GOL management team did a great job this morning of explaining the advantages of the 737 and even more advantages of the MAX. Now I want to talk about the Speed Trim System, which you formally know as MCAS -- MCAS is a function of the Speed Trim System -- and how we made it better. First of all -- this is Slide 110. First of all, I'll stay in the back because the lunch is being served in the front. Those of you on the phone, we're -- everyone's getting lunch, looks really good. How's the lunch? Was it good? Pretty good. I'm getting pretty good from the back of the auditorium. So first thing you need to know, if you look at this chart, the Speed Trim System has been on the 737 for a long time. It was on the Classic. It was on the NG. We added a mode called high angle of attack mode. And if you look on the MAX, the Speed Trim System is the same. Except there it is, all the way on the right side, that's what we added: MCAS. Let me explain for a minute exactly what it does. So the 2 of the 3 things, the speed trim mode and the high angle attack mode, what that does is allows the pilot to return the airplane to trim speed. If the airplane gets going a little fast, the horizontal stabilizer moves it to slow it down. If the airplane gets moving a little slow, the horizontal stabilizer moves to put the nose down to get it go a little faster, return to trim speed. The MCAS function, what it does is ensures predictable handling characteristics. I'm going to explain what that means, but I want you all now to look up from your lunch for 10 seconds because the next thing is the other thing I want you to remember. This is Slide 110 on the bottom. MCAS is not an anti-stall system. MCAS is not an anti-stall system. Please remember that. Here's what MCAS is for: it's to ensure predictable handling characteristics. What that means is, as the pilots -- I'm glad the pilots are -- the pilots are now eating. So I don't know if I don't get it. I'm not a pilot, so I may not get this right. So what MCAS does is, as you get to a non-normal angle of attack, the airplane nose gets too high, what MCAS does is, it makes sure that the pilots have smooth, predictable column force as they pull back on the column. Smooth, predictable column force, that's what it's for. It's like when you rent a car, imagine if every car that you rented, it would take a different amount of turn to move the wheels a certain amount, you'd be banging into stuff all over the place. Predictable column force, predictable handling, that's what it's for. That's what MCAS does, to make it handle like the NG. So it's not an anti-stall system. It's been around for a long time, and it's not an anti-stall system. Got it? Please. Okay, let's move on. This is where I usually lose the clicker. This is a quick 30 seconds on how the system works. Would you like to know how it works in 30 seconds? This is the way it really works. Here's how it really works. This is Slide 110 -- 111, excuse me. Bottom left, there are probes, pitot probes. And there they are. They're the angle of the attack sensors. You've heard a lot about those. That's what one looks like. Every time you go onboard an airplane, from the outside, you can go see, you can go have a look. There is the angle of attack sensor. It says what the angle of the airplane is. It sends that information to these 2 computers, my favorite computers. It's the combination of the air data computer and the inertial reference unit. They put them together and they gave it a cool name called the ADIRU. So the vane angle and airplane pressure goes to the ADIRU. The ADIRU sends information to the flight control computers. These are the things that are going to get the new MCAS software, flight control computers, FCCs. They send angle of attack, AOA; computed airspeed, CAS; and Mach number to the flight control computer. And then the flight control computer sends a signal to the rear stabilizing compartment. This is something some of you have probably never seen, on the upper left. This is inside the stabilizer compartment at the back of the airplane. Right down here, you see on the lower left, is a little electric motor. That's called the stabilizer trim motor. There it is right there. And so what happens is -- this long pole is a jackscrew. And this structure, that yellow structure, is attached to the stabilizer. So the signal from the flight control computer goes to the stabilizer trim motor. It turns the jackscrew -- you can't see this on the phone. It turns the jackscrew. The jackscrew moves to stabilizer up and down. That's how it works. That's how stabilizer trim works. A couple of things that I left out. You notice in the upper right are the stabilizer trim switches. Stabilizer trim switches, it says, "To FCC." This is for the pilots to control the trim. If the pilots move those switches, it goes to the FCC, MCAS shuts off. There are also -- if you look in the middle diagram -- this is for people on the phone -- they have these stabilizer trim cutout switches. These have become sort of famous. You shut those off and then that shuts off power to the stabilizer trim motor. And like on all 737s, if that doesn't work, you have these manual cables that are connected right to the stabilizer, where you can manually move the stabilizer. So that's how MCAS works. That's what it does. That was a little more than 30 seconds. It was pretty good. Oh, I'm going to do questions at the end. You're almost official Boeing engineers. Almost. That's how MCAS works. Here's what we've done to make MCAS better. We've improved it in 3 ways. On the software side, MCAS used to only use one angle of attack sensor per flight control computer. Now it's going to compare both. Used to be 1, now it's both, first thing. Second thing is -- this is Slide 112 -- MCAS will respond only if the data from both sensors agree. So if one says the angle of attack is really high and the other says it's really low, MCAS will shut off. That's the second improvement. Third thing, MCAS will activate once per high angle of attack event. So if the angle of attack goes high, MCAS gives that improved handling characteristics. Before MCAS will operate again, the angle of attack has to go low. Low, high, low. I hope there's nobody serving lunch right behind me now because I do this all the time: low, high, low. It will only activate once. And we've also made some improvements to the flight control computers that they check each other to make sure that they're both doing the right thing. These are all improvements that we've made. So we've improved the software. We've added crew alerting with a light on the flight deck called the speed trim fail light. And as you heard from our last speaker, we are developing mandatory pilot and maintenance training. And at the beginning of the week, we made the decision, the recommendation, that simulated training will be required. I'm going to talk a little bit more about that in a few minutes. And if you have questions about that, I'll be glad to answer. But I want to talk a little bit more about this whole simulator training thing and how it's going to go, okay? So now how are we going to work with our customers to restore their trust and confidence? It was in August, and I was in Asia -- I'll never forget this. This is another one of those things I'll never forget. I was in Asia, and sitting and I was talking like this, and sitting right about over there -- you, sitting right about over there, was the chief pilot for like a big Asian airline, the chief pilot for a big Asian airline. And the chief pilot for the big Asian airline, he's staring right at me. And I put this slide up, and I said, "You know, Boeing's been around for 103 years. And you don't trust us anymore, do you?" And the chief pilot for this Asian airline, he went like this -- you may have to look up for a second because this is nonverbal. So I said, "You don't trust us anymore, do you?" Chief pilot. And he went like this. He went. Just like that. And I was standing there. It killed me. It really did. I couldn't believe it. Nearly 103 years of Boeing history. So we have to figure out a way to get it back, the trust. So how are we going to do that? How are we going to do that for GOL? Well, first of all, we've had 41 regulators and leading aviation organizations providing direction and oversight. ANAC is one of the big 4: FAA, EASA, Transport Canada and ANAC. They are helping us. They're looking at everything. They're helping us make it better. They helped us with the software, with flight crew procedures, with maintenance and training and with simulators, more now than ever, the minimum equipment list, for those of you that are airplane geeks, and the certification standards. We've had 41 regulators help us. We've had airlines help us. If you look at the next slide -- this is Slide 115. People on the phone, I forgot. In developing the new software, we have utilized thus far more than 50 man years -- so it's actually person years. Figure it out, a Boeing year, for those of you who don't know, is about 2,000 hours. So 50 years, 2,000 hours, 100,000 hours of engineering has gone into making the system better. 100,000 hours of engineering. We've flown over 1,100 test flights of the new software, 2,000 flight hours. We've had simulator sessions with 545 pilots and 140 operators from around the globe. Have you guys -- did you fly the new software? Did you fly the new software? So does it work? So you have to say yes or else we're all -- so 545 pilots and 140 operators. We've had conferences around the world. We're working with our suppliers. We've put so much work through regulators and operators into this new software, this -- the airplane was safe before. It's going to be even safer. So we've had all this information to help us to try and restore trust and confidence. I put this one up -- this is Slide 116 -- because this is the schedule. This is the schedule to get the airplane approved. And I want to say, right now, this is the simple version of the schedule. There's another version of the schedule with about twice as many boxes on it. And where we are now -- see, I put my clicker thing down. I have to go to the front and get it. That's okay. You're all eating your delicious-looking lunch. Actually I wonder if I get a lunch. Did you save one for me? Do I get a lunch? Do I get a lunch? [ I better get a damn lunch ]. Anyway, so if you take a look at this schedule, you look at the top line, you look at where we are, this should be checked in: FAA line pilots crew workload evaluation. We finished this. That should be checked off. The certification flights, we're hoping come in the end of this month. But the interesting thing about this chart is that the stuff in gray, the stuff in gray, we have no control over that. That's up to the regulators. There's a lot the regulators have to do. And where we are now, to talk about the training, something else you need to remember, it's called the JOEB, the Joint Operational Evaluation Board. Boeing has made the recommendations of training to the FAA. Those recommendations actually go to this JOEB. They finalized the training requirements. They opened up the training requirements to public comment for 15 days. You, everyone in this room, will have 15 days to comment on the new training requirements. The training requirements will then be finalized, and we can go through the rest of the schedule to get the airplane -- -- there it is, all the way on the right side, back in delivery. That's why this is so difficult. Our current public statement is, "First quarter of this year, we'll be able to get the airplane back in the air." So that's the schedule. It's not easy. Believe me, it's not easy. What are we going to do to help customers like GOL get their airplanes back up into the air. We're going to treat it like a brand-new airplane going into service. We have -- sorry, you're really doing a great job. I want you to know, as a group and people on the phone, how I've completely annoyed the flight attendants by walking up and down the aisle during lunch. And not once, has they -- have they not smiled at me even though I'm like in their way, and they wish I would just get the heck out and go somewhere else. So I really appreciate that. So we're going to have a 24/7 dedicated support. We're going to have spares support. This is a new word that we made up at Boeing -- we didn't really make it up. It's in the maintenance manual. It's called depreservation. You put one of these airplanes down for 6 months or 8 months, it takes a couple of weeks to get everything back up and going. You have to put covers on the engines and covers on all the outlets. It's not easy for an airplane that's been sitting on the ground for 6 or 8 months. So we have to depreserve the airplane. We'll help with ferry flights and check flights -- let's move the picture. What else are we going to do to help you customers, to help you get back the confidence of your passengers? We, Boeing -- this is Slide 118 -- will be willing to participate in gate events anywhere you want. We will have Boeing leaders on first flights. We will have engagement with local media. We will have peer-to-peer meetings with pilots and crew, and we will have print materials for airlines to help them communicate to their passengers. First, an example of this, and this is Slide 119. We have these things called toolkits. Toolkits. It's printed material that if airlines want, we could give it to them. For example, you're a passenger on a MAX, you walk onto the airplane, and you say to the flight attendant, "Is this a MAX?" And they go, "Yes, it's a MAX." And then the person's going to go, "Is it safe?" What do we want the flight attendants to say? We want to have them prepared so that when they ask you that, you'll be able to answer that question. So we've prepared these toolkits. We've also found that we, Boeing, need to do a better job on social media. I guess being a 103-year-old company means we're not that good at social media. I personally am not very good at social media. So we're going to try to be better at social media. We are making short employee videos, which I think is the next one. Short employee videos, hopefully, the sound works.

Yes.

We have these soundless employee videos that people try to figure out what the guy is saying. [Presentation]

Can we back it up? Watch. Can we go back? Back. Can we go again? Here we go. These are 30-second employee videos. Are you going to go? It's not going to go, is it? Well, nothing is perfect. Let's try it again. [Presentation]

We have about a dozen of those videos. We've also discovered that the people that passengers trust the most are...

Pilots.

The pilots. People trust the pilots. So we're developing video stories with the pilots. The picture you see on Slide 122, that happens to be Jennifer Henderson. She's the Chief Pilot for the MAX. And we have videos with pilots in native languages and whatever you want to help the customers develop testimonials to help restore trust and confidence in the MAX. I want you to know I'm almost done. Boeing people are proud, are proud of what we do. And I have a really great quote down at the bottom from Jeff, a 30-year Boeing employee: "The MAX accidents make me more sad than anything in my career at Boeing. Every day, I'm committed to making the best airplanes in the world. And now the 737 will be even better." That's a true quote from a 30-year Boeing employee because it's me. It's my own quote. I put my own quote on there because this is what I tell everybody. So -- but I'm not alone as a Boeing employee. Someone said this to me, they said, "You got to remember passengers are counting on us." Passengers -- I'm going to stand by the podium for the first time ever. Passengers are counting on us. They count on us. And GOL can count on us, too. I want to finish with this. This is a little self-serving, but I like to do it. See this photo? This is Slide 125. That's my family. This is at my youngest son's graduation, 2 years ago. My wife. It was cold so she had to put on extra clothes. She's was a little unhappy about the picture. University of Francisco. And if somebody said to me, "Would you take your family on a MAX tomorrow?" Would you take your family on a MAX tomorrow? I would. I would take my family on a MAX tomorrow because passengers are counting on us. Thank you very much for your attention. I hope you enjoyed the lunch. This is a point where I drop the presenter pro and walk off, but I've broken several of these, so I'm not going to do that. Just remember, I hope you got the facts, and I hope you understand how we, as Boeing employees, feel about Boeing in general and how we feel about the MAX. And we will help GOL endlessly. Thank you.

Okay, any questions? Yes. Oh, you need a microphone? Kind of tired now. Is this thing still on?

Rogério from UBS. A quick one. Could you provide us a worst-case scenario and maybe a best-case scenario for the times of the MAX ungrounding.

So right now, we figured out all the numbers. And based upon everything we've talked about with the milestone chart, and the JOEB and everything that's going on, we still feel that sometime this quarter, first quarter 2020, is a good number. Now there's -- when I hear -- when the chief engineer talks about this, he goes, "There's risk involved. There's risk involved. There's always risk involved." But the software is done. The training requirements, you've read about in the news. So we're moving through the schedule, and we're going to try to hold to that sometime this quarter. Oh, a question. We'll get you. Yes?

Jeff...

You're the 8,000-order guy.

Yes. But I never actually broke 10,000...

10,000 -- I don't know if I'd get into the whole [ DC-3 ] thing. But...

By the way, I don't know if this may be a right number -- watch out.

Yes, I know. I almost fell.

This may be a right number or not, but I had heard recently that there may only be 34 MAX simulators in the world.

Correct.

And I did hear that Boeing, maybe working with the sim companies, may be able to modify NGs so that they can actually do the simulator.

Yes. So I'm glad you brought that up. So it was a question about MAX simulators. Right now, there are -- right now, there are -- I'll repeat the question because I don't think your mic worked. It was a -- it was how many MAX simulators are there? Is Boeing working with simulator manufacturers to make...

There may be only 34 in the world.

There are 34 in the world. Boeing owns 8 of them. The rest are owned by customers.

But I had heard that they're potentially modifying NG sims...

Well, so [ Patrick ], you stop me if I say too much. So the recommended training has certain scenarios that the flight crews have to do. And some of the scenarios that they are -- Boeing is recommending, cannot be done on an NG simulator because of the software version. So that's why. Most of the scenarios can, some cannot. And are we're working with similar manufacturers to make more? Yes. Yes, we are. Our -- we have in Miami -- from a GOL standpoint, we have 3 sims in Miami. We have 3 full flight -- 3 MAX sims in Miami. Other questions?

Dan McKenzie with Buckingham Research. So I hear you loud and clear on the safety of the MAX.

Yes.

If I can just address the financial implications for the airlines for one second. I'm not sure what you can share, but at least from my perspective, there is a race to induct these things as fast as they can to the airlines. And one of the things we picked up from Edu's presentation is an airline typically has 380 days to book an airplane. And in this case, airlines may have maybe a month or so or 2 months, so there's going to be pretty extensive -- the concern from a financial analyst perspective is the intense discounting that may occur with that. And if you can just share if that's part of the discussions that you have.

So here's what I can share. And also, I'll leave it to the GOL management team if they want to answer or to our sales director. So we have been working with all of our customers for a really long time on the financial aspects of the airplane being on the ground. And each airline is addressed differently, specific to their needs. In terms of how much or what, I am not privy to that information. I don't know if anybody wants to add anything. But it's been happening for a long time.

Sorry, I might -- just to answer something. The official statement from our side, Dan, is the following. We're going to have compensation. We're going to reach into an agreement. And this is going to be kept confidential under the contract agreements that we do have in place. So I -- what I -- we can say for sure is we are pretty comfortable with the inputs and feedbacks that we had -- that we got from Boeing so far in that case. So we are working closely with them to come to a financial compensation pretty soon, okay?

If I can take this. Just to add something here, I think the concern about, let's say, short-term capacity and pricing discount is our concern as well. So we are going to take deliver. Of course, we have 7 on the ground, but then, we're going to take deliver as we need it. And this is what we are talking with Boeing. Although we have, let's say, unlocked value on the economics of the plane, we are more concerned about an excess capacity. So we're going to -- we have multiple scenarios, as I said, but the idea is really to create a transition smoothly, and we have short-term leases that are expiring right now just for this. So we are going to be like looking every month to avoid an excess capacity.

I guess, do I have time for a couple more questions, if there are any?

Just a quick follow-up on the training requirement. Is that -- so is it a kind of a 1- to 2-hour-type training that's required or like a full 4-hour-type training, that?

So that's still being evaluated per pilot crew. But I think in terms of your range, I think it's going to be less than what you said rather than more than what you said. And let's remember, the JOEB, the Joint Operations Evaluation Board, they're the ones that are going to have to finalize the training requirements. One more? Are we good? Okay, mic's going off. Thank you all. [Foreign Language]

Jeff, thank you very much.

[Foreign Language] Okay, a couple of things here. Just we have some notes here that we can -- so you can remember the logistics. Mic's not on? Hello? Sorry, I hope you enjoyed lunch and Jeff's presentation on the aircraft's competitive advantage. I guess they gave me the clicker [ and I suppose ] you got to advance on the list here. Okay. At our investor roundtable in New York last June, we invited you to today's top GOL event. So I'm very pleased to have 56 investors and analysts here today. And then we have about 150 people participating on the webcast. And I hope your experience so far -- your customer experience has been worthwhile. I really appreciate that you made the effort to be with us today. Over the next 45 minutes, I'm going to brief you on where we are today, how we compare with our peers on the policies and strategies for this airline and what we are working towards as managers, okay? But just a couple of housekeeping items. We have on these tours here, I just wanted to remind you guys, if you're interested, to the extent you haven't done it. The maintenance tour is filled up. These are these little clipboards that are out in the room over here. The maintenance tour is filled up, and the other ones are still there. What's going to happen at the very end, again, is after we exit, the 4 guides will -- right out in -- where you came in, right next to the barbershop. It's -- that will be the meeting point. And then your chaperones will take you to the various areas of GOL. And the cargo tour is almost all full. For some reason, Kakinoff, you have to do some more work on the GOL lab tour. There's only 2 takers on the GOL lab tour. I can't understand it. But I think Victor is going to go on that one. He didn't sign up yet, but -- and then there's the CCO tour as well. I'm not sure, that's probably one of the more interesting ones as well. Also, I saw some of you guys taking pictures of the slides. We do have -- when you leave today, you'll get a copy of the presentation. And also, tonight after the -- after we finish, this will also -- the document will also be available on the website. But again, these things, you'll get a copy of this. But if you want to put it into your GOL log package to send back to your office, you can do that or you can take it with you. Now I'll start here on Page 27, for those of you following along on the -- Page 127, for those of you following along on the webcast. As my colleagues mentioned, in 2001, GOL pioneered the LCC operation in Brazil. And to this day, it's the only true LCC operating in Brazil. Only GOL, only GOL operates a highly efficient single-fleet type with a standardized aircraft configuration, type and size, that optimizes cost per seat and creates the market flexibility that we've been talking about today. And remember, the market that we live in is not a plus or minus 1% growth market. The market we live in is a plus or minus 4% to 5% growth market, and we have to have the flexibility to be able to manage that. And we've incorporated that into our business model. And that's why only GOL's model can achieve this worldwide internationally, globally, record aircraft utilization of near 14 block hours a day that we've been showing you. And that's what produces revenues. Now what that means is that our aircraft on average are doing an average of 12 flights a day. That's 12 takeoffs, 12 landings, 12 revenue opportunities that are being generated by these assets that Jeff was talking about, okay? And that's -- as Celso was saying, that's really the secret sauce of how we target these return on invested capitals of 25%. That's really the key component. There is obviously the cost component, which we talk about a lot, but then there's revenue component. And that's possible because of what we talked about on the product. And so as I said, only we have the lowest cost giving us these global standards of competitiveness. And so our competitors don't have the cost structure to viably offer the lowest fares. And the LCC model always wins, especially in a market like ours, due to its increased network scale and increased passenger flow. So past, present and future, this is GOL Airlines. One of the questions I've been getting recently is what's next? Well, this is what's next. It's what we're doing. On Page 128, you can see that we have the best combination of revenue generation and cost structure. Our disciplined growth and cost control has enabled us to take our best value proposition in the market and use that to increase our unit revenues and, at the same time, maintain our ex-fuel CASK flat. On Page 29 (sic) [ Page 129 ], you see there GOL's and international LCC benchmark. The left graph compares costs adjusted by average stage length for the last 12 months broken down by fuel, variable and fixed costs. And as you can see, GOL is the second best globally among significant airlines while operating in a country, as Peter was mentioning, with one of the highest tax, legal and infrastructure costs. And by far, GOL is among the lowest cost carrier among all the Latin American airlines. Our low-cost base is a significant and sustainable competitive advantage. Our standardized single fleet that Celso was briefing you on, allows us to obtain lower crew costs, better spare parts management and the higher aircraft utilization, than our more complex competitors. And the graph on the right, you can see our efficiency measured by the operating cost to net revenue ratio. GOL remains in the top tier internationally and the continental leader. Cost advantage makes GOL the best-positioned carrier to capture Brazil's air travel growth. Now I make a direct comparison with Ryanair here on Page 130. This chart shows how GOL adapted the LCC model to become the market leader in Brazil. And we do this comparison by taking what is -- in terms of significant carriers, the world unit cost leader, Ryanair, and adjusting it to the Brazilian market for taxes, infrastructure and limitations on existing airport infrastructure, these Brazil-specific differences explain about 73% of the difference. The additional 27%, of which only about 5% -- which is only about 5% of the total cost differential, is due to the attributes that were in the iceberg diagram that Kakinoff highlighted, the attributes that GOL added to our product, loyalty program and aircraft configuration to become the #1 passenger-transporting airline in Brazil and allow GOL to attain a 40% share of the business passenger -- the very demanding business passenger in Brazil. Going back to that iceberg diagram, where those -- that 10% to 15% additional cost, which allows us to have the product to attract the majority of the consumers today of air travel in Brazil. And so for example, as Junior mentioned, instead of configuring our aircraft at 189 seats, we configure them at 186 seats. That allowed us to create the premium economy and comfort class in the first 5 rows of the aircraft within the about 4 inches of pitch. You guys experimented this today, and it's similar to the -- what you're sitting in today without the elevation. It's all on a -- 0 degrees. And the other attributes which have 0 or marginal costs are things like onboard entertainment, onboard Internet, the seat outlets. We got a comment today from one of you that flew from the U.S. and then made a connection, that all of our seats have a USB port to plug in. You saw that on the marketing commercial that Edu showed you. The domestic lounges in the international and domestic airports and free onboard snacks and beverages, all these costs at the end of the day only add about 5% to 10% to our total cost of doing business compared to, for example, in the case of the no-frills product offered by Ryanair and give GOL this significant advantage over our competitors. Here on Page 131 I show that GOL has a 20% unit cost advantage compared to its closest competitor. On the right graph, you can see the evolution of that advantage comparing CASK, stage length adjusted in U.S. dollars of GOL and its peers as well as the Latin comps since 2014. GOL's low fixed cost derived from its integrated network, which is more flexible, also a more flexible aircraft type and more efficient operations and our shorter-haul network, and this translates into stronger results and higher profitability. And the MAX, the MAX will represent a further unit cost reduction. On the fuel side, it's 15% less fuel burn compared to NGs and also the improved revenue productivity, as Celso pointed out, in terms of who is doing proper upgauging. As a consequence, we expect this competitive cost advantage with Brazil comps to further increase from the current 20% today to around 25% cost advantage. Here on Page 132, we show 3 indicators of productivity and profitability. The chart on the left shows our revenues -- revenue competitiveness in Brazil and the middle and right-hand charts, RASM minus CASM in the middle and then EBITDA margin, respectively, confirm our position in the top tier of profitability. On the revenue side, we've adapted, again, the low-cost carrier model in Brazil in an innovative way by adding these additional attributes to maximize our unit revenue, and you can see that here. These attributes have allowed us to attract the leading share of the business market in Brazil, the leading share of the high-value customer without adding the significant costs, and this has given us the unique value proposition versus other low-cost carriers in the world. So this is the tangible evidence you have that in terms of the profitability. As you can see on Page 133, this has also translated into earnings growth. In the first 9 months of 2019, GOL had a 5% net margin. We generated almost $500 million of recurring cash earnings and placing GOL in good company with the most profitable carriers in the world, as you can see here on Page 134, our profits should also -- this places us among the world's most profitable carriers on a net income basis. These are the main companies that we benchmark ourselves with, and our profits should improve with our new larger aircraft, as you can see here on Page 135. And again, as I mentioned before, don't worry about capturing all the minutiae here, you'll get a copy of this book. This data will all -- will be there for you guys to access if you want to study it later. This year, we expect to increase GOL's average operating profit per seat by approximately 18%. Now while a significant portion of the improvements in our operating metrics -- and our metrics have been operational, we've also done a ton of work on the financial side as well. In particular, we focused aggressively on working capital and have extended our payment terms as well as managed our current assets and liabilities. We're now working capital-neutral, which reduces any cash draw that our prudent growth would otherwise require. And you can see this in our operating cash flow margin of 22% and our BRL 4 billion liquidity position, which is here on Page 136. On Page 137, you can see that GOL's credit ratings continue to represent a material disconnect to its peer group in spite of metrics reflecting BB credit risk. On the margin side, we have BBB margins, above the 15% level. On the leverage side, we're BB, which is below the 3x level. And on the coverage side, we're still at the high B level, which is above the 3x, but we're almost to the level which would qualify us for BB. So our BBB margins, which are in the high teens, are what's really driving the continued deleveraging. The leveraging that you see in our guidance coming forward is coming from these BBB margins, which is based on increasing EBITDA. This year, we're guiding a 30% EBITDA margin. We're also guiding lower financial expense. And we're also planning this year on early debt amortization of BRL 1.5 billion, which is the term loan that matures in August of this year as well as the senior notes, which mature in 2022, and an additional amortization of BRL 600 million of our Brazilian real debentures by the first quarter of 2021. And this will also help lower our effective tax rate in addition to other things we're doing, as we've mentioned, based on the BRL 2.1 billion of tax credits that we have. And also, on top of that, on top of everything I said, the [ FX of the miles ] taken. Now a BB rating is also supported by our yield management that recaptures FX cost variations, matches cash flows -- matching with cash flows and also our oil hedges that currently are protecting about 70% of our 2020 consumption, and that's 85% protection for the first half of 2020 in the low 60s WTI. Now here on Page 138, and to finalize this quick overview of benchmarking, we compare the less levered GOL to another Brazilian airline with a higher credit rating. And so GOL is less levered than this company even though this company here has a higher credit rating. On average, we have 15% less leverage. Now I'll give you a briefing on our -- a quick briefing on our financial policies. We've made a lot of effort to share with us -- share with you how we are thinking about our business through the lens of policy. We believe we have the right policies for liquidity management, capital management, risk management, profitability and returns. We manage GOL via specific directors that address competitive advantage, our focus on value creation, sustainable growth and generation of returns through the cycle. And we make an attempt to kind of let you know where we think we are in the cycle vis-à-vis our margins, as we've talked about. We still have a couple of 100 basis points of upside on our margin based on what we're doing, part of also where we are in the cycle. Part of the trick of our business is knowing where we are in the cycle and how to prepare for that. Among our main targets we have, as I mentioned, unit cost 25% lower than our closest peer; also the highest wallet share in the markets we target, which are the ones with the best margins; also a sustainable growth rate from GOL in excess of industry growth rate; and operating cash flow generation above CapEx and debt service and leverage below 3x. On Page 140, our corporate financial policies include maintaining our margin generation throughout the cycle, properly matching cash flows, both in terms of maturity as well as currency of our assets and liabilities, managing leverage throughout the cycle as well. That has to communicate with where we are on the cycle and margins. Managing risk, and risk for us is not just hedging, risk is capacity management, revenue management and hedging management. There is no amount of hedging you can do if you get the first 2 wrong, okay, and it starts with capacity. And that's why we've made a lot of effort to tell you how we're approaching capacity management. If we get that right, the rest are first and second derivatives of that. Now we have a leverage policy that we've been actively working towards with a 3x maximum net leverage. We're already below that. And so we already have created a buffer beyond that target as we move into the better part of the cycle. And our proprietary hedging policy is also highly effective. We back test and achieve results of effectiveness over 95%. And that's not something that is automatic. GOL has made a significant investment in its hedging program. And we think that also creates a competitive advantage when you need it, such as what you guys have been seeing over the last couple of -- I don't know what's happened over the last couple of hours, but over the last couple of days and a couple of weeks. I mean, this is why we have the hedging policy. We're going to remain disciplined with respect to capital allocation, delivering sustainable returns to shareholders alongside investment in growth, and that will come by maintaining an optimal capital structure. We have a strong balance sheet that we've rightsized and designed to allow us the benefit to take advantage of Brazil's economic upturn while giving us flexibility in any future downturns. Here, on Page 141, I just highlight that this investment in growth is focused on maximizing long-term value by leveraging our competitive advantages, which I highlighted; also succeeding in the growth markets; also improving our return on invested capital, and I'll highlight some numbers on that in a second as we got some questions on that; and also aligning our brand values and vision -- aligning with our brand values and vision, we've also strengthened our balance sheet and improved our credit. Now we've reduced our short-term obligations, increased our interest coverage ratios, and we continue to maintain liquidity of over 25% of last 12 months' revenues. On Page 142, our medium-term plan for GOL's capital structure contemplates 1 fleet transformation that we shared with you today, and maintenance of CapEx, lower by the modernization of the fleet, building free equity on 60% of our 135 MAX order; #2, liability management. We have more than BRL 2 billion in debt reduction over the next year, which will contribute to generating more than BRL 300 million interest expense reduction in 2020. You can see that in our guidance. We have no -- beyond what I've discussed, we have no relevant maturities over the last -- over the next 5 years. But I say that because we already have the liability management plan for the liabilities that we've already discussed, the term loan, and we have access to very diverse funding sources today; and then #3, in terms of our plan over the next couple of years is optimizing the balance sheet. All of our CapEx is 100% financed in terms of PDPs and engine overhauls. I mentioned that we've improved our working capital and availability of short-term credit in standby-type modalities. We've also maximized the use of capital deployed and tax credit, improved our interest coverage and working on getting the credit rating back to the BB range, which we expect will be in the short term. On Page 143, in our capital structure management, as I mentioned, we have a lot of flexibility in financing sources. I want to highlight 2 -- just as examples, I want to highlight 2 of GOL's unique components that are in our toolbox. First, we have an innovative capital raising tool in the form of what we call the GOL convert. This instrument has helped us maintain a lean capital structure with an optimized cost of capital and diversified funding. On Page 144 here, I show the second example, which is our asset management tool, which has been a consistent and reliable source of liquidity via off-balance sheet equity monetizations. And the higher residual value of our aircraft helps us reduce ownership risk and enables better aircraft financing. Now the major factors on why the 737-700s and 800s are valued more than the competition are what we've highlighted today. It all relates to the same process. I mean, at the same time, we're investing in these assets, we're also operators of this. It has lower operating cost economics, which is based on the better structural efficiency, better reliability; also Boeing's disciplined production rates, the 737-800 has 12 more 2 class seats and 36- and 32-inch configuration and 15 more seats than the 1 Class 30-inch configuration than the A320. Now on Page 145, Celso talked a little bit about our fleet plan. Our new fleet is expected to be the most modern fleet in South America, one of the youngest in the world. We briefed you on why the B737 single fleet strategy fits our strategy. And our current aircraft financing plan will finance a total fleet of 158 aircraft by 2025. And in that mix will be 89 operating leases and 69 finance leases. Over the next 5 years, this will include 69 MAX aircraft during this same period of time, which will be financed by leasing firms, also by banks backed by ECAs and insurance products, JOLCOs and EETCs. Those are all in our plan over the next 5 years. We are ready to execute on that once we're back in a normalized situation. In addition to secure financing, GOL also has a wide ranging toolkit to address all of its funding needs, a combination of banks locally as well as capital markets internationally. On Page 1 -- moving to Page 146, recently, we made a new proposal for the acquisition of the minority interest of Smiles, our loyalty company. And this chart here -- again, the Smiles is the 6% of our total 2019 revenues. This afternoon, some of you guys are going to visit that 3% there at Gollog. And then maybe in the future, you come back to visit us, we can take you up to Belo Horizonte and you can visit Aerotech. But also we're working on us taking back the minority interest of the loyalty company. And so here on page -- this page here, 146, you can see the relative contributions last year to each one of our group's businesses to consolidating revenues as well as EBITDA, okay? So here are the numbers for you there. On Page 147, in the proposed Smiles incorporation, investors can elect to receive a consideration comprised of redeemable preferred shares, which is cash and GOL shares. Now GOL is funding the incorporation of Smiles by issuing shares and diluting its current shareholders to maintain a prudent balance sheet and credit ratios. So a large component of this, between 40% and 60%, is going to be equity, equity issued out of GOL, like the BRL 39.25 price that was announced. And then cash consideration, the cash component, which will be 40% to 60% of the total, will come from our consolidated balance sheet cash. And so the transaction terms are a 40% to 60% payout with cash and a 40% to 60% payout with GOL equity depending on what minority shareholders select at the March shareholders' meeting. In this 60-40 alternative, this represents 0.4213 GOL PN shares and redeemable PN shares in the value of BRL 24.8 for each Smiles share. The reorganization of Smiles is effectively self-financed and increases cash generation and is earnings accretive. And I just want to highlight some positive points about this from the perspective of people in this room. First, it increases GOL bondholders' seniority in our capital structure; second, the reorganization will use equity and group's consolidated cash to finance the acquisition. These are finance that we already have on the balance sheet; the third positive point is the increase in the group's EBITDA with subsequent conversion of that into cash flow; and then fourth, it's earnings accretive and the proposed incorporation of Smiles will result in 1 single shareholder base for GOL and Smiles, and it will increase GOL's position today as the most liquid airline stock in Latin America. And here on Page 148, you can see that GOL is already the most liquid airline stock in Latin America and also amongst the most liquid of all publicly traded stocks in Brazil. GOL is one of the most liquid stocks on the B3 Brazilian Stock Exchange with a free float of almost 50% of the total outstanding shares. And after the issuance of new equity for the reincorporation, it will be by far the most liquid. Here on Page 149, you can see the liquidity of GOL's shares in the market at -- I'm sorry, I skipped ahead. You can see the liquidity of our shares in the market, which is approximately $59 million a day in the second half of 2019, and that excludes the 394 million block that traded on December tech, which was the monetization of the delta space. So these liquidity numbers here exclude that. Obviously, that helped additionally to increase the liquidity. Now -- sorry, I was just on Page 148. Now I'm moving to Page 149. Looking forward, GOL exists to provide the best air travel service at the best price. That's why we exist. We create value through these 3 blocks: aircraft acquisition; air transportation; and loyalty programs. I would say we spent the majority of today talking about air transportation, where the objective is to optimize RASK and drive the lowest CASK, but we also have these 2 other businesses, which derive out of the core business of passenger and cargo transportation, but also create values in different ways. The aircraft acquisition business creates hard currency equity and unlocks equity over a long period of time. Think about that as like a home equity-type concept for us. We build it up, and we can tap into it when we need it throughout the cycle. And then the customer loyalty business is basically a business which is generated based on the flow, which is basically cash and clients business. All these businesses kind of work together in our value creation plan. All of our investments for the product are already made. We've talked a lot about that today. We also have the highest operating margin and the most resilient business model today to take advantage of the upcoming economic growth. We've got a product that offers the leading loyalty program, Smiles, and we're the only airline in Brazil that has 100% of its fleet with some of the accoutrements you've been seeing today, such as onboard WiFi and the in-seat USB ports. All that investment is already made. All that groundwork -- what you're sitting in today is already laid. And this strategy is already generating a yield premium -- slight yield premium over our main competitor. And our key metric here is not just on the yield premium that we're extracting, but also the share of wallet that we've been able to capture from the various passenger segments that Edu mentioned. On Page 150, GOL, we believe, to this audience offers opportunity for asymmetric returns, including attractive opportunities from the leading company in Brazilian passenger air transportation. Second, a current value entry point that has near-term protection through enhanced liquidity. We're in the early innings of a Brazil macro recovery. We're in one of the fastest-growing aviation markets in the world. We've got unencumbered assets, and we've got multiple partnerships. And these asymmetric returns, as Brazilian airline activity resumes, are we believe, self-evident, and we've got cash generation to further strengthen the balance sheet. At the same time, we'll also proactively interact with the Brazilian government to keep maximizing many of the considerations that Peter made in his presentation this morning. Those are also very important. Now -- I'm moving now to the next page, Page 151, we maintain a right-sized fleet, in other words the right-sized assets, which is part of this equation on return on capital. We focus on the most profitable routes and high-yielding business travelers. And in addition to rightsizing our fleet and operating -- or optimizing our network and maintaining our strict cost focus, this has improved our operating results, which is the middle part of this chart here. Using the Du platform here, which is something I've always liked to use for GOL particularly because it has the focus on asset turnover, okay, a lot of calculations on return on equity just tend to kind of look at profits and equity, but for GOL, we have a strategic and competitive advantage on the asset turnover side of the equation. So Dan, going a little bit to your question, the key source of this -- getting to this target of 25% is what we're going to be generating out of the assets, which is a combination of the operating model with the fleet plan, but also what we can generate on the revenue side. And so -- and that -- these are very high asset turnover ratios. And that's -- it really kind of all starts from there. At the same time, yes, we have been improving the operating part of the equation. And that's the part that really ends up being more volatile. That's the part that will kind of follow the cycle. And we've gone through a lot of work over the last couple years of getting the right side of this equation, the leverage side, back properly matched with the asset side. And so excluding the gains and losses on our convert, which are noneconomic and excluding gains and losses on exchange variation and long-term debt, in 2019, we did an approximate 17% ROE based on these characteristics, and our 2020 objective is to get to 20%. But at peak cycle, which is 2, 3, maybe as much as 4 years from now, we hope to be hitting that 25% target. So this is one of the reasons why we think now is an attractive time to consider investing in GOL. Brazil is back. And the cyclical upturn in our market makes it one of the most attractive investment cases in emerging markets. Investors are starting to price in Brazil's growth after years of stagnation. Growth projections are being revised upward, and air travel demand has a significant GDP growth multiplier in Brazil. Airlines are a high beta way to play the Brazilian recovery. And finally, GOL, we believe, is in a solid position to benefit from this scenario and create value to investors. We're not only the market leaders. We have the best network, the best fleet, the lowest cost base and a solid liquidity position. And here on Page 152, you have a compelling case about why now is the right time to invest in GOL. While our 2020 and 2021 estimated revenue and EPS growth rates are higher than the peers on this page, we have the lowest price to earnings growth. The price of expected growth --P/E sorry, P/E to growth ratio at 0.2x, the lowest PEG ratio. So to finalize this segment, I'll now brief you on our preliminary 2019 results and our expectations for 2020. All this information you already have. We disclosed our preliminary '19 results this week, and you already have our 2020 guidance. We're delivering on our earnings guidance for 2019, as you see here on Page 153. And in 2020, we have a solid capacity plan to deliver our guidance for 2020, which is summarized here on Page 155. And as I wrap up, I want to summarize here on Page 156, don't worry, you guys will get a copy of this literally within an hour. I'm just going to run, so we can get to the Q&A and maximize that here. But all this data we've already publicly disclosed. This data -- just going back here, this data here is the capacity guidance that we've articulated, including today in our guidance, and it just shows you what the source of that is in terms of the comings and goings of the fleet. And then this year is already our public guidance, which are the main indicators. We provide a lot of guidance to help you guys understand and model, but these are the main drivers, capacity, revenues, leverage and earnings. But I want to -- on Page 156, I want to summarize here the work we have been doing to -- as I wrap up here, to promote principles -- fundamental principles and access to information, such as equal treatment and transparency, simultaneously publishing in English and Portuguese. As was mentioned, our corporate governance is in excess of the ADR Level 3 and the B3 Level 2 requirements. Our fair disclosure and best practices include all the required reports for the SEC and CVM. We have a pretty detailed IR website. Earnings releases with videos, calls and guidance, very detailed guidance and conferences and meetings with investors and analysts. For this year already, we have in our schedule planned 25 investor conferences, I'm looking forward to that. But -- and this is an example of a format that we call investor briefing. We did 1 -- we did 1 up in New York, and we did 1 here in São Paulo. We did the 1 in midyear in June, which is generally our anniversary of the listing on New York Stock Exchange. And then this one here, we've kind of been doing in January for some of the reasons that Kaki mentioned, this is kind of like a good time for us to tell you about how we're thinking about the year, start off on the right foot. And then part of the objective is to give you guys an excuse to avoid the sub-0 temperature in New York, but it looks like we got some people. We couldn't convince everybody. You know who I'm talking about. And then on February 2, which is the week before Carnival, we're going to be delivering our Q4 -- sorry, our 2019 audited results, and we would appreciate -- I would really appreciate if you would move the teleprompter. We'd really -- we really appreciate hearing your thoughts and suggestions to -- on how to improve our communications tools and activities. So same comment that Edu made. We do like to get the feedback for those of you who might have some particular observation about the GOL product, and we also want to hear what you think about how we're communicating with you. All feedback is incorporated. Your opinions are your opinions, you'll never hear us commenting on one of your recommendations, but you will have us commenting on making sure that we have the right communication. Many of you know that personally we want to make sure that we're on the right page in terms of what we're communicating about. So to wrap up here on Page 157, I'd also like to use the GOL 5G diagram. I don't know if we're going to have owe a royalty to somebody, the Chinese or somebody here, but the great market. Brazil is back. That's all -- period, that's all I'm going to say on that. The cyclical upturn makes it one of the most attractive investment cases in emerging markets. Air travel demand has a significant growth multiplier. Airlines are a highway to pay the -- play the Brazilian recovery. Great management team. We have a team that's committed to its purpose, which is to be the first for everyone. Junior mentioned that on his slide, he want to be the best company to travel on, to work in and invest in -- work for and invest in. And that's achieved by a great product offered via the LCC operating model. That's how we do it. And so that's what we're doing. So what's next? That's what's next, the great product offered via the operating LCC model. Our NPS is above 40, and it's on an upward trend. And serving the Rodolfos and Lais' is what we think is our unique competitive advantage that will prove assertive beyond our recent results as the Brazilian economy continues to resume growth. A great operating model. What can I say about that anymore. Is it possible for me to say anything more about that? I mean, we're not only the market leaders, we have the best network, the best fleet, the lowest cost base and a solid liquidity position. And finally, what it's all about at the end of the day, what really keeps us motivated every day, 24/7 is a great value creation plan. Our growth projections are being revised upward. We're in a solid position to benefit from these 5Gs and create more value for investors. And as I mentioned, now is an attractive time to consider -- consider investing in GOL. And so with that, we are -- we have time for a few questions. That can be on this section. We have a couple of [ times ] for that. And so what I'd like to do just to kind of keep things organized a bit is, for the next 5 to 10 minutes, we'll keep questions on this section, okay? And then once we address the questions on these sections -- on this section, what we're going to do is, well the 5 of us are going to sit up here on the stage, and we -- if you have any other questions you want to ask us as a group, we're going to -- we'll stay here until probably about 3:45 -- no, probably almost 4:00, and then what we'll do is we'll kind of organize you guys in terms of how we're going to go out the room and what's that. And so right now, we can take questions from anybody here at the GOL training center, where we are now, or if anybody else is still surviving there on the webcast, you can send your questions by clicking on the question mark on the upper left of the webcast, okay? So let's do that real quick. So 5 minutes real quick for me. But at the same time, maybe I can ask you guys to load up the platform with the chairs.

Rich, it's Mike. The goal to get to a BB rating, is that merely a stepping up this thing higher or are you of the view that maybe cost effectively the double BB, the place -- there's a debate out there about whether or not airlines even need to be investment-grade or not? And yet, I'm curious, because I don't think I ever asked you this question. I'm sure you have thought...

All right. Well we have -- there's 2 -- I have 2 answers to that. One is that the -- we do a lot of very sophisticated planning. The objective is not the rating. The objective is to minimize cost of capital. And so we have a process where we determine what our minimum WACC is. And while some people might like to see us be less levered, we right now are at the WACC minimization point. Maybe we're missing -- maybe there's another 25 basis points we can go. But I sometimes joke that I'm not 25 basis points smart, especially for a Brazilian airline. And so we're basically at the -- almost at the WACC minimization. We're almost there. We'll be there in a couple of months. And that's obviously the capital structure and then the instruments we're using. We're at the -- we just want to say we're almost there as we're at the final end of [Audio Gap] 3 liabilities that we're going to be getting rid of over the next 6 months, okay? Those liabilities should not be in the capital structure, okay? That's the term loan, the 22s and the minority interest, okay? Those liabilities go away. And then we're at WACC optimization, okay, we're at WACC optimization. That's point one. That's answer one. And we have a policy that defines that and we -- that's how we manage the business. But then there's the other component, which is the cycle, okay? And because it's not stack, right? And so you have to be -- that's why I said, you kind of have to ask us -- this is how we think about it, like where are we in the cycle? And so for example, right now, our view is that we're probably -- one of the devices we use here is to -- we don't think about a cycle as a rollercoaster, we think about it as kind of a wheel, where you have like the 4 seasons on it, right? And that's generally how it has kind of been in this business. It's -- you can argue it's somewhere between an 8- to 12-year cycle and there are certain characteristics of where you are in the spring, summer, winter and fall. And we're in the spring time right now, okay? We're probably getting to the end of the spring. And so what we're going to be doing over the next 3 years, which is also relevant to you guys, by definition of that, when I say we define a leverage policy, for example, at 3x, that's through the cycle, that's mid-cycle. It's not going to be that every year. When we're in the winter, we're not going to be at 3x. When we're in the winter, we're going to be at 5x. But what that also means for us to be at 5x in the winter, we got to be at somewhere between 1 to 2x in the summer time. And we're going into the summer time. So you can read into that, and that's why you see in our guidance where we're going. Over the next 2 to 3 years, we're going to reduce leverage. It's going to be at the same time that we're increasing margins. The main source of that is going to be margins. We've got a little bit of liability management left to do. But when we get around to the peak, and I don't -- if I knew that, right? But -- I mean, imagine that's 2023, '24, I mean, a lot of the statistics and the phenomena are being changed a bit right now by the current political scenario in the world, right? And so -- but using past, when we get to that peak cycle, we should be between 1 and 2x leverage, which would be, at that point in time, we would not be minimizing our WACC at that point in time. But we have to -- what we have to think about is, where am I going to be in 2028 when it's January? Where am I going to be? And from our policy, we don't want to be at more than 5x leverage at that point. And so that's the kind of -- think about between 1 and 5x. Now I have noticed that I think what you're implying as well that if you look out in the world today, the majority of the best practices airlines, the ones that we compare ourselves to, and we aspire to be, many of them are at 0 leverage, right? And of course, they have some benefits like you can get almost 0 cost standby letters of credit. We don't have that in Brazil, that's -- we have to -- our equivalent of a standby letter of credit is a huge cash balance on the balance sheet because banks in Brazil generally don't do that. They don't want to do that because for them, it's almost like making a loan and they don't make any money on it. So we don't have that in Brazil. So when I look like at Southwest Airlines and it has all these standby letters of credit, I don't have that ability. I got to have cash. So my standby letter of credit is my cash and receivables. But putting that on the side, I think we will, over the next couple of years, follow that, follow what these -- the U.S. and European airlines have done in terms of trying to see how low we can get in leverage. But it's not because that's going to be minimizing cost of capital because we know that over the next 3, 4, 5 years, we got to prepare for the winter. And so that's how we're going to be managing the business. Obviously, we're looking at minimizing WACC. And -- but right now, if you think about that curve that I had on that slide, we're kind of getting back to the WACC optimization. Whether or not we go less levered and increase the WACC, that's still probably 2 years away from us. And so for me to kind of be speculating about suboptimizing my WACC, that's 2 years from now.

[indiscernible]

Well, yes, I mean, like I said, the -- part of the wheel that you look at when you minimize WACC, part of the input there, it's not just quantitative, it's also what investors are pricing. And so I remember when we started -- if you go back to 2004, we had a -- our objective was to take the goal from 40% leverage to 70% leverage. We were underlevered. And because at that point in time, you're actually getting your optimized WACC, [ at 70% ] leverage, but the pendulum kind of swings. And so part of it, you're always kind of following what investors are doing. And so -- but for our space right now, we'll see. It seems that there is -- but we have some credit people in the room and credit analysts and bond investors here also. There probably is a slight premium for being less levered now, which I think is wrong because a lot of this is based on what they're looking at over the last 3 years, which was coming out of the winter, going into the spring, but we're now in spring going into summer. In the summer is when we need to start getting ready for the harvest, right? And so we need to be doing everything we can to -- and that's why we kept our investments here, we spent almost BRL 1 billion since 2012 on everything related to the product. That's also the technology, huge investments in technology. And that's because we were -- and so we didn't cut those, right? And we also didn't cut what we were doing on the fleet side. And that was to prepare because we got to be generating a lot of cash in the summer. And preparing for that, that's just the reality of our business. Now a 12 -- 8- to 12-year time period is probably not compatible with anybody's investment horizon here. That's private equity. That's how we have to think about it. And that's why one of the things we were saying in the meeting a couple of times is that -- and Celso said it as well, is that everything we're doing is for long-term sustainability. GOL has been very flexible in adjusting with the problems. I mean, we rightsized the fleet in 6 months in 2016. I don't think we get enough credit for that. Boom, done. This year, we had the resource -- last year, we had the resource, 45 aircraft [ intra-year ] because of the MAX and pickle fork problem, done. We're not getting -- you guys aren't paying us for that, you should be, you're not. But that's why we've been around for 20 years, right? I mean, that's what we do, right? That's what we do. And we would do it probably for free because we like doing it, right? But I'm saying, but that's -- what we're going for is over the long term. Now I would say there's an additional component throughout there, which I think is important. Right now because of our shareholders' equity, we can't pay dividends. And so it's going to be 2 or 3 years at least before we could pay a dividend. And so all the cash has to be retained in the business. And so -- but obviously, for us, in addition to the return on investment capital characteristic, the ultimate measure is if we have an optimized WACC and a sustainable equilibrium process going would be the ability to pay dividends. And so that's the question you guys have to wait to ask us, but that's probably going to be 2 or 3 years. The Smiles Reincorporation is important for that. But that negative book value has happened for a lot of Brazilian reasons also. But it prohibit us from paying dividends. Now from a credit perspective, like [ Ben ] loves that when I tell them I can't pay any dividend for 3 years, he's like, "That's great." But on the equity side, I mean, we have a person in the room that has 60% of the economics. That's the only -- he doesn't -- that's the only way that he takes value out of the business is through the dividend, okay? And so I mean, these are kind of -- that's how we're managing it over a longer period of time. But in the short term, you guys have -- I don't think you have a single company that gives you more short-term numbers than we do. I mean there's nothing else we can give you help you guys make a decision. But this longer-term stuff is -- obviously, these are more interesting times, you can just -- you already see. These are more interesting questions if people want to make an investment like a 5-year investment. Now we've been attracting some investors on the equity side that we haven't had for a while that have been taking 3-year views. And so we do talk with them about these things as well. And so that's a much more interesting conversation. Sorry, your second question was?

[indiscernible]

Okay.

Rogério from UBS. A couple of questions, quick ones here. One is that you mentioned 11 NGs that you could sale and leaseback generating about BRL 500 million equity. So when do you want to -- when do you plan to do that? And is it included in the 2020 guidance?

The answer to the second question is no. We would have already been doing a portion of that in a regular basis if it wasn't for the MAX and pickle fork issues that we had this year. And so we're -- we don't plan on reinitiating that until we have a definitive answer on the return to service from the MAX. If we get a definitive answer on a return to service from the MAX, we could do that this year. We have demand for those aircraft. And -- but one of the ways we're thinking about that as well is that, as you know, we have the -- we articulated last year that we wanted to call the 22 bonds this year, they're callable at 102 at the end of February. And as we -- as everything we do is matching assets and liabilities and as those 22 bonds were used to finance the 15% equity contribution of us, the asset acquisition, in our capital structure planning, those 2 are kind of indirectly linked. And so we don't have a need for that cash, but we do from a WACC optimization perspective, those 22 bonds are costing us over 9% per year. And so we want to amortize those as soon as possible. And so those 2 are linked. But I would say there's a greater than 50% chance that this year, we would finalize the monetization of those 11 aircraft. It probably would have already happened if it wasn't for the delays on the MAX.

Okay. Perfect. Second quick question on yields. So expectation is flattish yields for next year -- for this year, sorry. And we had second and third Q, we had Avianca Brasil leading the market. And ANAC took a while to redistribute the slots and these ended up helping yields and load factors. So my question is, how do you expect those yields to behave during the year? So if second and third Q have high comps and it may likely drop, but the first and last year of the -- last quarter of the year, it's going to be very high. So how do you expect those flattish yields during the year?

Yes, that's a good question. I mean, the -- as you saw, we've been really disciplined on optimizing revenues. You saw our fourth quarter PRASK up 11%. And you saw our slightly lower load factor numbers in November, December, but now you understand the source of that. We've been very disciplined on maximizing PRASK. I think the first -- I mean, right now, our view is flat and that would follow the normal seasonality for the year, which would be -- we have the weak seasonality in kind of the March, April, May period. But there's 2 components of that. If you take where we have good visibility on today, which is kind of the next 3 months, which is also the final end of the high season, we see -- at least for our unit revenues, we see good results. Beyond that, we're concerned about the second quarter because there has been a lot of capacity coming in. I think it was Kakinoff that mentioned that Guarulhos market has been subject to an enormous amount of capacity. So a lot of yield pressure. Because also in Brazil, remember that just -- if you remember the charts that Junior showed with all the people living on the coast and in the [ southeast ], there's a lot of overlap, and that creates a lot of pressure on -- a lot of overlap with networks and that creates a lot of pressure on yields. Now we've kind of worked to try to minimize that from a network perspective, but we're only 40% of the market. And so I think the test on that is going to be in the Q2. I think if we get through Q2 with good results across the industry, then I think we'll do better than flat yields for this year. We'll do better than that. But right now, we're concerned about the capacity coming in. And also, the second point I was going to say is that there's just not enough confidence on the demand side yet. I mean we think that the market is going to be growing at, as Kakinoff mentioned, 6%, 7%, 8%, maybe even 9% this year. But if you had have gone back a little bit before, we thought this year could have already been low teens on demand. And so if we get to low teens on demand, that could also be a reason for -- but what I wanted to put against that was that, as you've seen in some of the data, we're still recovering from a big stagnation. I mean we're only now getting back to the number of passengers transported per year than we had in 2012. And so there's an enormous underpenetration in Brazil. And so one of the ways to think about this going forward, not to have such a concern about yields, and where more of the revenue growth is going to be coming from volume, from capacity. As Kakinoff mentioned, lows in the low 80s in Brazil, that's a structural limit. If we go above that, we suboptimize unit revenue. We don't want to go much above that because of all the connectivity in the network, number one. And to stimulate demand, we have to have an increasing amount of inventory at a lower price point, to stimulate the Lais' of the world, as Edu mentioned. And so I think one of the ways to think about it and it's harder to look at is that we'll keep the profitability on the core business customer regardless of what's going on incapacity, but we need to deploy this capacity in a way to stimulate demand in the travelers that aren't traveling today. We've been doing this since forever. I mean as Edu mentioned, we've got 35 million people that made their first trip on an aircraft at GOL. But that, since the 2012 peak, it's stagnated. And so the way I would suggest you look at flat yields with margin maintenance, that's a fantastic scenario because that means we're stimulating demand. And if we were to focus -- like we focused on -- had an intense focus on yields during the recession and the recovery and we were very successful at increasing yields during that time period, which is not something that many airlines can do. But part of that is because the main customer paying the bill was the business customer who is basically price inelastic. People like you don't stop traveling generally based on what the exchange rate is or you're still working. Now there's a lot more economic activity happening. I mean one of our top clients are -- we were talking a little bit about the government, I mean one of our top -- usually, our top clients are natural resources and energy companies and banks and things like that, but recently now one of our top clients, in terms of consumption of air travel in Brazil, is the Ministry of Economy. That's because these guys are working. I mean they're traveling around Brazil and they're working. And so that also has reflections, but that bucket is -- that's okay. I mean the yields on that, I mean as long as we're rational, that would be all fine. But we do need to have a focus on stimulating the market, which is another way of thinking about that. And so part of the reason I'm saying that, there's been such an intense focus on the last, say, 3 or 4 years on how much are yields increasing and how much are unit revenue is increasing. We're getting pretty close to an optimized level. I think it's unrealistic to expect that, that should be going much above inflation, where we are right now. But that revenue growth is, 6% to 9% volume growth can come out of a higher penetration in Brazil. And then our main source of margin expansion going forward is not yields that you're seeing, it's basically the transformation on the fleet side, which over the next couple of years can be the source of as much as 300 to 500 basis points on margin. And so we've got that additional 3 points of margin that we want to expand as we go to the peak of the cycle over the next couple of years, we've got that covered on the cost side. We don't need that on the revenue side. That's how I would explain it to you, but I know everybody will -- but I think people do need to shift from this intense focus on how much are yields increasing. I think the maintenance of yields will be -- in other words, flat yields for 2020, that will be a fantastic outcome. That would be a great outcome. Because that will mean we got the demand growth, and we'll take the market from 100 million passengers a year and it won't be 104 million, like Peter was saying, it will be 110 million by the end of the year. And those additional 6 million passengers is what we want. We don't want 104 million. We want 100 million -- sorry, 106 million, right? We don't want 106 million, we want 112 million, okay? But right now, we're -- that's the number. We're tracking it to have a 106 million. We want to get 112 million. That's how I would describe it. So...

Dan here. Thanks for the presentation. Just a couple of housecleaning questions. One, I'm just wondering if you'd be willing to comment in passing just on the revenue strength and costs, be it for the third quarter. But then if we look at...

Third quarter?

The fourth quarter, sorry. And then with respect to the 10% -- I'm going by memory here, so please correct me. It was a 10% net margin that you're targeting for 2020, if that includes the corporate reorganization? And then one -- third question. Just with respect to tax reform that Congress is working, I'm just wondering if you have any more visibility on what that might mean for GOL.

Sure, sure. What was the first question again, sorry? I didn't...

Fourth quarter housecleaning on the revenue cost side.

Housecleaning, what does that mean? Sorry.

It's just kind of the key drivers of the revenue, key drivers for the cost [ levels ].

Oh, okay. Yes. Okay. Well, no, on the revenue side, unit revenue was coming out of the -- on the yield side of the equation. I mean that was just -- he's sitting right in front of you there, good job that Edu did on keeping a very good discipline on profitability and not getting drawn into certain battles. On the plus side, if you want to look at it overall, the biggest thing was probably on the fuel side. It's part on the fuel side. Your second question. On the net margin, you see that we're guiding a -- in the guidance that we've provided, this 13%, these numbers here do not include the effects of the reincorporation. Do not include, okay? The first effect will be the -- it's an immediate accounting effect, which is about a 2-point increase in margin based on the elimination of minority interest. That's just immediate, right? And of course, that will be half a year by the time it actually gets done. And then the second immediate effects are we immediately reduce tax outflows, another point roughly in there in the back half of the year. And then the final effect will be work that we have to do to better utilize GOL tax credits and increase overall revenues. But we think the overall impact on revenues on a run rate basis will be about 1% of revenues. So Michael is right that it's about -- it's more like BRL 150 million of revenues on a run rate basis. So none of that's in here, okay? None of that's is in here in this guidance here. And that gets to your third question as well because we were talking about on the tax side and other things, that will also have an impact. I mean the effective tax rate we're guiding here of around 15% does not include that also. And it also does not include the things that we're talking about there. You take that -- that we were talking about with Peter. We today have about 1.5% of margin that relates to the stuff that we're talking about this morning. It's around BRL 200 million of these things. Now you can't eliminate consumer claims or labor claims and these other things. You can't eliminate it 100%. But part of that was related to -- we get a lot of these questions about how easy it is to compete here in Brazil? It's not. And so we've got -- literally, there's a BRL 200 million bucket at GOL, BRL 200 million, that is going out because of those components that we talked about this morning. And we do have projects that are working on minimizing that, and we will minimize that. But that's probably going to take 1 to 2 years. And it won't be half of it. It'll still be a significant portion in there. But it's a lot. It's a big component in there. The other thing that will come out as well is the tax reform is currently on the docket with the government across Brazil, which is not about reducing tax rates, it's about eliminating tax bureaucracy. That also is another 1% in our value chain. In fact, that's like a 1% in the entire Brazil value chain. And I'm sorry you're not hearing on the microphone, yes. That's about another 1% -- that's probably psychosomatic. I don't want certain people to hear what I'm saying. But the -- because, for example, you walk over to a building with me over a year, GOL has almost 100 people in the tax department, which, if you don't have it, you're going to have huge problems. And so it's not a question of reducing tax rate. It's a question of freeing up cost in the system. And you roll those things together, it's enormous, right? But those things will -- they won't kind of -- we don't count on those things to increase margin. Those are going to increase cost competitiveness, but they're going to allow us to maintain our margins and reinvest that in the business. And that's kind of what Peter was saying is, it's not a question about sucking -- retaining that for us, those are costs that we have to deal with that are in our cost structure. And part of that is -- I think in the comparison I do with Ryanair, part of that's in there. If -- there's a chart in there, if Ryanair were to come to Brazil, he wouldn't have the cost that he has, he wouldn't have the profitability that he has. And so I'm just thinking now, it's like -- we're not going to get the Irish situation for sure, right? But that's tax nirvana. But you have all those -- one of those things there. But that's how -- that's going to take a couple of years though. But you won't see that in the margin, you'll see that reinvested in better productivity and growth. That will be reinvested in growth. So I think what I'm going to do now, just in terms of time, I think I'm going to call up now, Junior, Kaki, Celso, Edu, and we'll shift to just kind of a wrap-up, if you guys have any other questions? And then Kakinoff will make some closing remarks. And then we'll be available if you want to have a side conversation or anything. So for those of you on the webcast, we're going to turn now to a final 10-minute Q&A with the whole management team, and we'll wrap up by 4:00 p.m. as planned. Thank you.

If anybody else [indiscernible] Jeff and Peter [indiscernible] but I guess...

You guys can start.

You guys going to start.

I just got to get organized here, hold on.

[indiscernible] Is there -- Savi [indiscernible]

This is a little bit more shorter term, so I apologize. But -- so with the MAX, when do you have to start making decisions because you have some kind of short-term leases and things like that? And like when do you start making plans for like 2020, 2021 fleet? And how you're going to move forward? I know you have a lot of flexibility.

Before handing it over to Celso who's going to give you more detail, I would like to highlight something and somehow celebrate the most important outcome of the restructuring phase that we went through between 2015 and 2016. You should remind, mainly you, because I remember that we were together at that time explaining how we would restructure the plan. And we said our main target along this process is to build a fleet flexibility plan that was never seen before, which could allow us to go through the typical Brazilian volatility without facing the need to restructure the company again in the future due to either an overcapacity or a shortage in airplanes -- in airplane supply. We target that or we built that device, if I could say so, to face Brazilian volatility, never thinking that it could be to deal with the MAX situation. But now I can probably say that we went through possibly the most challenging time that an airline could ever face. You can imagine there was not only the MAX, there was the pickle fork, the NG pickle fork from one week to another, we were contemplating the possibility of having 8 planes being grounded. And then, in fact, there were 12 after that week. And you didn't hear any noise, you didn't see any customer complaining. We proved how robust, flexible and efficient this fleet plan structure that we have built at that time is. So when we announced that, if I'm not wrong, that we were capable of dealing with either a 5% higher demand per year over the following 10 years -- sorry, 10% higher demand over the following 10 years or a minus 8% per year without jeopardizing our fleet plan because we had built that flexibility into our leasing contracts and mainly dealing with Boeing, how the planes would be supplied, that gives me the comfort to tell you we can wait longer if it's necessary because the flexibility is there. I mean we should give a very good example. We simply decided to not translate our equity into cash during this year on the 11 issues that we have available. We can decide to speed this process up if needed. We can further postpone it for more 1 or 2 years. We can have a set of alternatives that give us that robustness, which is delivering -- which has been translated into EBITDA margin. Because that was -- I do not want to play any kind of drama here but honestly, having in 1 single year, the pickle fork effect, the MAX effect, the Santos Dumont runway being rebuilt and delayed for 2 weeks more than expected. This kind of stuff -- even Avianca's bankruptcy. You can imagine how stressed our operation was during the first 3 to 5 months because we were transporting for free, literally speaking, millions of passengers, those bought their tickets in -- to fly Avianca and the company was not more there. So that's not something to deal with and this overweight was over-proportionally applied upon GOL's structure because we are the big company -- we're the biggest company in the market. So now I will finally answer to your question on the fleet plan on MAX, but I really would like to take this opportunity to highlight something, which I believe is one of the main assets of this company and that would explain why we have been so successful navigating on this trouble waters that we usually have in Brazil. Please Celso.

Thank you, Kaki. Thank you, Savi, for the question. If you look at our fleet today, it's totally different fleet from what it would be the fleet if we knew that the MAX would be 1 year on the ground. So the fleet that we have today was a fleet created looking 2 years -- 3 months ahead like, so it's a very fog 3 months ahead, and we were taking decisions in different time frames with one eye in this 2-, 3-month period, and the other eye in the peak season, which makes really the difference for us. So for next year -- for this year 2020, we are now growing in the high season, so this is the fleet we have and then we have the first low season for the year, which is February to June. So for this, the MAX doesn't make any difference in the capacity for us. So that we have the eye now on July. We have a plan with the fleet -- the existing fleet, we can, I mean, deploy the right capacity for the first half of the year. And now, July is the -- really the question mark. And we have -- we are now working on this on an everyday basis, of course. But I can tell you that, I mean, beginning of April is an important milestone for us for 2 reasons. One is because we are scheduling flights with the MAX from April 2 and on. So the MAX can fly before it, but we are now selling flights only in April. So if the MAX starts flying in March, let's say, we're going to start testing the plane and doing everything that Boeing will require, ANAC will require, then we're going to start flying with the MAX some flights that NG now is flying. But then in April, we have flights on top with the MAX. And so April is a key milestone for this reason. And the second is because it's 2 months before July, so we can decide if we do a short extent on some leases. The important thing to say is that we have today 7 MAX on the ground, 16 MAX in [ Seattle ] or in the desert, but already built. So the production cut is not a problem for us for this, let's say, for the next 18 months, we have planned enough planes. And the question will be, how the leverage we have is going to be, the short extensions that we may be doing with summer leases that we just took, and then we -- of course, we want to send some planes also for the European summer. We can send, I mean, from 2 to 7 planes, depending on -- if we have the MAX or not. So as you said, we have this flexibility. But I think April is a good time frame for us. And of course, if it's not if we have an additional delay, then we are going to start building a new capacity for July by March and April.

Can I just ask a quick follow-up on that? Like with the MAX, it seemed like international, though it's the one that took a step back, but also domestic had strengthened or the picture had changed in the domestic market. So when the MAX comes back in a meaningful way, are you going to -- is international going to see maybe a faster growth to catch up? Or given the domestic market, is it still more kind of a domestic higher growth focus?

Yes, I think domestic is going to be a focus. The only thing is that the MAX will be allocated to international routes, of course, because we can fly more efficiently and without the -- that they stop to U.S. and to Cancun, but the growth itself it's going to be more concentrated in Brazil. The year-over-year growth that we show up here on the international, it's more about, let's say, the year -- the full year effect of routes that we are just launching right now, Cancun -- what, the middle of the year and Lima by the end of the year.

Dan here again. Just to -- expression here, to kick a dead horse. You guys have talked about the alliance a few times today that the loss of revenue from Delta pretty de minimis from your perspective. But I guess the question is as you line up a new partner or partners, is there a potential revenue upside beyond what you've lost from Delta? And then, of course, presumably, that's not included in the guidance either at this point. And if so, if you turn on a codeshare, how quickly could some of those routes -- some of that incoming revenue begin to filter through the income statement?

This is -- it's pretty immediately. Once you have -- we have the expertise how to connect -- easily connect those systems with ours, it was previously developed and it's going to be a matter of weeks to resume additional revenues coming from this codeshare partnership. It's important to highlight that we never stop it. We still have the Delta's codeshare valid working, and they have the interline agreements with American Alliance and United. So it's going to be another layer on top of the current revenue level that we are operating at this moment. Okay.

We have a question from Duane, the RTS, the RTS for Jeff. Okay.

Is there anybody else. Okay, so...

So just -- so that's it, we're going to wrap up. Before we wrap up, I just wanted to give a special thanks to 2 people who are in the room today. We're organized at GOL, this is it, you're looking at it, all right? I mean, we have organized along Vice Presidencies at GOL. And each one of us has a small staff. When I say small, it's usually like 1 person. And so the person that -- the secretary that keeps -- that works with all of the people, myself and Mario and some of the managers in the back of the room is Patricia. Can you just stand up for a sec. This is Patricia. So the invites you got for this event, so a lot of the interaction you'll have with us, if it's not me or Mario, I mean this is the team, right? This is the IR team. Patricia is also on the IR team in that respect. And then Rodolfo also had a -- works as kind of in our platform behind the scenes pretty much since forever. I mean, I met Rodolfo back in 2000 when I was a baby CFO at Americanas.com, and I had to do an annual report, and I needed to know what that was. And Rodolfo helped me do the first one. And so a lot of the technology you see with what we do with communicating with you, including like the videos, they're done at Rodolfo's studio. It's all low cost, very kind of low budget and shoestring. But these are all the people that you're interacting with. It's not anything more than that, right? And there's a couple of the -- a lot of the numbers are generated by the 5 people sitting in the back row, many who work with Mario, who you all guys know. Mario needs no introduction, right? And so I just wanted to thank Patricia and Rodolfo [Foreign Language]. The second thing is, I wanted to thank all of you for coming today. I think there's -- there always ends up being a lot of common characteristics in people that end up being associated with GOL over the long term. Number one, I think it's because we love what we do, which generally is related to the airline business or aviation. And the second thing is we love GOL, right? And so I think, including many of you in the room here today are also here because you share that with us in one format or another, not just on a short-term basis. And so I just wanted to recognize that. I mean it's a pleasure for me personally to be able to interact with you guys over a very long period of time. I remember the first invitations I got for whatever it was you guys invited me for, for your conversation, Michael, back in 2004, where we were just nobody, trying to get our name out in the world and you put me right -- the presentation right after, who was then the CFO of Southwest Airlines, which was Gary Kelly. I mean that stuff has a lot of value for us even though it might seem not so much for you guys, but for what we come -- where we come from, that has a lot of value for us. And so we really appreciate your interest -- your continued interest in kind of in GOL, and we share that mutually. I just wanted to say that now. Hopefully, you enjoyed today. We tried to make it as comfortable as possible, given that many of you came from far away. This is pretty much it. This is GOL. It's as you see it. Right now, what we're going to do is, if I remember correctly, you're going to walk down the hall, actually, what are we going to do? Yes, you're going to walk down the hall back to the simulator room where you came in, and we have some special things for you there. Take your time. Probably be a line there. You've earned your GOL wings. You lasted this long. So you're going to get your GOL wings. And another special treat, which if you consume it, you'll then be an official consumer of the GOL product, and will be able to give us your NPS rating. And so you'll see what that is when you go out, so make sure you don't miss that. And as we mentioned, all this -- and it will be a copy of the presentation there also. And if you just want to -- if you don't want to take it with you because you're going out to the bar right now, wherever you're going, you can just put it in the box, leave it there, and we'll send it to you via GOL log. And then after that, as soon as we're doing with that, for the -- there's about 25 people that signed up for the site tours. The tour guides will be at the exit of the facility by the barbershop, and Mario will kind of help match you with the right person. And there'll be the 4 tours. 2 of them go in 1 direction and 2 of them go in the other direction. So we just want to make sure you don't get lost. And so we'll -- but those are going to be interesting for those of you who have the time, it will be another half hour, but I promise it will be worthwhile for you guys that are interested there. So I guess with that, does anybody else have anything they want to say, or any of you guys or...

Maybe I would like to highlight the presence of Sérgio Quito. Quito, please stand up. I would like to -- again to introduce Quito to you. He is possibly today one of the most experienced airline captain in the world. He has a very interesting position, for those who would like to know a little bit more on the MAX development, it was created a kind of special airlines committee to deal with that situation and Quito was elected the coordinator of that group. So from an airline perspective, he has all the informations that you would like to have. He is a very nice people -- a nice person to talk, not only because those credentials but he is also one of the most interesting persons we know from this industry. So Quito, thank you very much for supporting us.

And he's going to be taking the group that's going to the ops control center. He's your tour guide. But you can also take advantage of the walk and talk to him about it including about his views on the -- I mean, Quito is the guy, 3:00 in the morning, September 30, 2006, Quito is in the room. This is what happened, that's what happened. 24 hours after the Lion Air accident, Quito what happened? This is what happened. I mean he knows this stuff. That's what he's been doing forever. And so he's -- we're fortunate to have him. As Kaki mentioned, he transitioned off the executive team, but he's now the Chairman of the Safety and Security Commission. So he'll be with you guys if you're going on the CCO tour.

And my final comment on behalf of our team and the whole management, I'd like to thank you especially because most of you here have listened and paid a lot of attention to what we have said along the last years and you took one of the most important decisions that we could get, which is to believe and invest in us. So I really would like to thank you very much for supporting our strategies and making us capable of coming to this point and renewing this belief for the near -- for the short and long term ahead of us. So thank you very much.