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

Good morning, everyone, and thank you for attending today's teleconference of GOL Intelligent Airlines regarding the merger of proposal with Smiles Fidelidade. After the company's remarks, there will be a question-and-answer session. At that time, further instructions will be given. This event is also being broadcast live via webcast and may be accessed through the GOL website at www.voegol.com.br\ir and MZiQ platform at www.mziq.com. [Operator Instructions] Before proceeding, let me mention that forward statements are based on the beliefs and assumptions of GOL's management and information currently available to the company. They involve risks and uncertainties because they relate to future events, and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that events related to macroeconomic conditions, industry and other factors could cause the results to differ materially from those expressed in such forward-looking statements. At this time, I will hand it over to GOL's CFO, Mr. Richard Lark. Please go ahead, sir.

Good morning, and thank you for your time today. In advance of the shareholder meeting scheduled for next Monday, March 15, we wanted to host this call to provide investors an update on our merger proposal submitted to Smiles, share the most frequent questions we have received recently and provide information on the procedures for next Monday's events. In today's presentation, first, I will walk you through our views on the premium offered to Smiles shareholders. Second, I will summarize why this transaction is critical for both companies, GOL and Smiles. Then I'll walk through some frequently asked questions that we have received. And finally, I'll provide you with some relevant information on the procedures for next Monday's meeting. Now moving to Page 2 of today's presentation, which you've accessed on the GOL IR platform. As we've stated previously, the proposal offers an attractive exchange ratio and a meaningful 26% premium to the share price implied by the unaffected 30-day volume-weighted average price, the VWAP of Smiles. If we look at the 60-day or the 90-day VWAP of Smiles, the implied share price offers premiums of 33% and 38%, respectively. Even in an environment where we are seeing low to no premium merger transactions in the market, we felt it was important to offer a premium that was better than the precedent transactions. Recent merger transactions such as Hapvida-Intermedica with a 15% premium, and [indiscernible] with a 10% premium are some examples -- recent examples with significantly lower premium offer. We believe the exchange ratio being proposed is attractive relative to the unaffected trading prices of both GOL and Smiles. If we look at the average implied exchange ratio of the 2 companies over the 6 months before our proposal, the average was 0.818x, and our proposal was higher than that. As you can see from the graph on this page, there are very few instances where the relationship between GOL and Smiles was more favorable to SMLS3 shares since June of 2020. Moving to Slide #3. We were disappointed with the ISS recommendation on the merger proposal. However, as we look deeper into the ISS analysis, one of the key reasons for their recommendation was because in its view, the proposal offered no premium for Smiles shareholders. Unfortunately, in their analysis, they utilized the long date when calculating the premium and used an already deal-affected price basis. ISS used February 12, 2021, which is not the announcement date to compare the prices of both companies, which indeed does produce a discount if you were to compare it to prices on this date. Mistake in the ISS analysis is that the merger proposal was announced on December 7, 2020 and not February 12, 2021. If you use their same approach with the correct date, which is December 7, 2020, the correct premiums are 3% over the date prior to announcement and a 53% premium over the price 2 months prior to announcement. We felt that it was important for investors to have the correct information as they evaluate our proposal, and we reiterate that we believe our proposal offers a compelling premium to the Smiles shareholders. Moving to Page #4. Now I want to remind everyone how a frequent flyer program works because it's important to understand how they work in order to understand why this transaction is so important for both businesses. Frequent flyer programs, FFPs, generate revenues by selling points. The sale of these points creates deferred revenue, which is a liability, and the programs sell these points to GOL, GOL's partners, banks, retailers and other partners. Importantly, the largest buyers of these points are not the airlines, but actually the banks, the retailers and other partners. And they account for around 80% of the points purchased from the FPP -- FFP. The frequent flyer programs, the FFPs recognized revenues and the results when their members redeem points for either aircraft tickets or other goods, like hotels or rental cars. For Smiles, 90% of the redemptions that drive realized revenue, and therefore, decreased the deferred revenue liability are for plane tickets on GOL and GOL's partners. FFPs generate profits from 3 sources: one, the spread between the price they charge their partners to purchase the points and the cost of the product that their members purchase through the redemption of points; two, interest on the flow earned on the deferred revenue prior to a member's redemption; and three, breakage, which is when miles expire before they can be redeemed. Those are the sources of the profits of the FFP. To summarize, for the selling of points, Smiles is most dependent on the banks, retailers and other partners. But for the redemption of points, Smiles is almost wholly dependent on GOL. Conversely, the tickets acquired by Smiles for redemptions only represent about 12% of GOL's revenue. Put simply, Smiles could not survive without GOL, but GOL could survive without Smiles. On Slide #5, the next slide, we further articulate why this transaction is so important for both businesses. On this page, you can see on the bottom left how Smiles' success is directly tied to GOL. You can see that when GOL's ASKs or seat capacity decreased due to the COVID-19 pandemic, the revenue of Smiles decreased in a highly correlated manner. This brings us to the real problem, that is, the contract that exists between GOL and Smiles and the misaligned incentives in the structure. Unfortunately, the contract that was put in place a long time ago did not contain the necessary flexibility to evolve with the ever-changing competitive landscape. This is nonincentivized cooperation, collaboration or investment for the betterment of both companies is purely economic, which ultimately will cycle the value creation of both companies. This leaves us 2 choices: number one, merge the companies so that we can achieve the same objective; or to seek to change or renegotiate the contract so that it creates the right incentives and aligns the 2 companies. Both choices can eventually get us to the right-hand side of this page, which is what is needed to drive long-term value. We need to create a virtuous cycle of value creation, where GOL is able to use the cash flow from Smiles to invest in enhancing the customer product and experience, which allows GOL to provide the best possible inventory to Smiles members for redemptions, which, in turn, allows Smiles to attract more members, offer a more competitive product to its bank, retail and other partners or the primary buyers of points, which is becoming a highly competitive market, and thus, driving more point sales, and ultimately, driving more redemptions. Moving now to Page 6 to help you understand why we believe this transaction is so critical for Smiles. The next 3 slides describe what is happening in the loyalty market in Brazil. As we mentioned previously, Smiles primary channel for selling points is the banks and their credit card customers. The credit card market in Brazil has seen declining growth in profitability, which puts competitive pressure on the Smiles business model. Because of the pressures being experienced in the concentrated market, banks are putting pricing pressure on Smiles and focusing on their own in-house cash back loyalty programs. And in Slide #7, you see that this competitive pressure has translated into a declining average price per mile that is being paid to Smiles. And this coincides with cost pressure that has been facing Smiles as the average price per ticket has continued to increase. Combination of these 2 factors put significant pressure on Smiles and adjust the program to better meet the needs of its bank customers. Please move to Page #8. When we carved out Smiles in 2013, the objective was to distribute a meaningful amount of the income generated by Smiles to shareholders. Here, you can see that Smiles has declining profitability on an adjusted comparable basis since 2017, long before this pandemic. Moving to Slide #9, you can see that the competitive pressures, the declining profitability, the reduction in dividends and the fact that all other carriers and competitors have bought back in their loyalty programs had put significant downward pressure on the share price of Smiles. It's our view that if we don't address the structural issues of the company and work to eliminate the risks facing both companies, which are amplified as separate companies, there are significant risks to the Smiles share price going forward as Smiles recovery value is at a discount to trading value. When we net the primary assets of Smiles advances to suppliers, which are the advance tickets purchased from GOL and cash and subtract Smiles primary liability, which is deferred revenue liability, which is points sold to loyalty program partners that can be redeemed for goods and services, when we net those against each other, you have a recovery value below BRL 10, which is much lower than the value offered in our proposal. Plus the net value of Smiles liquid assets or recovery value is significantly below the value we are offering Smiles shareholders in our proposal and is emblematic of the downside risk that we believe that a Smiles shareholder could face if there is no merger transaction. In our view, the proposed merger transaction is the best alternative available to solve all of the issues that both companies are facing today. On the next page, #10, we highlight a very important point for SMLS3 shareholders that are considering becoming GOL shareholders. On top of the benefits that we already covered throughout this presentation, the proposed transaction, if implemented, will expose current Smiles shareholders to what we believe is an improved corporate governance regime. GOL's governance is also superior to that of most companies listed on Novo Mercado. For example, GOL does not have a staggered Board and all GOL Board members are up for election annually. Also GOL is subject to SEC regulation and requirements that include a 3-member fully independent audit committee and GOL has a majority of independent board members, as required by the New York Stock Exchange. While the GOL core shares are by definition nonvoting, the company's corporate bylaws provide voting rights to GOL shareholders for the critical items that a shareholder would want to vote on, including any affiliate transactions. Minority shareholders of GOLL4 also benefit from the best tag-along long rights, 100%, which puts them at the same level of the controlling shareholder. Also, the GOLL4 shareholders have preemptive rights. Moving to Page 11. GOL prides itself on its best-in-class corporate governance policies. As you can see on this side-by-side comparison, we're certain that you will agree that GOL offers strong corporate governance protection through its shareholders. Key differences from Smiles governance include, one, a majority independent Board; two, executive sessions for independent Board members; three, compliance with SEC and New York Stock Exchange requirements; four, SOX-compliant financial statements; five, commitment to an ESG reporting; and six, independent Board committees. As you can see, for those of you that decide to migrate from SMLS3 shares to GOLL4 shares, you will get an upgrade in corporate governance. Moving now to Page 12, we share the most frequently asked questions that we have received. And I'll just go through these here with the answers that we've been providing, and again, as I mentioned, one of the objectives on this call, which reflects our governance, is that we wanted to make sure that we share with everybody, our answers to the most frequently asked questions that we have received. First question here. Should GOL and Smiles wait until we are past the COVID-19 pandemic? Well, if you run the math, the pro forma ownership of GOL or Smiles shareholders, if they choose the option with more stock, is almost 10% of GOL. That's roughly the same pro forma ownership that Smiles minority shareholders would have received at the previous deal of a year ago, which we had to cancel to conserve cash during the COVID-19 pandemic, had been put to a shareholders of GOL. Now they received less cash, but both companies have also adjusted down in value due to the pandemic. GOL actually believes the longer it waits, the less value there will be for Smiles shareholders. Next question, how do you think about the valuation proposed relative to other deals that have been -- done recently to consolidate back in the minority interest of their loyalty programs? A couple of points here, 2 points. Number one, the correct multiple to look at is on an enterprise value to EBITDA basis. And on that basis, LATAM Multiplus was 7.6x, and the recent Avianca LifeMiles deal was 6.7x. And what GOL has proposed is around a 7x multiple, and we think the Avianca LifeMiles taken is the most relevant comparison as it was completed in 2020. Number two, the correct analysis to look at is to look at the value GOL is offering Smiles, relative to what GOL is offering, which is shares in GOL. So the intrinsic value of the shares being offered attractive relative to the value being paid for Smiles. So GOL believes the composition of the offer of this proposal is very attractive on that basis given the consideration being offered, if you look at the intrinsic value of the GOL shares being offered relative to the value being paid to Smiles. Next question. Another related question we've been getting is what is the value to Smiles of buying tickets in advance from GOL? Our answer on ticket prepurchases from GOL allow Smiles to earn a higher interest rate on their cash balances increasing cash flow. GOL pays an above-market interest rate on these advanced sales until the tickets are issued to Smiles members and that interest rate is on average around 6%. So if Smiles buy tickets in advance from GOL, the additional interest income that Smiles earns increases the cash flow at Smiles. Next question. Why is the deal structured 80-20, 20-80? Well, GOL wanted to give Smiles shareholders an opportunity to become meaningful shareholders of GOL and benefit from the recovery from the pandemic and the synergies from the merger. GOL also recognizes that these are challenging times, and access and liquidity in Smiles stock is challenging. So we created a second option, which is mostly cash, for shareholders looking for liquidity today. Lastly, in order to address the operational issues on potential tax payments for international investors, there's a need for a minimum amount of cash and in this scenario, hence, the 20%. Next question. Smiles shares have traded well relative to GOL right before the announced proposal. How does that impact your view on the premium and trough implied by your proposal? The answer to that is GOL's stock price is influenced by a number of macroeconomic air travel and COVID-19-related factors whereas Smiles stock is a derivative of GOL stock performance because Smiles business is a derivative GOL business. There have been very few instances since June of 2020 where GOL and Smiles have traded at a relative exchange ratio above the proposed exchange ratio. The proposal implies a price to Smile shareholders that is a 26% premium to the 30-day VWAP, a 33% premium to the 60-day VWAP and a 38% premium to the 90-day VWAP. Going to the next question here in terms of the most frequently asked questions. If GOL is not successful in gaining approval for this merger at the shareholder meeting, what happens next? This is a critical question. First, I hope that we are successful. But if we are not successful, you have already seen that we are making changes in how we're going to do the business going forward. That can involve the way we do the forward sales tickets between GOL and Smiles. In addition, in order for both companies to be successful, we will need to modify the contract between the 2 companies, and I believe that the Smiles Board understands this. We'll figure it out. But going forward, the economic model for Smiles will have to change in order for both companies to be successful. And now before opening the call for your additional questions, in addition to these most frequent ones that we've got, which now I like to hear. We'd like to inform you on the procedures for the general meeting on March 15 that are here on Slide 13 of the presentation there. Due to the lock down in São Paulo for the next 2 weeks. The Board of Directors of Smiles approved the virtual participation of its shareholders in this EGM. Plus this EGM will provide a digital participation option for all shareholders. If you've already made arrangements for your shares to be voted at this EGM and you wish to keep that arrangement, you don't need to do anything. If you instead wish to participate virtually, you need to follow the instructions on this page. It's important to note that all information must be properly forwarded by 10 a.m. New York time this Saturday, March 13, to Smiles' IR department at the address -- at the e-mail address listed on this page. A link for those choosing the remote option will be provided back by 3 p.m. New York time on Sunday, March 14. All details of the necessary procedures are available on the Smiles' IR website. Now I'm going to return and over to the operator, who will open the Q&A session. Please, operator.

[Operator Instructions] And the first question will come from Victor Mizusaki with Bradesco BBI.

Richard, I have 2 questions here. The first one, in the conference call in Portuguese, you mentioned that the minimum quorum for the shareholders meeting on Monday is 2/3. So can we assume that GOL taking Smiles will be counted for the minimum quorum? But then, I mean, the controlling shareholder will not vote? And the second question if -- I mean, given that the Smiles shareholders will have 2 alternatives, right, and whilst that, as you mentioned and you talk about, bigger cash payments. How GOL expects to finance these cash payments?

Sure. I'll just repeat the questions to them. It's a little bit muffled. First is, yes, for Monday, we need to open a meeting. In the first call, we need 2/3 of the minorities present, okay? Because again, GOL is not voting on the material. So it's 2/3 of the minority. And then that's to open the meeting and then the proposal would then require 50% of the minority in the first instance. If you go to the second instance, then it's the shareholders that are present. The -- your second question, the range on the proposal, obviously, shareholders can pick the 80-20 option on the 20-80 option. If you have the option of 80-20 stock, cash, that's an area that's around $50 million of cash. If you have -- if it went 100% the other way, 80% cash stock, that's $20 million of cash, and the dilution on the GOL stock would then range from a little over 9% at the maximum to a little below 3% at the minimum. But if you assume, from an agnostic perspective that would be right down the middle 50-50, call it, about $125 million of cash will be the cash portion of that. Now the liquidation of the operation, in other words, the settlement, would be around 60 days after the -- will be around 60 days after the effective shareholder meeting. So if there's a decision on Monday, it would be mid-May. The -- as you know from the materials, the proposal is subject to ability to pay given that we are in the global pandemic, but we have no intention of not paying if we're successful in the offer. And that will go into the management of how we've managed the company from a capital structure and a working capital perspective, managing the group's consolidated resources. Now you know that we've got on the balance sheet approximately BRL 2 billion of liquidity. And we have access on the liquidity sources in our non-GAAP current assets that we can access if needed. And also, we have the ability to raise additional funds if needed based on the existing mechanisms we have, which cover both fixed income and equity alternatives. And so that -- obviously, the cash is very tight, as you saw from our recent investor update. We've gone back into a different phase of COVID here in Brazil recently. This morning, I guess we're in the headline on CNN. We hit 2,000 deaths yesterday. Obviously, that somewhat affects the psychology, but we believe we can continue to have market access if we would need to go external for funds. We also wouldn't necessarily need to go external for funds. We can bootstrap if we would need to. Again, we're talking over the next 60 days, we do expect to have on the other side of this current wave at that point in time. But obviously, we're being extremely conservative and asking for a lot of sacrifices in our -- with all our partners that have been helping us across our supply chain and leasing companies and banks and so on. And obviously, our first priority is to be able to transport passengers where our first obligation is. But the value creation potential of this transaction is also perceived by our partners that are supporting us through this pandemic. But also, we believe that we'll have market access as well. I mean, one of the things we're waiting for right now is we have to have our Q4 numbers out, which will be out next week. And then we go back to having a window of market access. And as you know, for those of you who have been following the company closely, as most of you have been, we've developed additional tools for liquidity, such as the secured financing mechanism that we set up, where we deposited $900 million of collateral in December. We still have significant capacity under that. And so we preserved our options, I guess, is kind of my point here. But that will be something that we would, I think, communicate once we have a definition of the timing on this, Victor. But thanks for the question. But I think we also have -- we have our earnings call next Wednesday. And so we'll, I think, be able to give folks -- hopefully, we'll able to give folks an update on that on Wednesday. Like I said, I think we believe that we'll be successful in the voting on Monday. And then on Wednesday, we can communicate next steps as it relates to that. But one of the rules that we've been using during this pandemic, which is now literally, I guess, it would be tomorrow is exactly 1 year since we put our employees into home office. It was on March of 12 last year. We've been -- obviously, senior management and some of us have been working full-time at GOL physically in the office ever since. But it was 1 year ago, I guess, Friday that this started. And so part of what I'll say, Victor, is that one of the rules we've been taking during this pandemic, and we've kind of gone backwards a little bit over the last 60 days, is taking one day at a time and making sure that we do the absolute best possible -- manage what we can do given the constraints we have on us today, with an eye on our competitive advantage for the future. But pandemic management and airline doesn't give us the luxury of making commitments about what's going to happen 2 months later. We'll see where we are next week. And hopefully, next Wednesday, we can give a little bit more insight into specifically how it's going to go. Because potentially, on next Tuesday, we could have a specific closing date to be talking about. Thanks for the question.

[Operator Instructions]

There's a couple of questions that came in on the, I guess, they sent by e-mail. But what I'm reading here from the 2 guys that asked the questions. We've already answered those questions. So we've covered those questions.

[Operator Instructions]

Let me just -- operator, just give me a second because we have another channel here with -- other than the, what you call it, the verbal questions, we have a channel here for questions by e-mail, which I can also read and quickly answer. Just give me 1 second. I guess we have another couple of minutes here, if we need. And I'm just looking at those questions right now. I think we've covered them. So just to be efficient with everybody's time, I think we can -- yes. I think we can go ahead and close out the call. I guess we've covered most of the issues. Again, part of the objective of this call was really just a sharing of the questions we've got over the last 2 months or so. Because most of you guys on the buy side and sell side, you know how we approach this. It's really important for us you guys to understand how we're thinking about our business, how we're managing it, what we're seeing. We do a lot of work here to try to share as much information as we can with you guys in our updates, in our communications and given that this -- today, tomorrow is going to be the last day for our folks to be deciding on this, we wanted to make sure that everybody has the information that we have. Part of our -- one of our principles in corporate governance is transparency and equality of access and information. And so that's what we're doing here. There was a guy in the previous call that was making some questions, and he didn't agree with us. And I would say the same point that I said to him. Nobody is obligated to agree with how we're managing our business now during the pandemic or what our plans are, but it's important for us that -- especially the buy side that makes a decision on buying our securities and being an investor at GOL and our bonds and our stock, that you understand how we're thinking. And we like to interact with everybody. Also here, how you guys are thinking and see if we can incorporate that in terms of how we're managing the business. But ultimately, we're responsible, we're the fiduciaries for managing this business. And we have to do it in the interest of the group. And that includes Smiles. That includes Smiles, which is part of our group, and that includes GOL. And to maintain our competitive advantage in the long term, but also in the short-term here, there are components of surviving being in the desert here and conserving ourselves. And actually, we just had another question popped up here. We do have another 5 minutes if we want. So operator, you can take the next question.

The next question will come from Stephen Trent with Citi.

And that read-through you did was helpful. You actually answered most of my questions in your read-through. Just kind of curious, if one thinks about the counterargument in the case of Smiles. So if they don't agree with GOL's proposal, if you're a Smiles shareholder, what is the ultimate long-term end game, if they're not going to merge? I'm just trying to maybe understand that view.

Well, sure. I mean, like I was saying, that's been something that we want to make sure that people understand. I mean, we've tried to be clear on this since the very beginning. We have 2 alternatives to correct the competitive disadvantage that we have and the structural disadvantage that we have. What we'd like to do is merge the companies. But if we're not successful in that -- for example, if we're not successful in this round that we're doing here, it's going to be a period of time before we could come back with an alternative proposal. I mean, it's not a black and white area. But it's at least 6 months, maybe a year, for us to come back with a proposal. And so -- just given how the rules work. And we won't have the luxury to wait 6 months to a year and keep investing in the status quo that creates great significant problems in terms of the collaboration and innovation and the betterment of both companies. It's just an economic relationship right now. And the way to fix that economic relationship is through the merger proposal or we'd have to change or renegotiate the contract between the 2 companies so that it creates the right incentives to align the 2 companies. And that's been especially exacerbated by this pandemic. I mean all the points we've been sharing with you guys has just been magnified by 10 during this pandemic across the board. And we hope that we're going to be successful. And we've been applying the principles of the power of positive thinking all during this dynamic. I mean we don't let negative thinking come in here. But the 2 ways to relate with the companies on how we do the forward sales of tickets and how we -- the whole overall contract works and those things will have to be modified in the interim period. We'll have to figure that out, it's not something that we're working on right now. But going forward, the economic model will have to change in order for both companies to be successful. So one of the things we've been trying to do is share with people this reality in terms of how -- what are the nuts and bolts of how loyalty program works within the airline group and so on. And so going forward, which is where we are now, there's those 2 alternatives. And so we would have to initiate work, which would probably be also not a quick process. We have to do that in parallel while we continue to think about other alternatives. But those are the options that we have right now as well. But one of the things we've also tried to do, Steve, I mean there's -- we have tried to use all the mechanisms available to us. As you know, we've worked within the context of the independent committee, which we have a very good experience now with Opinion 35, and there's a lot of conflicts and disincentives to come up with a decision that's in the best interest of the companies in that process and that's our specific experience. So we do think that the best -- and best governance, by the way, which gives the maximum voice for the minorities is let the minorities decide. But within that context, we've been endeavoring to make sure that minorities have all the information they need to make a proper educated decision. That's also part of the reason for this call today, just sharing and understanding. It's less the focus, let's say, on sell side, it's less the focus on all investors as well. Obviously, GOL investors are involved in this decision also because there's dilution for both shareholders. And it's not a small and significant amount of dilution. As you know, we have a very -- we have an owner here at this business. And what we're proposing is almost 10% of the largest airline in Brazil and one of the most successful low-cost carriers in history. And we're offering 10% of that company and all that represents in the current environment. And that obviously was -- that's a big decision for us to do that. It's the major equity issuance that we're doing here. Well, for investors that aren't interested in that, we're also giving them a -- what we think is a very generous cash-out option of 80% of the total price, which is, again, also a significant decision for us because during this pandemic cash is king. And a year ago -- in fact, a year ago Saturday, is when we had to pull the previous proposal because we had to hunker down for the pandemic. And in December -- as you guys know, in December, we have a little bit of an eye of a hurricane phenomenon here in Brazil, where things have recovered. We were back to about 60% of 2019. And we've had a significant reversal back to today. Yesterday, we had 2,000 deaths in Brazil from COVID. That's a record. That's double -- almost double the number that it was in July of last year. We're keeping the proposal on the table because of all the reasons we've described. Even though we're going to have to work very hard to settle the transaction. But we have all the mechanisms, as I was describing to Victor, to -- available to us to work hard and to do this. And so just to kind of circling back on that. Our invitation, and we hope that people accept the invitation to become a GOL shareholder and participate in the upside that we're going to be working hard on this year and next. But if not, there's effectively a cash-out option, which is, again, in our opinion, a very attractive price in December when we announced it. And again, in December, we were back -- we thought we were out of the pandemic, but it turned out to be more of an eye of the hurricane. But if you look at it now, it's an extremely attractive premium over where the stock would be trading now if we had not made the proposal back in December, which to some extent, is creating artificial floor on the Smiles trading price today. But we're intent on getting this done. We have been intent on this since the very beginning for the long-term survivability and competitive advantage of this group. And we do think that the governance has been proper. We've worked with all the mechanisms that are available to us and provided all the information. But we want to become more strict on time lines now. We're not willing to get extremely long open-ended time lines where 6 months, we have no results. And so we're putting very short time lines on things of which we have to have results or we move on. And that was the spirit of the process that we're in right now, and -- from a governance perspective. From a valuation perspective, it's -- we believe that if you look at multiples, if you look at premiums paid, if you look at precedent transactions, if you look at all the proper methodologies for valuing this type of proposal, it's an attractive proposal. But we're -- you're going to have to work very hard to pay for it and also to create the value from the merger because that -- it's not just merging the companies, that voila, we should think you have value, we have to work. All of the work is going to have to be done to realize the synergies going forward for all of the people who are with us fiscal shareholders, will happen only because of the work we're going to have to do over the next year. And it's a lot of work that needs to be done to realize those synergies. It's not at all automatic. But -- and that's what we've been providing. And there's been a lot of information provided. We've been extremely transparent about this process. And as I was saying that I think that's left. The reason I was adding a little bit on the question there, Steve, is what I -- right before you jumped on here, we've just gotten some additional questions on the Internet platform here. And I was kind of feeding in some additional answers to your question. So with that, I think I will -- we don't have any more questions in the queue now. So I will -- I guess, I'll ask the operator to proceed to the concluding remarks. Operator, please.

Thank you for that. This concludes GOL Intelligent Airlines conference call for today. Thank you for your participation, and have a nice day.

Okay. I don't know if you mean -- you're turning over to me, operator. But I just wanted to say to reiterate that we're very excited about the prospects for our 2 companies once this merger is completed. And we hope that the Smiles shareholders choose to become meaningful shareholders of GOL as we think that the combined companies will be better positioned in their respective markets going forward. On behalf of all of us here at GOL, thank you very much.