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

Good afternoon. Thank you for joining us for the GOL Investor Roundtable at the New York Stock Exchange. I am Richard Lark, and with me is our CEO, Paulo Kakinoff, and the rest of our senior management team to share with you the status of GOL's plans, where we are currently and where we're going. Today is the 16th anniversary of GOL's initial listing on the New York Stock Exchange on June 24, 2004. On that day, in 2004, we rang the opening bell, and today, as has been our tradition in most of our years as a public company, we're going to ring the close -- we're going to bang the closing gavel, albeit in a virtual format. We appreciate the support and investment by many of you over these 16 years as an NYSE listed company, and we look forward to being with you all soon in the city that never sleeps, and we're going to do our part to help get the markets fully functioning again. I will now ask Michael Blaugrund, the Chief Operating Officer of the NYSE, who is speaking now from the floor of the exchange in New York City to kick us off today in style. Michael?

Good morning. Welcome to GOL Airlines First Virtual Investors Day, happening today, June 24. My name is Michael Blaugrund, and I'm the Chief Operating Officer of the New York Stock Exchange. I'm speaking to you from above our trading floor. I hope all investors enjoy this new format made necessary by the social distancing requirements of our time and that you have a great event. And with that, I'll hand it over to Richard.

Thank you, Michael. On Page 3 of today's presentation, you have our disclaimer. In the last half hour of our Roundtable today, we'll answer the questions that you submit through the platform. To send your questions, you can click on the question mark link, which is on the platform that you're participating from now, just below the video area. You type in your question, and then we'll respond in the Q&A session. We look forward to your questions. Okay. Let's begin. As I mentioned, today with me at GOL's headquarters here at the Congonhas Airport in Sao Paulo, where we are right now. I have Kaki, our CEO; Junior, Chairman; Celso, our VP of Operations; and Edu, our VP of Sales and Marketing. To make it easier for you to follow along with today's presentation, we're now going to switch your screen to the slides, and each speaker here with me today will take you along his presentation. The floor is yours, Junior.

Thank you, Richard. Good afternoon. First, I would like to echo Richard's sentiment in appreciation of the support and investment by many of you during our 16 years as a NYSE listed company. As of today, we have carried almost 0.5 billion passengers since our filing in 2001. GOL's history includes many firsts, beginning with our launch as the first LCC in South America. As technology pioneers, we have many firsts in product innovation, such as mobile tracking, geo location and onboard Wi-Fi. GOL is responsible for the continued popularization of air travel in Brazil. We call this the GOL Effect. While the Brazilian market grew at an average rate of 5% per year from 1970 to 2001. After GOL's entry, market growth accelerates to 10% per year. During that period, our first 10 years annual market supply increased from 42 billion ASKs to 116 billion ASKs per year, and GOL grew to serve just under 40% of the market. Today, as Brazil's largest domestic carrier with a leading position in Brazil's main airports, GOL is in the par position to consolidate market recovery and create value for investors. Our list of firsts also include innovations in the capital markets. Such as the first simultaneously dual listing an airline on the New York Stock Exchange and the Brazilian stock Exchange, and the first perpetual bond and first convertible bond issued by a Latin American airline. Let's move to Page 5. 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 over 70% of the tickets sold on GOL are below $90. We achieved the most reliable and lean operations with the highest utilization, the fastest turnaround time, on-time performance, high safety standards and the lowest lost baggage. We operate a flexible business model, successfully managing market volatility and serving diverse customer segments with market leadership in both leisure and business traffic. We have a strong brand awareness, including Brazil's largest frequent flier program. Our way of being and doing is dictated by our shared values of safety, our #1 value that guides all of our actions in flight and personal safety, the lowest costs. Our Team of Eagles that is the best in Brazil airline team. Intelligent solutions and technologies and service that make us the best options for the customer. Moving to the next slide. Here on Page 6, I share how GOL strategy positions it to outperform due to its unique strengths deriving from lowest-cost operations. As a pioneer of the low-cost model in South America, GOL has maintained the lowest unit operating cost of any Brazilian airline since founding. Our resilient operating model has served us well in contractions and expansions, always winning market share throughout the cycle. GOL achieves the highest aircraft utilization from the newest and most fuel efficient 737 fleets. The right product, GOL offers the best value proposition to customers via the most attractive product and experience and the best fares. GOL is #1 in Brazil main airports and destinations with high hub connectivity. The GOL product leads both the corporate high-value customer segment and the leisure economy segment and the right market. Brazil is an underpenetrated market. North America has over 4x the number of flights per capita compared to Brazil. Our network will continue to evolve to address Brazil's unique geography and demographics. Brazilian population is getting older and is getting wealthier. Over the next 2 decades, Brazilian air travel should add over 100 million traveling passengers per year growing to 200 million passengers per year. GOL's winning operating model that produces the lowest cost units and the highest unit revenues, when combined with our 90 strong alliance partner network, positions the company to expand its network in South America, the Caribbean and the U.S. Here on Page 7, I show how our network has evolved from our initial flight in January 2001, when our fleet had 6 aircraft connecting 20 destinations; to 2010 when after our integration of Varig passenger operations, GOL had 125 aircraft flying to 67 cities; to 2019, when after the addition of 45 regional destinations, GOL has the broadest and most expensive network in Brazil. We have by far the strongest network in Brazil. We connect 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 deals. We have high on-time performance and business travelers are highly loyal to us. High loyalty is the result of continuous and meticulous work in identifying who is our customer and what are their expectations for service, product and price. Edu will elaborate more on this a bit later. Today, as the largest Brazilian domestic airline, with a fleet comprising of 120 Boeing 737 aircraft, operating over 100 destinations and most defensible position in the main airports in Brazil. We are operating over 800 flights daily when the COVID-19 pandemic hit Brazil in the second half of March 2020. And while GOL should be less affected than other airlines. Move to Page #8. The latest estimates from ICAO indicate that possible COVID-19 impact on domestic traffic around the world will be significant. The impact on the scheduled passenger traffic in Latin America and the Caribbean for the full year of 2020 compared to the baseline, which is business as usual, originally planned, could be. An overall reduction ranging from 32% to 62% in seats offered by airlines, an overall reduction of 87 million to 164 million passengers and approximate potential loss of gross operating revenues of $7 billion to $13 billion. On the next page, Page 9, you see that the impacts will depend on the duration and magnitude of the outbreak and containment measures, the degree of consumer confidence on foreign travel and economic conditions. Here, you have the ICAO scenarios for recovery until the end of this year. We anticipate that the recovery will lead to a more structurated industry in Brazil and South America, in which GOL will lead the recovery. With improving visibility, GOL's current capacity planning scenario assumes an increase of 90% in second quarter '20 over first quarter '20, up to 290% in third quarter '20 over second quarter '20, and an increase of 135% in the 4Q '20 over third Q '20. We have significant flexibility to respond to prevailing demand trends. We believe GOL is well positioned due to its leading market share of the domestic passenger market with a network that serves both business and leisure travelers. And our management capabilities that I highlight for you on the next page. The execution of our strategy is led by our purpose-built team that has more than 60 years of combined tenure at GOL. They execute upon a proven operating business model, build on the lowest unit costs, the best product and customer experience and a well-designed value creation plan. Important to note that our performance during this pandemic is an affirmation of the work this team has been doing on liquidity and the balance sheet for the last 3.5 years, not just for the last 3 months. Our senior executives lead a highly productive team with solid track record and are united by a unique corporate culture. This team is aligned with shareholders via long-term incentives for strengthening our productivity, increasing competitiveness in domestic and international markets, delivering sustainable long-term growth with capacity discipline and increasing our Net Promoter Score. Kaki will elaborate more on our areas of focus. And to conclude my remarks, I would like to share my confidence on why I believe GOL will outperform the industry. First, GOL is the best positioned in its market. Obtaining a revenue premium, increasing aircraft utilization, with more capacity deployed on the most profitable routes, with premier alliance partners in each region and with a favorable competitive environment. Second, GOL has long-term advantage, such as leading airline, cargo and loyalty brands and loyalty business with unparalleled reach driving customer's insight. And a brand strategy, delivering profit sharing above capacity share. Third, our single Boeing 737 fleet has the highest utilization in the world and produces the most unit revenues at the lowest costs. And for 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 all economic cycles. Now Kakinoff will brief you on GOL's profit drivers.

Good afternoon. In today's review of the key drivers of GOL's profit growth, we will share who we are and why we have been successful. What GOL does differently and its advantages in product, pricing, fleet and network, and how we measure up in terms of costs and liquidity. Our management executes upon a proven operating model built on: one, the most productive aircraft, a single fleet of Boeing 737s; two, the lowest cost operations, our advantage is significant; three, the best product and customer experience; and four, a well-designed value creation plan. GOL's strengths create a [ virtuous ] cycle. Our business strategy has given us 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. GOL's balance sheet is strong. We are appropriately levered to optimize cost of capital and, as Junior mentioned, our performance during this pandemic is an affirmation of the work we have been doing on liquidity and in the balance sheet for the last 3.5 years. Our lowest cost derived from a world-leading utilization of the single fleet type of 737s. GOL's 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. GOL is a company of opportunities and offers interesting career paths to recognize and value people who are with us a long time and the ones who come from other companies who work at [ United ] with this strong corporate culture. ESG criteria has always been a part of our operations, as you can see here on Page 14. GOL is a socially responsible company committed to sustainability. Not only is the company one of the greenest airlines in the world, but we continuously invest in becoming even more sustainable. Not only is the company one of the greenest airlines in the world, but we continuously invest in becoming even more sustainable. We reinforce our accountability with various stakeholders through added transparency and credibility. GOL provides annual sustainability reports based on global reporting initiative guidelines, as highlighted on this image. The company report relevant ESG information to investors in accordance with the Sustainability Accounting Standards Board patterns for the airline industry. GOL continually looks for ways to become more fuel-efficient and adopt state-of-the-art technologies. We have continuously enhanced our time-tested LCC model single fleet of aircraft with large gauge while our competitors employ hybrid or legacy business models. Low-cost always wins and have clear cost and productivity advantages. GOL's fleet planning is disciplined and highly flexible, allowing it to quickly adapt to changes in the market. This advantage not only won't go away, it will just get stronger. The company's aircraft offer significant benefits to our already industry-leading margins as they are more fuel-efficient than competitors' fleet and have lower operating costs and higher seat capacity. We are focused on targeting business and premium leisure customers who value the experience we offer. GOL has the best [ flow to range ]. These advantages are large and sustainable for our customers and shareholders. Here on Page 16, I illustrate in a simple way, GOL's secret sauce. When some people think of low-cost, they think of the attributes on the lower half of this slide. They relate it to high operating efficiency and high productivity. GOL would be the leading ultra-low cost carrier if it stop and add these features. While the company is among the best in these attributes, and they represent 85% to 90% of the GOL's cost, they are not observed by the passenger and are not sufficient to serve the Brazilian market with scale. The additional 10% to 15% that a company adds make the difference in the experience of the passenger. Offering attributes such as an onboard service, loyalty product, entertainment, comfortable seats, et cetera, give GOL its competitive edge. We continuously evaluate the ones that represent value to the passenger to determine which investments to make. Thus, our model is 85% to 90% ultra-low cost carrier. And we add specific attributes that allow us to extract a leading share of customer wallet and higher yields. This is the one of the key issuance of the GOL model. Our significant investment in the product over $200 million from 2013 to 2018 is already made and has 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 of our investments speak for themselves. You can see here on Page #17. GOL competitive strengths and business strategies have shown up for the last 15 reported quarters as results for our customers, employees and investors. Income increased significantly, cash flow generation grew consistently and deleveraging drove credit ratings improvement. These results prepared the company to face a dramatic reduction in demand for air travel in Brazil due to this pandemic. On Page 18, you have the relative contributions of last year to each one of our group's business to consolidate revenues and EBITDA. Passenger transportation contributed around 3/4 of the company's EBITDA, with loyalty contributing 19% and cargo adding 6%. Celso will brief you on GOL Aerotech and our MRO facility. Moving to Page 19. You see that the company has the best combination of revenue generation and cost structure. Our disciplined growth and cost control has enabled GOL's best value proposition in the market to increase our unit revenues, and at the same time, maintain ex-fuel CASK flat. And this is the result of our strategy, as elaborated on by Junior. The same strategy prepared the company well for this pandemic. GOL management is concentrated on delivering sustainable growth with capacity discipline and a strong balance sheet, strengthening productivity by maintaining high aircraft utilization and a CASM significantly lower than competitors, increasing the competitivity of our team in all markets and increasing Net Promoter Score by being the easiest to use and the most affordable in the market. We have implemented all necessary health procedures and are ready to transport clients with the same level of safety and comfort as has been characteristic during our almost 20 years, providing passenger air transportation in Brazil. GOL will make an assessment of the new level of demand and the company's flexible single flight type operating model will continue to be matched to the passenger demand generated in Brazil's principal business and leisure markets. We expect to maintain cash flow equilibrium during our ramp-up due to the quick and decisive action plan implemented in March, which I will review for you here on Page 21. On March 9, in view of the anticipated decrease in demand and revenues expected for the remainder of 2020, we began implementing cost reductions, payment deferrals and cash conservation measures. By acting decisively, we matched our fixed cost to revenues and preserved the jobs and working capital. Some of the actions our management team took to address the pandemic were: redelivery of aircraft, compensation reduction and deferrals, including agreement with our 1,600 pilots and 3,000 flight attendants valid for the next 18 months, which reduced labor cost by approximately 50%. On the financing front, we rolled over credit lines, extended amortization portfolio of our debentures and refinancing CapEx. GOL has access to over BRL 3 billion in additional liquidity sources in the form of unencumbered assets, restricted cash and deposits. Our controlling shareholders remain fully aligned with our success in the long term. Thus, the company is well prepared to overcome this pandemic. Moving to Page 22. I highlight the actions that reduced the wages and benefits by 50% as of April 2020, through the reduction in working hours and compensation for operations, administrative personnel and middle management, a 60% salary reduction for top management and negotiation of part-time hours for our [ crew ]. Approximately 6,200 employees choose voluntary unpaid leave, representing 38% of total workforce. On June 5, GOL obtained an agreement with the Brazilian Trading Union of Aeronauts (sic) [Brazilian Trade Union of Aeronauts] with the objective of maintaining jobs and preserving cash over the next 18 months. These agreements secured over 5,000 jobs for pilots and crews. Moving to Page 23, I will end my part of today's briefing. As a reminder, on the platform just below the video area, there is a question mark for sending your questions to us at any time during the presentation. Now Edu Bernardes will elaborate on our competitive advantages in product, pricing, sales and marketing.

Thanks, Kaki. And good afternoon to all of you with us today. I begin here on Page 24, by reminding you that GOL personalized products offering in price, growth in services make it unique in Brazil. Innovation drives our customer segmentation and contribute to our ability to offer products and services that improves our customers' experience. We recognize each one of our customers and create customized communications, offering the right products at the right time and the right place, while generating value for both the customer and GOL. GOL uses personalization technologies using big data and omnichannel tools that improve analytics, allow us to capture more data and deliver a 360-degree view of our clients in all communication 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 as offering tickets, ancillaries, products and customer services. All in real time. To maximize revenue, GOL segmentation strategy serves 2 different types of customers. We understand the need of both types and we know how to offer a right product, the right service and the right price tailored to each one. For our business travelers, network and services are determined. Around 40% of our corporate customers are loyalty members and around 22% are large corporates, such as bank and multinational, where GOL has over 700 contracts and 300 global accounts. For the 45% eventual in small corporates, we offer [ GOL-leased ] product, a one of a kind in Brazil. GOL is the leader in the corporate travel in Brazil since 2015. For our leisure customers, price is determined, and our low cost enable us to provide a low-fare product to stimulate and capture all economic travelers. Let's move to the Page 25. I review our product strategy here. We align GOL's products and service with the attributes that customers value more, be they price-sensitive or premium. GOL offers the most attractive product, the best experience and the best fares for business and leisure customers. We offer the most convenient flight schedule and a highly integrated flight network for fast connection times. Members of our Smiles Loyalty Program more easily accumulates, redeem and upgrade, gets free checked baggage, special seating and airport priorities. These Smiles Diamond customers have access to lounges in Brazil around the world, priority check-in and boarding, and they also earn courtesy tickets. GOL is the only airline that offers premium economy with the middle seat blocked international destination, with a differentiated onboard service with free meals and alcoholic beverage. We are the only airline that offers the GOL comfort seats with an extra 4 inches of legroom and 50% more reclining We are the only Brazilian airline that offers female toilets and exclusive overhead luggage compartment All GOL customers have access to free live TV with the best programming in the market and an exclusive platform of upgraded movies and series, free organic snacks options, coffee, juice, softer drinks and water and our onboard food menu and high-speed Internet with package options ranging from sending messages to streaming. Thus, customers love the experience of traveling with GOL, is reflected in one of the highest Net Promoter Score in Brazil. And there is no exception to this rule during this pandemic, as you observe in this short video that we will present. [Presentation]

A very solid product and positioning, no? Here, on Page 26, (sic) [Page 27] I review our comprehensive distribution strategy. Our customized communication includes the right distribution channel for each customer. Our distribution strategy is based on Internet and APIs. Our multilingual sales channel includes websites, mobile apps, direct connections, sales call centers, airport ticket counters and global distribution system, GDSs. Approximately 90% of our passenger revenue whether booked directly by customer or booked through a travel agency is booked in the GOL online platform, making GOL the global leader in online bookings. Around 42% is sold direct to customers. And travel agents represent 58% of our sales. Okay. Now we're going to move to the Page 28. I'll review our revenue management strategy. GOL is well instrumentalized to maximize passenger unit revenues, our price. Our revenue management strategy includes the offering of over 23 different fares for each flight differentiated by restrictions installed over a 330 days forward booking curve. Dynamic [ good ] management allows GOL to maximize unit revenue simultaneously from on demand business passengers that usually buy less than 7 days in advance and a price-sensitive leisure passengers, that normally buys more than 60 days in advance and also maximize our upselling alternatives. To improve even further the optimization of our products, we are investing in a new technology and advanced analytics. GOL has built a position of strength, result of a superior positioning in product, brand, customer service and network as well excellence in operation and the best-in-class process in marketing, sales and revenue management. We believe our new sources of competitive advantage will come from making GOL a leading tech airline. Innovating through digital analytics and embedding new capabilities and agile new ways of work, as highlighted here on Page 29. Our investment in the new technologies and advanced analytics will allow us to better optimize the company for us. Over the past couple of years, we have accelerated GOL's digital analytics transformation and you can see the main pillars upon which it is organized. GOL aims at improvements in customer excellence, revenue growth and operational efficiency through embedding data analytics in every component of our business. Also building our world-class tech function and developing agile and new ways of working. Within the helm of revenue management, our objectives are here specifically to boost performance and create competitive advantage through advanced analytics to build one source of proof, leveraging information and silos in an integrated way, to foster our data-driven culture and systematically incorporate advanced analytics into the GOL organization. Our reported price includes all passengers ancillaries. In our average ticket price of BRL 350, GOL earns an additional BRL 32 from checked bags, Wi-Fi, 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 right side of this page, you see that GOL's last 12 months growth revenue from passengers' ancillaries were around BRL 1.3 billion, approximately 9% of the total revenue. Now we can move on to Page 31. Here, you see why the Smiles Loyalty program is an important component on the GOL value proposition to customers. We have more than 16 million members, and they fly twice as much as the regular non-Smiles customers. As the top-of-mind brand amongst all loyalty programs in Brazil, the Smiles is a great tool for attracting frequent flyers who consider their loyalty program the third point of decision on the ticket purchase. GOL not only improve the travel experience by offering Smiles, but also offers over 900 global destinations to Smiles customers. Moving to Page 32. We have several cargo warehouse facilities around Brazil. And Gollog customers can have their product picked up and delivered to their door or use the convenience of one of our over 100 stores around Brazil. Gollog is growing its clients base and by 2022, our plans are to grow Gollog to 9% of our total revenue. A driver of this growth is expected to be e-commerce. Gollog is enabling e-commerce. Brazilian customers are shifting more to their [ spending ] online, but with a greater emphasis on fast-moving consumer goods, more sellers are listed on e-commerce marketplaces. Products, which were almost exclusively sold offline are now online. The store closure, the availability of consumables and free shipping incentives are expected to drive higher purchase frequency and the COVID-19 pandemic has accelerated online buying, and Gollog will be a critical part of this behavioral shift. Moving to Page 33. To wrap up my review on sales, I want to share with you the behavior of GOL's 7-day sales moving average for the last 90 days. March 22 was the date that we initiated selling our essential network designed to match our supply with demand. Our internal and external data analytics are showing increased demand for GOL flights at a pace above the 20% week to week for the last 4 to 5 weeks. GOL's June booking are up 50% from May, and we expect a high-70% load factor for the month. Our July inventory is very well sold up to now, and we expect a load factor near to 80%. Now Celso will review what we do differently, our advantage with our fleet and network. Thank you so much.

Thanks, Edu. I'm on Page 35 on today's presentation. GOL is well positioned for sustainable long-term results with an operation model built firmly upon safety and security culture. The highly successful GOL operating model is based on a single fleet type, which, combined with a high use of technology, industry-leading aircraft utilization and high productivity, best turnaround and the overall best operating performance and service levels. GOL's high operating [ efficiency ] provide significant gains in seat inventory and operational management. And it's the most adapt to the realities of the Brazilian market, giving GOL a high amount of operation flexibility and guarantees GOL's with the lowest unit operating costs. GOL optimized capacity planning is based on a persistent search of the optimal supply and demand balance where the equilibrium is the objective. GOL's planning is based on multiple scenarios and permits best reaction to the market change. Capacity flexibility is a key competitive differential for GOL. And last but not least, GOL's network is unique. Our slots, our position in the main airports and our opportunity to create even more value, our operating model is firmly rooted and safe. Since its foundation in 2001, GOL has a strong presence and productivity participation on international flight safety community, and it's recognized as a top-notch flight safety organization. GOL is [ thought ] of a safety reference by many airlines and safety organization. We are the leading member 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 Japan Airlines, Sky Airlines, Delta Airlines. GOL's safety and security culture and the highly successful operating model is based on a modern and efficiently of a state-of-the-art single type aircraft. Moving to Page 36. You see that GOL utilizes assets more efficient than any other airline. We have best-in-class aircraft utilization, as you can see in the graph for the first quarter of 2020. We achieved these based on best turnaround times and modern single fleet of Boeing aircraft. Moving to Page 37. You have a summary of why GOL is a leading LCC in South America. Our aircraft are deployed in a highly flexible manner to transport leisure, corporate and international customers, achieving a high customer satisfaction and create a structure basis for achieving the lowest unit cost. We achieved a world-leading aircraft utilization. And a key component of our high operating efficiency are our operations analytics department and our in-house MRO that use predictive maintenance tool to maximize aircraft availability and keep costs low. Moving to Page 38. I remind you that Brazil is very unique geographically. Most of the population lives nearby the coast, although countryside Brazil is showing greater growth rates. Income is also highly concentrated. This is why our network has an unbeatable capillarity in cities with the highest population density, representing almost 75% of Brazilian total population and almost 80% of the GDP. Our network is focused on the high-yield routes that attract business travelers. This allow us to generate higher margins as this is a more profitable segment. We have, by far, the strongest network in Brazil. High-efficiency, high aircraft utilization and high load factors. This core network is prepared to capture the upside of the Brazil growth, but not only that. For the post-COVID period, we envision GOL strengthening its presence in regional routes, max enabling international expansion to clients and both movements will certainly create even more density. GOL will take advantage of its capillarity, connectivity, intelligence, sales platforms, simplicity of the Boeing 737 single type fleet. We fly all of our routes with the same crew, same [ parts ], same [ stock ], same reservation [ season ]. And this gives GOL a flexibility and competitive advantage that no other player has. Here on Page 38 (sic) [Page 39], I share our expected network plan for which we have a better visibility for the next few months. As Edu mentioned, the pandemic began impacting the GOL network in the second half of March, when we had around 800 flights per day. On March 24, GOL initiated a new essential network with only 50 daily flights, connecting passengers via Guarulhos Airport to the 26 state capitals and Brasília. All international flights were canceled. During May, we increased flights at Brasília and Rio and restart our São Paulo Rio and São Paulo Brasilia shuttles from São Paulo Downtown Airport in Congonhas. In the next 30 days, we are adding more frequencies in Brasília and Rio hubs and increasing shuttle services. During April and May, GOL report load factors above 75%, with improving visibility into the recovery. GOL's current capacity planning scenario assumes that by the end of the year, 80% of our 2019 frequencies and markets are expect to be served. Our network designs achieved the highest load factor in Brazilian domestic market. We believe that the recovery will lead to a more structured industry, in which GOL expect to play a leading role due to our market position in Brazil with a network that serves both business and leisure travelers. Moving to Page 40, I highlight a key component of GOL's ability to manage through this pandemic, our highly flexible capacity management. Our fleet management allows GOL to better match capacity and demand scenarios. At the end of 2019, GOL's total fleet was 137 Boeing 737 aircraft, comprised of 130 NGs and 7 no operational MAX. During May, we operated 13 aircraft on the GOL's network with the remainder kept on the ground. Thus far, in 2020, GOL has reduced its NG fleet by 11 leased aircrafts and plan to finish the year with a total of 150 NGs in the fleet. We plan to further reduce our NG fleet by 18 aircraft in 2021 and 2022, intended with an expected reinitiation of the MAX operation. And GOL has reduced its 2020 and 2022 Boeing 737 MAX deliveries by 47 aircraft. Our strong relationship with lessors and Boeing will allow us to meet GOL's future fleet needs. An example of this partnership is on the next page. In March, we announced an agreement in which Boeing compensated GOL for the grounding of the 737 MAX. The agreement boosted our liquidity by nearly BRL 0.5 billion in April. Additionally, the agreement allows GOL to adjust its order book, increasing our flexibility to reduce fleet if needed. We believe this will prove to be a significant competitive edge in the future scenario. Moving to Page 42. You can see how the more flexible capacity management of a single fleet type has translated into a better performance in the pandemic. The single fleet LCC model is the most resilient and will allow for a faster recovery and deleveraging once the market normalizes. On the left-hand side, you can see that independently, of their home market, LCCs, such as GOL, Southwest and Ryanair had less leverage than their regional peers. On the right-hand side, development market LCCs had outperformed their multi-fleet peers in the active market, while GOL has outperformed to a lesser extent. In the credit market, you can see that LCC bonds are tighter than peers. Moving to Page 43. I'd point out another key component of GOL's ability to manage through this pandemic, our domestic focused flight network. We are primarily a domestic Brazil airline, and our revenues are more driven by local business and leisure and do not rely on international traffic. The small portion of international flights which we normally operate are to destinations that have experienced similar currency devaluation of the Brazilian real. As I mentioned, to match its supply with expected demand, GOL plans to adjust its operating fleet by the beginning of 2021 to around 100 aircraft. Differently from its competitors, GOL does not have aircraft financing in the capital markets, EETCs or finance leases. Our fleet is 100% operating leases and we are receiving support from our partners in the form of deferrals and discounts. Our capacity management has been and will continue to be a significant competitive differential and that reflects our sustainable and balanced growth style. Moving to Page 44. To conclude my briefing, I want to summarize a very important competitive strength of GOL products, our network. Our highly integrated network gives us a leading position in the key airports and routes with room to grow. GOL's network covers most of Brazil GDP and it's a high-value network focus. On higher-yielding business traffic, we are the #1 airline for business travelers. GOL is well positioned and dominant in 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 and Salvador in Bahia. These airports represent nearly 80% of Brazilian domestic traffic, and our network is expanding and diversifying. We have codeshares and interlines with over 90 airlines flying to Brazil, generating new and additional connecting traffic for the GOL network. With that, I have finished my part of today's briefing. Just a reminder, to feel free to send us your question at any time, you only need to click on the question mark just below the video area. Now Richard will review how we are structured to compete and win on cost and liquidity.

Thanks, Celso. GOL is an international benchmark. The left graph here compares costs adjusted by average state length for the last 12 months, broken down by fuel, variable and fixed costs. As you can see, GOL is the second best globally among significant players, even in a country with one of the highest taxes and infrastructure costs. And by far, GOL is the lowest cost carrier among all Latin American airlines. Our low-cost base is a significant and sustainable competitive advantage. Our standardized single fleet allows us to obtain lower crew costs, better spare parts management and higher aircraft utilization than more complex competitors. On the right graph, you can see our efficiency measured by the operating costs to net revenue ratio. GOL remains in the top-tier internationally and the regional leader. Moving to Page 47. Here, we selected 3 relevant indicators of productivity and profitability. The chart on the left shows our revenue competitiveness in Brazil. And the middle and right-hand charts, RASM minus CASM and EBITDA margin, respectively, confirm GOL's position in the top tier of profitability. It's worth noting that, while a significant portion of the improvement in our metrics has been operational, we've done a ton of work on the financial side as well. In particular, we focused aggressively on working capital and extended our payment terms as well as managed other current assets and liabilities. We are now working capital neutral, reducing any cash draw that our otherwise prudent growth would have required. Moving to Page 48. I highlight our financial policies that include maintaining margins throughout the cycle, properly matching cash flows, term and currency of assets and liabilities, managing leverage throughout the cycle and managing risk in terms of capacity, revenue management and hedging. GOL will remain disciplined with capital allocation, delivering sustainable returns to shareholders alongside investment and growth by maintaining its optimal capital structure. Our balance sheet will continue to be designed to allow us to benefit from the business cycle, flexibility in upturns and flexibility in downturns. Investment will maximize long-term shareholder value by leveraging GOL's competitive advantages, succeeding in our markets, improving our ROIC and aligning with our brand, values and vision. We have the right policies for liquidity management, capital management, risk management, profitability and returns. We manage GOL with specific directives that address competitive advantage, value creation, sustainable growth and generation of returns through the cycle. Among our main targets we have, our unit cost, 25% lower than our closest peer, the highest wallet share in markets with the best margins, a sustainable growth rate higher than the industry growth, operating cash flow generation above CapEx and debt service and leverage below 3x. We have a strong balance sheet that we've rightsized and designed to give us flexibility in downturns. GOL's value creation plan, summarized for you here, occurs through our aircraft acquisition, air transportation and loyalty businesses. Our aircraft acquisition activities generated over BRL 2 billion of cash gains over the last 4 years. We managed a rightsized fleet, and we focus on the most profitable routes. All investments for product are already made, and GOL has the highest operating margin and the most resilient business model. We have the best network, the best fleet, the lowest cost base and a solid liquidity position. Moving to Page 51, you can see that our cash liquidity is expected to be sufficient for our near-term debt amortizations. As of May 31, the company had approximately BRL 3.5 billion in total liquidity, which implies over 12 months of cash on hand, which excludes refunds and restricted cash. Including the financeable amounts of deposits and unencumbered assets, GOL's liquidity sources would total approximately BRL 7 billion. And the company currently has BRL 1.7 billion of unencumbered assets. Moving to Page 52. I want to make a few comments on our oil hedging activities. If oil prices stay where they are, we could see around an 8% reduction in our operating costs, including the currency effect. Second, GOL has a comprehensive set of risk management policies and programs with a current budget of around $60 million to invest, based on our 2019 fuel cost of around BRL 4 billion and the recent historical crude oil price volatility of around 15% to 20%. GOL utilizes plain vanilla instruments such as options, zero cost collars and swaps, both OTC and exchange traded. Currently, we have a hedge ratio of around 60% for our projected 2020 consumption in oil prices in the low 60s and hedge ratios of around 30% for 2021 and 2022 each and oil prices in the mid-40s. Over 70% of our positions are in calls and call spreads, with no downside risk of cash consumption. The remaining 30% are in zero cost collars and swaps immunized with Brent underlying in the mid-20s. GOL has fully marked to market and fully deposited all required margins with counterparties. Moving to Page 53. You can see that we also stand out with respect to cash liquidity. In the first quarter of 2020, GOL reported the highest cash position of any of its competitive peers, with cash of over 20% of LTM revenues. Our cash position was the most resilient when measured by the difference from the fourth quarter of 2019 to the first quarter of 2020. GOL is managing its cash position sustainably. And our total cash position of approximately BRL 3 billion was unchanged during April and May. We have near another BRL 4 billion of potential liquidity sources from financeable deposits and unencumbered assets. As of May 31, the company had approximately BRL 3.5 billion in total liquidity, which implies over 12 months of cash on hand, again, excluding refunds and excluding restricted cash. Moving to Page 54. You can see that we entered this pandemic period with the lowest leverage among our regional peers. Moving to Page 55. In summary, regarding how GOL is dealing with the pandemic impacts and the ramp-up of operations, we continue to make the necessary cost reductions and shore up liquidity to withstand the crisis. Demand for GOL flights is growing at week-over-week rates above 20%. As of June, we continue to maintain the leading market share in Brazil's business segment at over a 40% share of business traffic in Brazil. GOL is operating at a cash breakeven. We have over 1 year of cash on hand, including the full amortization of the Term Loan B in August 2020. GOL has negotiated favorable terms with employees, suppliers, lessors and banks. This company has matched its assets and liabilities for the second half of 2020. We were strong operationally and had the best balance sheet of all airlines in South America, and that strength let us get largely through this pandemic. And I'll finalize by showing you some of the reasons why we believe GOL will emerge stronger after this crisis. Number one, GOL is Brazil's largest domestic airline with a strong presence in the main metropolitan areas; two, GOL has a singular exposure to the underpenetrated Brazilian domestic market with organic growth opportunities; three, we have an unparalleled brand and customer loyalty program; four, we have a highly defensible low fare network; number five, we have proven ability to maintain reliable operations, control costs and CapEx and improve liquidity; six, we have a large fleet of modern Boeing 737s with high operational flexibility; and seven, we have a strong and committed controlling shareholder. With that, we conclude our formal remarks. [Operator Instructions] Thank you for your interest in GOL airlines. And now we will initiate the roundtable discussion. Because now we're going to go to the Q&A part of this investor roundtable today. Thank you all for staying up until this point in the session. Apologize for one of the technical glitches that we have at the beginning of this. We're broadcasting this live from here in Congonhas Airport in our office at GOL's headquarters. [Operator Instructions] We're going to do about a half hour of Q&A here now. What we have here is questions that we received from the platform. And we're going to do this in kind of a panel format. And so what I'm going to do here is distribute these questions around our panel here today among the senior executive team. And so you probably have about another 10 minutes, if you want to submit a question. We still have time to get it into our process here. And so I already have a couple that you guys have submitted over the last hour or so here.

I guess the first question I'm going to start off here, I'm going to -- I'll probably send it over to Junior. The question here is from one of our investors, one of our actual investors, I won't mention his name. I will mention the sell side's analyst names. The question to us is, how do you see the competitive landscape in South America once that LATAM and Avianca have filed for bankruptcy protection in the U.S. last May. And then the second part of this question here is what is GOL's strategy and what you expect to grow your market share in the region? Maybe Junior, you can kick us off with that.

Yes. Thank you, Richard. Let's start by saying that we have been refining our business model since we start our operations. And especially during the last 3 years, we make some right decisions in terms of strengthening our balance sheet, refining our product and deliver -- develop value proposition to our customers. Saying that, I think that we have been able to achieve all of these goals. And with that, I am considering GOL as the most favorable airline to take advantage of the recovery that we're going to see in the near future. And by the way, I see that reorganization in the sector as a positive for the whole industry. And as I said, GOL is well prepared, is well positioned to take advantage of this recovery.

Okay. I'm actually going to take these questions in order that we receive them today, in no particular order. Next question is from Savi Syth from Raymond James. Gollog was 3% of revenue and 6% of EBITDA in 2020. We know you have a target of reaching 9% of revenues for your cargo business Gollog. Would that translate to 18% of your EBITDA? Or does the greater mix of e-commerce reduce the margin? Maybe I'll send that to Kaki?

Yes. Sure. Actually, within your question, you have the answer already. We don't believe that's the market or the logistics demand will grow upon the e-commerce and in that specific segment, the margins are lower. So definitely, the business will grow and you expand in absolute terms, the margins, but each is not going to grow proportionally to the same margin level that we do have today.

Okay. Next question is a question from Victor Mizusaki from Bradesco BBI. I think I want to send this over to Edu. The question is, apparently, during the peak of the COVID-19 pandemic, GOL did not have any major problems with clients to rebook the tickets. Can you comment about this? Is this a result from the massive investments in technology to improve customer experience?

First of all, thank you, Victor, for this very important question. Actually, I feel very good about this question because the major investments that we've done in our technology platform in the past 5 years are really supporting us on this very challenging moment. Together with that, we made some -- made some flexible the rules that we apply to our tickets, trying to meet the needs of our customers. So it's a conjunction of a high level of investment in technology. A lot of flexibilization for customers. We are trying to convince all of our customers to keep the credit here at GOL in order to allow them to use this credit for a further trip. And of course, we have a very compromised team that is every day working in order to even develop better our technology in order to support our customer needs.

Okay, great. Next question here from one of our bond investors. I think I'm going to direct this over to Celso. The question is, GOL has mentioned that it was pursuing to reach a deferral -- to reach deferral agreements between 3 to 6 months with leasing lessors. However, 3 months will end in June and 6 months will end in September. Are you considering new phase of negotiations with lessors? Or do you expect to return to full payment or rentals?

Yes. Thanks, Rich. We -- I think at the beginning of this crisis, we all think that this crisis could be a 3 -- a 6-months crisis. And the lessors and us, we work together since the beginning negotiation -- since the beginning of the negotiations, looking at this, let's say, this timeframe. But now we agree us and the lessors that this crisis will stay for a longer period and requires a deep fleet restructuring. We are organizing ourselves, and this is public. We are talking every day with the lessors that we call this 3 to 6 deferral period as the Phase 1. And now we are entering the Phase 2, which will be a mix between deferrals, powered by the hour structure and haircuts. The average term that we are reaching with them, it's going to be for 12 to 18 months, and then we are going to reach Phase 3. On Phase 3 is where we are going to be able to understand what is going to be the market prices for the planes. We still don't know. There's a lot of speculation of how it's going to be the Airbus price, the Boeing price, the Embraer price for the -- this post COVID, we all don't know. So Phase 3 will be the right time to match to a market price -- market-to-market pricing approach. That's how we are organizing here.

Okay. The next question we have for you guys is from one of our equity investors. And I think I'm going to send this one to Kaki. Question is, how do you think about the post-COVID pricing environment? And where do you think the areas are that you can take the most advantage of your low-cost structure to gain share in that new world, i.e., densifying existing markets and big hubs, expanding into regional markets where you are under-indexed today. Thank you.

Thank you for the question. Actually, we do see that in this post or after COVID world, our fortress, our assets will be even more valuable than they were before. I mean, high utilization, the hubs, strong hubs operations. And through that, superior performance, producing lower [ CASM ] where you take the benefits of being even more attractive to the leisure travelers than we are right now. We believe that this is going to be the first kind of passenger resuming its regular or its former travel pattern. I mean, VFR, visiting friends and relatives or the leisure ones. And therefore, they are more -- their willingness to fly with GOL should be even higher than before due to our fare attractiveness. And on top of that, the company has refined its network along the last 19 years in order to produce the most attractive offer, connecting the most density cities in the country. So I believe that we are in a very nice position to even expand our market share in comparison to what we got before. It's really hard to predict the fare levels at the moment. Our costs are pretty much related to the exchange rate and jet fuel prices. But you probably would like to know that we are operating at the moment at the level of BRL 300 average fare which is not that different from what we got before the COVID. So I mean, the company has been pretty much successful in managing our revenues, no matter the size of the market, but we are operating high load factors and protecting the fare levels that we had before, basically following the same kind of philosophy that the company has defended, has protected along the years. We are rationally deploying capacity, following what's the market size, the market demand without jeopardizing, without damaging our way of doing things. I mean, high load factors, high utilization and capacity discipline. So therefore, I believe that we're not going to see any disruption regarding the fare levels at the same time that the company is pretty competitive once the customers might be more price-sensitive than they were before.

Thanks for your questions. We've -- I guess, I was successful in stimulating you. We have about 30 questions that we're going to try to get through here. We'll go all the way up until the top of the hour when we have to virtually close the session, the trading session at the New York Stock Exchange. And so if you guys want to stay with us, we're going to stay with the Q&A session to the top of the hour. Next question is from Michael Linenberg from Deutsche Bank. I think I'm going to send this over to Edu. Question is 2 parts. Any noticeable change in competitive behavior by LATAM Brazil, given that its parent company has filed Chapter 11 bankruptcy. A little bit of overlap with the last question, but I think it's -- and the second part is as capacity is gradually added back into the Brazilian domestic market, what are you seeing with respect to demand, pricing, booking trends, et cetera?

Up till now, we don't see any different movement from our competitors, LATAM, in the case. The market is still competitive as previous to COVID phase that we are facing now. What we see now that once you are gradually growing our network, we are taking care of aligning the demand with our offer in order to guarantee that we can operate in an ambient that can bring positive results for GOL. The numbers that we see in June, in comparison with May, they are very positive. We are growing in terms of tickets, a little bit higher than 100% in comparison with May. Our forecast for July shows now that we have a trend that will allow us to grow something around 60% in terms of tickets on July versus June. So this scenario, we are keeping control in terms of adding capacity, working very close with our planning team in order to guarantee that we're going to have the right offer for our customer, trying to capture all the demand in the market.

The next question I have from one of our equity investors, I think I want to send this to Celso. Now that everyone is flying at 10% to 20% of last year's network, how do you see the recovery of your network this year and your competitors' network this year?

Thanks, Rich. That's a really good question. And I take this opportunity to share with you a little bit of our thoughts here. Because I have been reading so many analysis that are referring all the time to the -- let's say, the pre-COVID network. And the way we are doing this is we truly believe that it's a unique opportunity, a unique scenario, where besides Congonhas, Santos Dumont and Guarulhos because of their slot-constrained rules, the rest of Brazil, I mean, we can rebuild the network, of course, using the strengths that we always had, the high utilization, the number of frequencies that we had, but we can redesign this network like we had done in 2016. But now everybody is doing the same. So it's a kind of a zero base game. I think São Paulo because of their rules, it's not going to change. This is my -- our view of the, let's say, in the next few months. The landscape in São Paulo will not -- not going to change so much. Talking about us, we are pretty much focused and to be even more strong in Rio and Brasilia. And we see us developing new focus here through the entire Brazil, as again, I see this is a zero base game, and we are ready to grow. So I think the landscape can be very differently. And in our case, with a balance between regional routes and core routes differently from what we have. We see many opportunities in the center of Brazil and the north of Brazil, that we think we -- it's going to be a potential upside for GOL. And we will explore with our Boeing 737-700s and the -- with our partners on the regional routes.

Okay. Next question comes from one of our bond investors, actually one -- a convertible bond investor. I think I'm going to send this to Kaki. Question is how do you see in terms of threats and opportunities arisen from the recent codeshare announcement between LATAM and Azul.

Sure. You're not taking any question, Richard. That's a...

There's a bunch of questions here that are repetitive, and I'm just going to address all those at the end, questions about balance sheet and financing that are multiple same questions from everybody. I think I'll save those for the end.

So actually,

Or mix them in.

He would like to know about the codeshare [indiscernible]. As Junior said before, we see that kind of movement as a positive because for this new scenario, for this new environment, the proper balance between capacity and demand will be the most important factor to influence the company's sustainability in the region. So the more we would have this kind of partnerships even further evolving to kind of merge, the better we will be -- it's supposed to be the market rationality. So I believe that environment is benign. And therefore, it might positively affect the whole industry.

Okay. I'm going to put 3 questions here together for Edu as they're kind of related to the same theme about short-term forecasting and bookings and so on. So the first one comes here from Dan McKenzie at Seaport Global. The forecast I've seen is that COVID cases in Brazil peak in July, yet GOL is forecasting an 80% load factor for July. Can Eduardo provide some further [ expective ] here, leisure business? Are these travelers primarily 20 to 40-year-old demographic that doesn't care about the outbreak?

That's another good question. Thank you, Dan. What we see now, we see the forecast for July for the load factor, something around 80%. Up to now, we are very in line with this projection. It's almost the same load factor that we see for June. In terms of the demographic, what we see now, it's much more passengers that we call essential passengers. They are the ones working in some type of activity that requires from them to be in a specific place at this moment. So we see a lot of those passengers traveling with us. And also, we see for July, a increase in a number of VFR customers, the ones visiting friends and relatives. It's -- they are a little bit different from the traditional leisure customers because their stay is a little bit shorter than the leisure traveler. Most of the time, they don't travel with their family because they are visiting a family in some other point. They are -- their age, I would say, that it's around 25 to 40 years old. And we also see that the number of customers that are loyal to GOL has grown a lot in May, June and July, just for -- just to share you this idea. Before the crisis, the number of Diamond customers traveling on our airplane used to be 1% of the total passengers. Right now, this number achieved 6%. So we see more loyal passengers flying at this moment. And we are forecasting the same type of customer traveling in July, adding, of course, some more VFR passengers.

Okay. A point related to that, Edu, is -- a question here is will tickets be more expensive when this stage of the crisis passes due to the sanitary measures and lower margins of the company?

I think Kaki just talk a little bit about that. And it's not something that we can well predict right now, but we don't believe. We believe this, the ticket will keep the same amount that it used to be. The impact of the sanitizing process, it's going to happen for sure. But the level of demand, the jet fuel price and the exchange rate is still the more impactful cost in our structure.

Okay. Well, a question from [ Stefan ] at Bank of America. I think I'll send this over to Celso. Have recent developments with the wider COVID spread in Brazil impacted your capacity forecast for the rest of the year?

Thanks, Rich. No, I think we -- our forecast for the rest of the year is, I mean, is already taking this peak that we are facing right now into consideration. So if you look at the network that we are flying in June, right now we are flying 120 departures per day. We are going to fly almost the double of this in July. But I mean, we have been in quarantine for the last 90 days here in Brazil. As Edu mentioned, there's a lot of families that are not together. There's a lot of business, essential activities that needs some kind of human touch, human support to fix some problem right now. So we are seeing -- what we are seeing on our website, on our books is showing that this growth is still balanced. But look, again, it's 200 flights versus a base of 900 flights. We are still very conservative, and we still believe that we are going to be flying 30% less capacity versus last year by the end of the fourth quarter. So no international. I think the -- all the situation of the COVID-19 in Brazil is, of course, impacting even more the international traffic. But in our case, we are not planning and we were not planning to fly international routes by July and third quarter this year. So I think that our plan is still in place, and it's going to be, of course, we're going to be calibrating as we go.

Okay. I'm now going to group together a lot of questions that a lot of people are asking across the spectrum, and we'll just answer them as a panel here. First one, I think I'll just slip it to Kaki. A lot of questions about what we're negotiating with the government in general and then more specifically related to the potential financing from the Brazilian Development Bank.

Basically, there are 2 items, major items being discussed at the government at the moment. The first and the most important one is, for sure, the BNDES credit line. We have on a daily basis interacted with them and the private banks, those are supporting these negotiations, in order to shape adequately the credit line proposal and make that, not only feasible, but mainly well balanced between the 3 major interests is that -- I mean, the bank's attractiveness to make it happen. The company, at least from our perspective, considering that GOL not necessarily would take that credit line, but we would really like to have it as a nice alternative. So we have tried to influence the credit line design in order to make it more attractive to our company. And finally, considering its regional concept which demands investors from the capital markets to make it also equally attractive to this -- new investors. So it has progressed. I believe that until -- between today and the end of next week, we might have the final terms being presented, and then it's going to take some time for a possible execution in the case that the company decides to go for it. And the second discussion is related to some advanced tickets purchased by the government that would stand for a [ merchant model ] amount, something around BRL 100 million. But those are the 2 major discussions in place with the government considering financial support.

Okay. A general group of questions regarding the MAX. I'll just read one received from Duane from Evercore. Do you have any updates on the MAX? Anything you're seeing that increases your confidence in delivery timing? And how would you bring the MAX back into service? So maybe we'll ask for the man who will bring the MAX back into service for us to answer that question, Celso.

Richard, what we know here is, I think Boeing is being very transparent with the whole world. So there's no hiding information behind the development of the ungrounding. So we expect the MAX to have the third fly by the next weeks, maybe in July. And the way we are planning is to take, let's say, to fly the [ 7 ] MAX that we have on the ground as soon as possible. We want to fly those planes. They are still in a honeymoon period in the maintenance. They have low cost. They are very efficient machines. So we believe that, as soon as possible, we want to fly those. And we have adjusted our order by 34 planes so we don't have much pressure from the production -- from the recovery of the production into our system right now. Yes, we still have some planes on the ground in Seattle that we may take delivery, but that's what we are negotiating right now with Boeing to take deliveries in a pace that follows our fleet restructuring here on the NG side. But yes, we still believe in the MAX. We believe that this plane will be our core -- in our core network in the future pretty soon.

Yes. Okay. A question about what we're doing in terms of our outstanding bonds in the market. Just -- I think the best example is probably here from [ Nicholas ] from Jefferies. Thank you for the presentation. Could you please confirm the company plans to make the 3 coupon payments in July? Yes, we plan to make the 3 coupon payments in July. What Nicholas is referring to, we have about $35 million of interest on our outstanding U.S. bonds, which are semiannual. So we have $35 million in July and then $35 million in January, and those are in our budget. Next question would be for -- sorry, I just lost my place here for a sec. And again, thanks for all these questions. This is a really good collection of questions here. This is more of a micro question on sales, but I think it's interesting because it will give you guys a feel. This is from one of our equity investors, and I think I'll send this to Edu. How much have online sales increased from May to June? And what are your expectations for online sales in July?

Okay. Thanks, Rich. Online sales is growing in -- faster than non-online sales especially because the large corporate customers and also the traditional leisure markets, they are the one more impacted with the COVID-19. So once the corporate market, which will still be the leading company for this segment, it's not performing on the normal path, the -- directly sales or the digital sales, they are growing in a faster pace than indirectly sales. Our forecast for -- at least for the next 2 months is that this tendency we will keep the same once we are also taking advantage of our investments in technology during the past years in order to be more assertive in terms of finding the right place -- right customer and offering to this customer the right product at the right time in the right channel. So we are leveraging the technology that we invest in that past years to bring -- and try to bring the customer to fly on us at this moment. So it's growing in a pace faster than the indirectly channels.

Stay with you Edu, another question from Savi here. The most recent update -- your most recent monthly update showed recovery in revenue. Is the demand recovery prevalent in a particular region in the network or demand segment, i.e., via for our leisure or business? And what trends are you seeing heading into the July winter break in Brazil?

Thanks, Rich, and hi, Savi. So as we said, the VFR customers, they are growing a faster pace than the other segments. In terms of region, we see an evolution in terms of sales around our own network. Of course, we are facing a little bit more challenge on the markets that are predominant. Corporate market, for example, when we see Congonhas -- Belo Horizonte, Congonhas, Curitiba, we are adjusting our capacity on the air bridge Congonhas into the mall. Those more corporate markets, we are facing a little bit more challenge than other markets that does not depend that much from the corporate market. And of course, for the July period, we see the flights from the Southeast area to the Northeast area performing a little bit better because it's the way the high season period for July works here in Brazil.

Okay. The -- I'll put together 2 questions here from 2 credit investors, they're related. And it is -- and they're both about the Chapter 11s of competitors and fleet. From a competitive advantage perspective, where are your thoughts around the Chapter 11 processes with some of your competitors being able to reduce fleet and debt? And then related question to that, talk about the competitive landscape after this COVID pandemic, even if GOL can reduce fleet naturally, do you think that pricing may be significantly lower for those airlines that are -- aircraft pricing may be significantly lower for those airlines that are currently under Chapter 11? Will GOL be in a disadvantage to LATAM after the pandemic as maybe able to adjust its fleet to a more flexible structure and access lower fleet rates?

Thanks, Rich. What we are seeing in Latin America is that the world will be split into 2 types of airlines. The ones that go through a Chapter 11, the ones that are not going through the Chapter 11. And the ones that are not going through the Chapter 11, I think the lessor community, they are analyzing every day, the ones that will be sustainable in the future, the ones that will be winners in the future. And the feedback we have every day is that GOL will be -- and we are just being GOL as we have been GOL for the last 19 years. I think the airlines that went through a Chapter 11, their targets right now it's to change their entire business model, their entire fleet. They want to ground some 787s. They want to ground some A350s, they need to ground A320s, they need to ground A321s, and it's not our case. If you look at the size of the restructuring that they need to do and compare to the size of the fleet restructuring that we need to do is a big difference. If you look at our case, yes, we're saying that we are going to face a tough scenario going forward that maybe 30 planes or 20 planes will be the excess capacity. We will address the returns of those planes or we were going to keep those planes on the ground without payment, we are going -- we start to negotiate [ PB8s ] to deal with this, to have more flexibility, to have -- to transform this fixed cost into a variable cost to be able to match supply and demand and cost, fleet cost. So I don't believe that lessors will give them some benefit on the long run differently from what they will give to us. As I said, Phase 1, it was equal to everybody. Everybody defers. Phase 2 is where we're going to match the dollar we pay for every rent to our cash flow capability right now. And the Phase 3, where it's this market to market gain that will really define what is going to be the competitive advantage. On the long run, we are going to be the winners because we have the strongest business model. We don't need to change the business model and the size of the fleet restructuring that we are doing don't need a [ cut ]. So we believe that this [ out of cut ] and friendly approach that we are doing, we are going to be able to match the lease rates that we need.

Question for Edu. How do you see the importance of third parties such as travel agencies to help GOL in the recovery period?

They are as much as important as they were previous to the COVID phase that we are facing right now. We keep the stronger relationship with the travel agents. It's important to remember that they represent something around 58% of our total revenue. We keep a very straight relationship with all the segments, with all the entities that represents the travel agents. We have a more transparent connection with all the entities. We are working together with them even during this pandemic period that we are facing now. There are some initiatives that we build together with some of those associations. So I keep -- they are -- they're going to be always important to our strategy, especially because we want to be the first one for every single channel that we can sell tickets. So they are important for us.

Okay. Question here from Crédit Suisse. How do you see the distribution of slots and relative positioning of Brazilian players following this period of crisis? Do you believe the balance sheet restrictions of some of your competitors can have an impact to their slot grants. Maybe you, Kaki.

No, I don't think so. I don't believe that a single aspect will influence in any manner.

I'm going to shift a bit to questions more on the balance sheet and cash here right now in the last 10 minutes we have here. Put together a couple of questions. What is your cash burn per day? And what do you expect to get by the end of the year? We've been very proactive in providing the market monthly updates on our cash burn. So I'll just repeat what we've already provided. Our cash burn, including the full payment of the Term Loan B this year is BRL 10 million per day. That's including the full payment of the term loan. And that will gradually reduce, as Edu mentioned, as forward bookings increase and follow the recovery and increase in the network that Celso was describing. So a lot of questions related to the Term Loan B that we have. The current plan, it's in the budget to be paid third week of August. If we had any news on that, we would obviously communicate that to the market. And then a final question -- or I'd say, a group of questions. And I'll maybe ask Junior to answer part of the question here. Under which conditions, if any, would you raise equity capital, what are your financing plans, things along those lines? And then within that, would the controlling shareholder provide additional capital to the company? I mean, we've -- you've seen in our plans that we've disclosed, we are -- Kaki mentioned that we are in discussions with the Brazilian Development Bank on the financing that they would provide, up to 60% of that market-based financing. Also, we have some other financing tools that we've described. We're working on a potential secured financing that's secured by our aeronautical assets spare parts. We've also talked about -- we have a significant amount of unencumbered assets that we can use for secured financings. That would approach around BRL 1.5 billion to BRL 2 billion. And so those are debt financings. Those are -- some of those are financings that we were working on pre pandemic, just in terms of our normal capital structure management. And we're looking at if we want to take those to the market in the current environment or not. We are, let's say, motivated by the success that many of the U.S. airlines have had recently in raising both secured and unsecured funding for the market. But within that is also there's questions about, is there a level of dilution that you would not tolerate and things like that. I mean, we, at the company, have always worked to optimize capital structure, and that's a proper mix. When we came into this pandemic, we spent over the last 3 months, working very hard to get to cash breakeven. We have the same amount of cash liquidity that we have today on the balance sheet, we had in December, March, April, May, roughly BRL 3 billion to BRL 3.5 billion. But that was the fruit of work we have been doing over many years, not just over the last couple of months in terms of our leverage policy, in terms of our profitability management, in terms of our attitude to the business. But within this question, one of these questions here, Junior, is bluntly will you consider providing additional capital to the company?

Thank you, Richard. It's important to say that I have a huge confidence on GOL. I strong believe that the combination of our business model, the right airplane that we are flying, our dominant position on the main hubs on the Brazilian domestic market, plus the execution by the best team on the airline business in Brazil give me this confidence to say that I am committed with the supporting to GOL in every way that I can. So I guess, I could -- with that, I could answer this question.

Okay. So with that, we're going to have to conclude because we have to go bang the gavel at the end of our traditional annual event on the New York Stock Exchange. We weren't going to let this pandemic take it away from us. We got through most of the questions. There were some questions we tried to put together and maybe some we didn't get to. Of course, as you know, your experience with us, if you submit questions to us on our website or via email, we do respond to them thoughtfully and thoroughly. So have the confidence, if you needed information in addition to that we've already provided or helping understand what we already provided, we're available to do that. So this is going to conclude our Investor Roundtable today. As my colleagues and I have discussed with you, today, we're well prepared, strong, agile, united. We thank you for your interest in GOL Airlines. We hope you can stay safe and stay healthy in this period here. And now we're going to head to the floor to bang the gavel.