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

Welcome to Gol Linhas Aerea's conference call to discuss the second quarter 2025 results. This event is being broadcast via Zoom and can be accessed on the company's website in www.voegol.com.br/ri. We inform you that participants will be watching the event during the presentation. Before proceeding, I would like to emphasize that the forward-looking statements are based on the beliefs and assumptions of the company's management and on the current information available to Gol. These statements may involve risks and uncertainties as they relate to future events and therefore, depend on circumstances that may or may not occur. All listeners should consider that events related to the macroeconomic environment, the segment and other factors could cause results to differ materially from those expressed in any respective forward-looking statements. I will now give the floor to Mr. Adrian Neuhauser, CEO of ABRA Group.

Good morning, everyone, and thanks for joining us today. I'm Adrian Neuhauser, CEO of ABRA Group, and I'm pleased to be here in the first GOL earnings call after its Chapter 11 emergence. Two months ago, GOL successfully completed Chapter 11 bankruptcy proceedings, marking an important milestone in the company's transformation. I would like to congratulate the entire team, both at GOL and at ABRA for their hard work during the nearly 17 months of this process. I would also like to express my gratitude to our customers, lessors, key financial stakeholders and advisers for their support. This process undoubtedly placed GOL in a more competitive and sustainable position with an optimized network and fleet plan, even more competitive costs and a strengthened financial position with substantially lower debt and solid liquidity to support future growth and boost GOL's potential in the coming years. ABRA continues to invest in that future. We renewed our commitment, strengthened our investment and became the controlling shareholder of GOL, reaffirming our confidence in the company, in its management team and in its business plan for the coming years. Over the past few months, we have seen significant improvements across all GOL key performance indicators, as Celso will explain shortly. These achievements confirm the company's unwavering commitment to providing exceptional service to its customers and creating value for its stakeholders. With ABRA as a strategic enabler for all GOL's future plans, we are confident that GOL will continue its path of sustainable growth. Manuel Irarrazaval, CFO of ABRA, who is also on this call, will be joining us on the GOL Board of Directors. He and the broader ABRA team are committed to continuing supporting GOL in this path. I will now pass the floor to Celso Ferrer, CEO of GOL, to walk you through the second quarter results and update you all on the state of the business. Please, Celso, go ahead.

Thank you, Adrian, and good morning, everyone. Thank you for joining us today for the GOL Second Quarter 2025 Results Presentation. I'm pleased to present our performance and achievements for this quarter. But first, I would like to introduce you to our new CFO, Julien Imbert, who recently joined and started his history with us in a very important moment for GOL. Please, Julien, take the floor.

Thank you, Celso. Good morning, everyone, and thank you for joining us today. I'm very pleased to be speaking with you for the first time as GOL's Chief Financial Officer. Aviation has always been a passion of mine. I started my career as an aircraft engineer at Dassault Aviation. And during college, I was flying Cesna 152's whenever I could. But for the past 18 years, I've been with Boston Consulting Group in Paris, Chicago and Sao Paulo, specializing in growth strategy, efficiency programs and development of artificial intelligence solutions. Over that time, I had the opportunity to work closely with GOL, starting in 2014 on a number of strategic and operational projects. While that experience gave me a deep appreciation for GOL's culture, its people and its focus on innovation and efficiency. Today, I am proud to be part of this team at such a pivotal moment. Having successfully emerged from Chapter 11, we are now fully focused on executing our plan, ensuring a sustainable financial trajectory with discipline and innovation and continuing to strengthen the gold's performance. I look forward to engaging with you regularly to maintaining transparency and to building on Gol's strong foundation as we move into this next chapter. So thank you. And with that, I'll turn the floor back to you, Celso.

Thank you, Julien, and welcome again. We are very happy with you joining the team. I would like to start by celebrating our very important milestone, the successful completion of our Chapter 11 process. This is a moment of great pride for all of us, and we are excited about the future we are building together. The successful completion of this process was possible, thanks to the relentless dedication of our team, and we could not celebrate this moment without saying thank you to everyone involved, especially to ABRA. The renewed support has been fundamental. ABRA financial investment, significant know-how and operational synergies have allowed us to operate more efficiently and more effectively. After raised $1.9 billion in the exit finance and fully pay off the DIP, our liquidity post exit reached BRL 5.4 billion, of which BRL 3.5 billion was available cash. Our liquidity levels was BRL 4.6 billion higher compared to the last quarter before Chapter 11. We also get to the half of '25 with BRL 2.7 billion of EBITDA, BRL 685 million higher than the same period of last year, proving our focus on achieving the BRL 5.8 billion by the end of '25. These results led us to a leverage of 3.7x post exit, 2x lower than the first quarter of '25 and 1.4x lower than what we had planned for the same period. We are confident that, with our well-defined strategy and support of ABRA Group, we will continue to lead the market and deliver significant value to our investors and customers. Let's now take a closer look at our highlights for the second quarter of '25. Our fleet restoration effort recovered 20 aircraft back to the operational fleet, which we foresee to be 100% recovered by the first quarter of next year. This opened the net -- the way to more than 19% growth in the ASKs in this quarter, 13% in the domestic market and 62.1% in the international market. Our net revenue grew almost 23% in the period, a combination of capacity and unit revenue growth. Our EBITDA is 70% higher if we compare to the last year second quarter and demonstrating our commitment to maintain a healthy bottom line. Our efforts to streamline operations and manage costs effectively are paying off as evidenced by the reduction of 2x in the net leverage. In terms of customer engagement, we achieved a remarkable 19.9% increase in the number of customers transported, the highest number for a second quarter after pandemic, a directly result of our dedication to operational quality, which has also gave us the recognition for the sixth consecutive months, now seven, including July as the most on-time performance airline in Brazil and in June, the first in Latin America. Our commitment to our customers during the Chapter 11 now reflects 17 points of growth in our NPS. Our cargo revenue and transported weight increased by 14%, supported by the addition of two dedicated freighters and a well-positioned logistics strategy. Our Smiles loyalty program continues to thrive with a 3% increase in the number of Smiles Club members and in redemption transactions. This quarter also celebrates our new moment in the ABRA Group. Now, with ABRA as our main shareholder, Gol is stronger than ever. As we look at the potential of the market in Brazil, we see an immense opportunity for growth and expansion. The ABRA Group renewed the commitment, providing us with instrumental factor to our journey ahead. One of the key synergies is cost optimization by combining negotiations for fleet contracts, maintenance and supplies. This will optimize our unit cost and enhance aircraft utilization. Integration between our networks is another critical synergy with greater capillarity and optimized flight schedules, we can maximize connections and profitability. This great network will enhance the customer experience and will enhance our loyalty programs in the group, Smiles and LifeMiles. ABRA's strategic direction and synergies will provide us with the necessary tools and support to achieve our goals and make us well positioned for success in the coming years. So moving forward to our operational performance. Since the beginning of the Chapter 11, one of -- our main focus was the fleet recovery to support the trajectory of the upcoming years. So you can see that even with the same number of aircraft that last year, 141 as a total fleet, we increased our operational fleet from 102 airplanes to 122 planes, recovering 20 aircraft that we're bringing back to the operational fleet. This allows us to increase our capacity by almost 20% in this quarter. But more importantly, it's how we allocated this capacity. Our team is always focused on the best markets, either domestic or international. And our efforts were paid off by a load factor increase of 1.4 points this quarter with sustainable unit revenue growth. Our presence in the market has also increased. Gol has operated the highest number of destinations in the history during the first half of 2025. Today, Gol operates 16 international destinations and 64 domestic destinations, solidifying Gol's commitments to be the first for all. The fleet recovered and capacity growth followed by strong operational efficiency month after month resulted in not only the sixth consecutive months in on-time performance in Brazil, but also as the most on-time performance in Latin America in June. Our commitment to customer satisfaction goes beyond on-time performance. We have added significant new functionalities in our digital journey, especially with the new app, which has helped to increase the overall NPS by 17 points during the turnaround moment of for Gol. I also want to thank our customers for choosing Gol and making the number of passengers transported between April and June a record for a second quarter after pandemic. The combined efforts of recovering aircraft into operation, placing capacity in strategic markets and focus the best service for our customers led us to grow almost 23% in our revenues for the quarter, 21% in the first 6 months of the year. This is the third consecutive quarter that Gol has been able to increase capacity while also increasing unit revenue. PRASK grew by 4.1%, RASK by 3% and yield 2.3%, all highlighting GOL's focus on sustainable revenue growth. Moving to cost. Our CASK was 1% higher, mainly due to almost 9% increase in the FX rate, depreciation and maintenance expenses as well. The increase in maintenance expenses were mainly caused by unscheduled removals of the LEAP engine and end of leasing provisions for future aircraft returns. Depreciation was heavily impacted by investments to recover our fleet. Just considering this effect, CASK would have gone down by 6% compared to the second quarter of '24. Our business units also play an important role in our results. GOLLOG brought us more than 14% in revenue with an additional two dedicated freighters and an increase of more than 14% in transported weight, confirming their position as the largest regular cargo operation in the domestic market. As for our loyalty program, which is the biggest in the country with 29 million members, Smiles continue to see their Smiles Club members grow. The number of redemptions transaction was 3% higher, showing that Smiles clients are increasing their miles used. As Smiles maintained their focus on providing the best loyalty program and the best experience, with more than 100 commercial partners and now focusing on cross benefits with LifeMiles, Smiles continue to extend their value proposition to our passengers. The results of everything we have seen so far resulted in an EBITDA of BRL 1.1 billion in the second quarter of '25, 70% higher than '24 with a margin of 23.4% against 17.2%. In the first half of the year, EBITDA reached BRL 2.7 billion, on track with our goal of BRL 5.8 billion until the end of 2025. Moving forward to leverage and liquidity, our successful emergence from Chapter 11 is strengthening our financial position. After raising $1.9 billion in the exit financing, paying all the [ deep ](sic) and restructuring our debt, our leverage decreased by 2x from the first quarter of '25 to the second quarter, reaching 3.7x of net leverage. It's important to mention that if we deduct the ABRA debt of $850 million, this leverage would have been 2.8x. The graph on the right-hand side shows our liquidity, which considers our available cash and only includes credit card receivables. Since this is the truly liquidity portion of the accounts receivable balance. Note that we do not include any restricted cash and receivables that are not liquid. We got to the end of this quarter with a strong position of BRL 5.4 billion in liquidity, BRL 1.6 billion higher than the first quarter of '25, BRL 4.6 billion higher than pre-Chapter 11. Now that we have gone through everything that happened this quarter, all these results proves that GOL is completely positioned to win. As you may see in this page, our EBITDA is consistently growing throughout the quarters. paving the way to our BRL 5.8 billion target in the end of the year. Our liquidity level is on track. Our net leverage for the quarter was 1.4x lower than what we projected in our 5-year plan for the post-exit and is already better than projected for the end of the year. Even if we make a sensitivity neutralizing the FX impact in the debt, we would still be better than projected. The first mile of our journey was a very important one and proves that we are on track and working towards what we have planned. Now before going to the Q&A session, I cannot close this first earnings call after emergence without thank you, my incredible team at GOL. I am confident that we would not have achieved all these results without the hard work of thousands of people that were 100% committed to this process since the very beginning. Thank you to all employees, all customers, lessors, advisers, financial partners, especially to ABRA, who fought with us side by side and was fundamental to our success. Thank you.

[Operator Instructions] Our first question comes from Andre Ferreira with Bradesco BBI.

Congrats on the emergence from Chapter 11. I have two questions. So first, if you could just give a recap of the next steps post-emergence from the Chapter 11. For instance, there's an expected additional equity of $330 million, potential conversion of take-back debt. But anyway, if you could just recap in general, it would be very helpful. And my second question is related to the aircraft on ground. How many are still on ground? And of those, how much will be recovered to operations or returned?

Thank you, Andre. Good to speak with you. So it's Celso. And so your first question is like what we're going to do now post-emergence. We have decided to exit the Chapter 11 once we are ready. And we see -- we saw a very good window to be able to exit in all that scenario. So we don't foresee at this moment any additional equity. And as you saw, our financial performance is even better than the plan that considered equity. In all the angles you look, we are in a better shape even without the equity. So we continue to perform, focus on the incremental profitability, bringing back the fleet. As you mentioned, the fleet that was ground and we -- at the beginning of the restructuring, we had 30 planes on the ground. Now we still have 11 and working very hard to make sure we are going to have all the fleet flying again on the first quarter next year. So that's the plan. It's obviously everything included in our projection, and we are doing exactly what we have planned on this. We are, of course, taking many engines to the shops -- and today, the turnaround times are bigger than it used to be in the past. So we are facing problems in the whole supply chain, but still on track to make sure that our whole fleet will be flying again. You saw that the operation fleet grew from 102 planes to 122, I mean, bringing this sustainable ASK to the market again. So that's our plan.

And just a follow-up over the next quarters, by the first quarter '26, should we think about the return of the aircraft kind of in a linear fashion?

Yes. I mean we have been returning planes. I mean, during the Chapter 11, we returned 13 planes, and we took delivery of also 12 planes. So we continue to bring new planes to the fleet and return planes. So in 2026, we will continue to have a reasonable number of lease returns, but as expected by our plan, no big changes on this.

Our next question. "Can you detail your new capital structure? And who are the main shareholders?"

Okay. So as part of the restructuring process, Gol restructured most of its debt and emerged from Chapter 11 with a healthy debt profile and no significant maturity until 2030, coupled with a robust liquidity position. During the Chapter 11 process, Gol renegotiated most of its debt. We issued BRL 1.9 billion to new investors through the exit financing bond and issued BRL 1 billion in take-back debt financing to the exit creditors in exchange for the pre- Chapter 11 debt obligations with those creditors. As of the end of the second quarter of 2025, Gol liquidity amounted to over BRL 5.4 billion or $977 million. This equates to roughly 26% of last 12 months revenues, providing us with a very robust and buffer to finance investments, including its fleet, as we were mentioning, including the engines and make sure that we can do the route network expansion as we have been doing. So Gol is now controlled by a new parent company in Luxembourg, which owns 99.8% of Gol's economic interest and 100% of Gol's floating stock. The new parent company in Luxembourg is controlled by ABRA, who owns around 80% of the equity of the new parent company, with the remainder held by certain lessors of Gol and certain other general unsecured creditors from the Chapter 11 process.

[Operator Instructions] Our next question comes from Chris [ Reidy ](sic) with BNP.

The results were quite good post exit for the sub period. I just want a little bit of clarification. When you say that the fleet will be back to full capacity 1 quarter '26, is that full capacity pre-pandemic or not? And then if you could just explain about the new routes, obviously, saw through traffic data. There's been a lot of expansion of the capacity, which obviously speaks to the operating leverage built in the restructuring plan. How much of those routes are new and need to mature? And how much are just routes that were underserved and so it's just really catching up to the demand that's already in the system? And then the last question is, how is the forward booking demand curve looking out as far as you have it? Sorry for all the questions.

Thank you, Chris. Thank you for the questions. So the first one, I mean, let me explain better the fleet here. It's -- when we say that we are going to have all the fleet in flyable conditions is because we -- during this -- the pandemic and after pandemic, we kept some planes on the ground waiting for engine shop visits. And the restructuring, the whole turnaround of the company, has one priority, which was making sure that the whole fleet will be flying. So I'm not comparing to pre-pandemic levels. I'm talking about efficiency here. I mean you saw the results we are delivering now with still 11 planes that are not flying. Those airplanes are in the depth. Those are -- we are paying the leases for those planes, but they are not flying. So once they fly, you're going to see something similar to what you saw now when we put back 20 aircraft into the network. And so, no comparison before. It's true, by the way, that we will have the same capacity that we had in 2019 in the domestic market next year. This is a remark of our 5-year plan. And it shows that we have been recovering our capacity in the domestic market in a cautiously way. So even though you're seeing big numbers of growth here. And now addressing your second question, we have been very cautiously to look to where the markets were really underserved and most of the markets underserved were markets that Gol used to have a very strong network. Rio, I think it's the best example here. So we are growing a lot in Rio, but it's just a recovery from what we had before. I mean, of course, in the middle of this expansion, you can see one route or the other that is now a new route, but most is the rebuilding of the banks, creating new connectivity and creating more powerful unit revenues as you saw. So -- and part of the growth was also year-over-year comparison to the fact that last year, Porto Alegre, which accounts for roughly 7% to 8% of the total capacity -- domestic capacity was closed. So part of our hope is also the recovering from Porto Alegre. Our intention in the short term is -- I mean, we are catching up the capacity now in our main hubs, making sure that we have a very solid network, good timetables in the business markets, good connectivity, Guarulhos, Rio, Brasilia, Salvador, our main focus. And -- but we don't want to -- we are very cautiously of how we are going to deploy this capacity in terms of avoiding spiral down prices, making sure that we are adding capacity as the demand required. So demand -- domestic demand in Brazil is very solid at this point, as you saw in the numbers. So we are adding capacity step by step following that good growth that we are seeing in the market. And the international market is where we are launching kind of new markets. And our international strategy is exactly related to that. We have the 737 MAXs with good range, good unit costs, and we want to explore flights that other airlines are not operating. So we launched many routes from, for example, Buenos Aires to most -- all those capitals in the Northeast of Brazil. We have Buenos Aires Natal, Buenos Aires [Foreign Language], Salvador, Maceo. We -- and also for South Florida, we tried to do something that other airlines are not doing, which is a kind of a more fragmented approach towards South Florida using narrowbodies. So we fly to Miami, for example, from Manaus from [ Belaine ](sic), from Fortaleza and from Brasilia. So that combination is very healthy. I mean, for us, I mean, we have competitive advantage, and we are also -- I mean, some of the routes, we are the only players. And also, we are leveraging our integration with Avianca. So we launched Bogota, we launched San Jose Costa Rica, so markets where Avianca is pretty strong. And more and more, you're going to see flights that make sense for both airlines. So it's truly a combination of underserved market, including Porto Alegre, as the main one compared to last year, of course. But then in international, we are kind of creating new markets. The third question, it's the -- can you repeat your third question?

Yes. The third was just really -- you basically answered, how is the forward booking curve and demand, and it sounds like that is perfectly fine. I guess what I wanted to just clarify, these 11 million -- I'm sorry, 11 aircraft you're putting back in, those will be back in, I guess, you say in the first quarter. 11 million -- 11 aircraft, we're talking like 3-ish million seats, give or take, annually. The market in '23 was 220 million seats. Brazil is growing like 15% per annum. So like 3 million seats shouldn't matter at all. It should be, like, welcome capacity added, right? It shouldn't have any impact on pricing, by the relative insignificance of it, compared to the market?

Exactly. Exactly. And that's -- that's how we plan it. As I said, just as a reference, I'm using 2019, just as a reference of a pre-pandemic world. We are going to have the same capacity in the domestic next year with all this recovery, which makes sense after 7 years for a country like Brazil, and it really makes sense. And the good news is that we are seeing a better demand that we were projecting when we did this plan. And so more and more, we can do some fine-tuning to make sure that we are able to take the advantage of the market growth at this point. Booking curves are good, like you said, especially on the domestic market, it's performing quite well. But -- and also, I mean, the beauty of this, Chris, is that, I mean, we use the same plane for both international and domestic. So we have in our plan a more aggressive growth rate in the international market as we come from a lower base. And as we grow international, we always have the option to -- I mean, to trim, I mean, how much we can do in the domestic, how much we can do in international, but international has been performing well.

Perfect, thank you so much for your time, and wish you continued good luck and fortune.

Our next question, "what's driving the better-than-projected net leverage? What's the expectation for the coming quarters given the recent outperformance?"

So net leverage, as I said, is 3.7x, and it's lower than what we have been projecting. And the main reason of this is, of course, if you compare the FX, if you compare the FX that we had on our plan, 6.04 and versus what we had now, I mean, it's significant improvement. But we also have better performance in the overall, I mean, KPIs and numbers related to net leverage. So our liquidity position is stronger than what we have planned. And the EBITDA, the last 12 months EBITDA is also growing -- is also coming stronger as you saw here. So it's a combination. I want to make sure that everybody understand the effects here, but the liquidity and also the EBITDA are very important key factors, and that will continue to drive for a better leverage. That's -- and as I mentioned in my first speech, the intention of looking to our projected net leverage for the end of the year and makes a sensitivity on what would be with the same FX, which is 3.9x show that we are better than the plan. I mean, if we continue to perform like this and everything is showing that we're going to continue to drive results. Yes. I mean, we have been also quite benefit by lower fuel prices than comparing to our plan. And the team has been able to retain the value of -- in the revenue, as you saw revenue growing with the fee going down. So that's the performance -- that explains the better performance versus plan.

Our next question comes from Andre Ferreira with Bradesco BBI.

Hey, thanks for the follow up. Just a quick one. If you could just update us on the interest in the deal with Azul?

So as we have mentioned during our Chapter 11 restructuring, our priority always was to emerging from Chapter 11 independent as an independent company. The MOU between ABR and Azul has no impact at all in our strategy, in our business plan or in the day-by-day of operations. And beyond that, I prefer to pass to Manuel, I mean, the CFO of ABR that is here with me, so he can comment on this.

As Celso was saying, we always insisted that Gol had to have a stand-alone plan and independent plan going forward, and that's what was achieved. Gol has emerged independent and stand-alone, and that will be the main path. Is there an interest still in a merger? Of course, it makes industrial sense and it makes strategic sense, but it needs to have both parts participating. Now Azul has gone into their own Chapter 11. Therefore, conversations need to wait to see what happens there.

Our next question comes from Sergio Calci with UBS.

Congratulations. Could you just walk me through your free cash flow profile, maybe just for the full year? And should we expect a better free cash flow relative to your 5-year plan in line with sort of what's happened with your net leverage? And then the second one is just if I understood it correctly, there's no longer going to be an equity injection as was previously sort of signaled back in May. Why was that decided?

Thank you, Sergio. And yes, just a quick summary of, let's say, our cash flow view for 2025. Of course, this is a year that you still need to consider that we have a drag in the operational result. We still have a drag on the debt and specifically, the drag is the aircraft that we have on the ground at this moment. So -- and also is a year that the whole financial expenses is also neutralized by a huge new capital that increased the capital of the company. So the way we see this year, of course, is we have the BRL 5.8 billion EBITDA in our plan. We're going to pay around BRL 3.2 billion in leasing and the financial expenses is a positive, BRL 2.1 billion and a CapEx of BRL 1.8 billion more or less, which gave us, of course, BRL 2.9 billion to prepare to the 2026, and then we are going to follow our 5-year plan projections for this period. So you can see there, the liquidity levels is quite stable from 2025 and 2026. And so of course, every better performance that we are having now would impact EBITDA and the EBITDA that we achieved in the first half of the year was better than what we expected. We are cautiously looking to the rest of the year and cautiously looking to the projections. We don't think it's time to change. But of course, every improvement will have an impact on our cash projections as well. The equity investment, it's -- I was clear that it's not -- we don't work expecting that the equity investment will happen. All the numbers I'm showing you and all the effort of the company to be sustainable without the equity investment. But at the same time, the company, it's being more attractive for a new equity investment as the results are getting better. So of course, especially ABRA continue to talk to potential investors that -- I mean, and Gol is an asset that is showing a very resilient result compared to the plan. Manuel?

So Sergio, it's also important to point out that when we raised the exit financing, the equity investment was an option. It was not an obligation of the company to do. The company was able to raise the financing without an equity investment and has proved that it doesn't need it, right? So it is an option in the future, of course, but it's not an obligation.

Our next question comes from [ Gavin McKeown ](sic) with Amundi.

On the numbers. I was going to ask you to clarify on the equity, but I think you've done that, Manuel. On engine financing, there was a few changes, I guess, over the 6 months between December and when you finally exited. Can you just remind me, you've got roughly $72 million, $73 million between AerCap and ACG. There is still an additional amount available above that. Is that correct?

It's Celso. Yes. So yes, we have been performing the plan. And of course, the lessors are participating on the exit -- on the engine shop visits as that was one of the key pillars of the fleet restructuring. So I will recommend that -- I mean, we still have sorry, we still have engines going to the overhaul with the lessor financing, and we will continue to do this until the end of the year. The BRL 1.8 billion that I mentioned on CapEx is the Gol part of it. There is a big portion of the CapEx that will come from the engine financing facility that we structure for the lessors. But any breakdown through lessors, I would love to take your question and give you an answer afterwards.

[Operator Instructions] Our next question comes from [ Simon Millidge ] (sic) with [ Strip ](sic) Capital.

Can you hear me?

Yes sir, we can year you.

Yes, we can hear you.

This was kind of touched on before, but can we have some commentary on how Q3 and Q4 look bookings-wise?

Sue, it's Celso. Normally, the seasonality in Brazil is very strong on the -- in the end of third quarter to beginning of fourth quarter. So fourth quarter is normally the best quarter. And as I said before, we have been seeing a better demand than expected until June. We saw recently in July also the consistent demand. We are seeing for the third quarter, a very solid booking curve at this moment. And fourth quarter is still not there. I mean in terms of -- we have -- in Brazil, we have a very short booking curve. I mean it's around 50 to 60 days, but we expect fourth quarter in line with -- I mean, with the trends that we have been seeing now in August and July, which is pretty consistent on the domestic side and a little softer in some of the international markets. I mean nothing that calls the attention so far, but we have been trimming the capacity to make sure that we can capture the value.

And one more very quick question from my side. Are you in conversations with credit rating agencies? What's the outlook for the rest of the year from your side? Other than that, congratulations on emergence from Chapter 11 and very excited for what the future holds.

Thank you, Simon. And yes, we have been talking to the rating agencies. We have just announced that we had a minus B from Moody's and a triple C plus from Fitch. I mean, and we continue to talk to them. And of course, these results is driving -- it's also better than what they expect, and they also had a positive outlook on us.

Our next question comes from Miranda Wei with ExodusPoint.

Congrats on the emergence. I want to ask two questions. One is net debt showing on the presentation slide is BRL 20.5 billion versus BRL 27 billion at the time of issuing exit financing. Is there any meaningful debt reduction that has happened since the emergence? That's question number one. And question number two, how should we think about maintenance cost for the next 2 quarters?

Thank you, Miranda, and I will start from your second question. So the maintenance cost, as you are seeing, we -- maintenance cost comparing to last year is higher. I mean, of course, everything in reals here and most of our maintenance is in U.S. dollars, most of everything is in U.S. dollars there. So there is the FX impact. But also I highlighted two components. One is the LEAP engine that we are facing early removals and the cost of these early removals shop visits, they go to the P&L. So this is there. And we expect the same trend on the third quarter on the maintenance for those engines. And we also have done provisions for our lease return compensation. So it's also in line -- third quarter will be also in line, and it's in line with what we have in our plan. But maintenance line as a whole and also the depreciation is higher than usually reflecting all the -- let's say, all the nuances of our restructuring. And then your first question on the debt -- on the net debt, I mean, it's primarily the FX and other accounting effects on the fair value of the debt.

Got it. So we're not taking the -- the principal amount times the exchange, rather this is some kind of adjusted fair value times the exchange?

This is the accounting under IFRS of the debt. But the biggest effect here is the FX.

Can you walk me

The fund was done at $6 -- what, $6.04 and the real is much lower, right, more than 10%.

Got it. So if I just look at the first lien exit note, which is $2.1 billion. And if I convert that into real using today's exchange rate, I'm looking at somewhere around BRL 11.3 billion versus reported on the balance sheet is at BRL 10.3 billion. There's a pretty big delta. What was the driver of that?

We can have the -- look, we can have the team get back to you and go over the details, but you have effects of the cost of the transactions of the issuance costs and you also have the effect of accounting for the convertibility of the take-back paper and the fair value of the take-back paper. Remember, take-back paper is -- has a lower coupon. So it's accounted for in IFRS at fair value.

Okay. Maybe we'll do a follow-up on this one. Thank you.

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

So I hope you found our presentation and Q&A session helpful. Once again, I would like to thank you, the Gol team, our investors, primarily ABRA and all the lessors, all the suppliers that have been participating in this process. And our Investor Relations team is available to speak with you as needed. Thank you very much. Bye-bye.

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