GOL Airlines Presentation at the SGX

Transcription

1 Presenter Richard Lark Chief Financial Officer GOL Airlines Presentation at the SGX March 20, 2018

2 Table of Contents Introduction Investment Highlights Financial Review Appendix

3 GOL at a Glance The #1 Player in the #1 Market in Latin America Founded in 2001 and headquartered in Sao Paulo, Brazil Punta Cana The Largest Domestic Market Share in Brazil (36% 1 ) 33 million passengers transported per year with over 700 flights per day 65 destinations of which 13 international Leading position in Brazil s main airports Single fleet of 120 B-737 and orders for 120 B-737 MAX R$11 billion in revenues (USD $3 billion 2 ) The lowest cost provider in South America 13 million members in Smiles (loyalty program) Cruzeiro do Sul Santiago Boa Vista Medoza Manaus Santarém Porto Velho Rio Branco Santa Cruz Campo Grande de la Sierra Presidente Maringá Prudente Campinas Londrina Assunção Foz do Iguzçu Capecó Caxias do Sul Córdoba Rosário Paramaribo Macapá Belém Sáo Luis Fortaleza Marabá Carajás Juazeiro do Norte Palmas Montevidéo Buenos Aires Petrolina Brasilia Natal João Pessoa Recife Macejó Aracajú Salvador Ilbéus Porto Seguto Vitoria Rio de Janeiro São Paulo Curitiba Joinville Navegantes Florianópolis Porto Alegre Fernando de Noronha Dual-listed in Brazil on the Bovespa (GOLL4) and ADRs in the U.S. on the NYSE (GOL), both since 2004 (1) By Revenue Passenger Kilometers (RPK) in 2017 (2) Average exchange rate of R$ per 1 US$ 2

4 Brazil s Best Sponsored Airline One of Boeing s most important 737 customers Over aircraft operated to date Order for Max 8 31 current aircraft financed 40 aircraft financed in total MRO and Wi-fi maintenance Boeing U.S. Exim Bank 61% 10% 2% (1) 28% Constantino Family Delta Air France/KLM Public Market Brazil s largest transportation operators Board members with significant experience and complementary profiles America s largest airline Total PAX in 2016: 183.7mm Operating fleet: 857 Market cap: ~US$42bn (largest of any airline) Invested >US$150MM in equity and US$300MM debt support GOL Board seat Europe s #1 airline Total PAX in 2016: 93.4mm Operating fleet: 555 Market cap: ~US$4.6bn Invested $100MM High liquidity ~US$15mm daily trading volume High standards of disclosure Quarterly IFRS financials Supplementary disclosures IR Website Independent audit committee Publically-traded loyalty program Note: Market data as of 12/31/2017. (1) Includes 0.3% shares in treasury. 3

5 GOL Has the Strongest Airline Management Team The Most Experienced Team: C-Suite has almost 100 years combined experience in the industry The Most Consistent Team: Over 60 years of combined tenure at GOL; successful right-sizing The Most Committed Team: Only all-brazilian team, with two active 737NG pilots in C-Suite The Most Productive Team: Highest productivity employee base; unique GOL corporate culture Years at GOL Years in industry Paulo Kakinoff Chief Executive Officer CEO 2012 present Board member Richard Lark Chief Financial Officer CFO , 2016 present Board member Eduardo Bernardes Vice President, Sales and Marketing VP, Sales and Marketing 2015 present Captain Sergio Quito Vice President, Operations VP, Operations 2012 present Active GOL Pilot (737NG) Captain Celso Ferrer Vice President, Planning VP, Planning 2015 Present Active GOL Pilot (737NG)

6 Why GOL? Opportunity for asymmetric returns Attractive security from the leader in the Brazilian air passenger transportation sector Value entry point with near-term protection through enhanced liquidity Early innings of a Brazil macro recovery One of the fastest growing aviation markets Unencumbered assets Strong partnerships with Delta and Air France / KLM Asymmetric returns should Brazil s aviation activity levels resume historical trends Use of proceeds primarily to further de-risk the balance sheet 5

7 Investment Highlights

8 Investment Highlights 1 The Market Leader with Irreplaceable, Highly Defensible Network 2 World-Class Low Cost Operator: Significantly Better than All South American Peers 3 Best-in-Class Operations and Service: Driving Customer Loyalty 4 Positioned to Benefit from Stable Brazil Macro Recovery 5 Right-sized Balance Sheet with Strong Liquidity Position 6

9 1. GOL is the #1 Player in the #1 Market in Latin America Brazil Domestic Market Share 1 (by Revenue Passenger Kilometers (RPK)) Latin America & Caribbean Air Transport (million passengers carried, 2016) 2 Brazil 36,2% Mexico Colombia Brazil is 1.8x the next largest country Chile Peru 32,6% Argentina Panama Venezuela, RB 17,8% Ecuador Bolivia 12,8% 2017 El Salvador Trinidad and Tobago (1) ANAC, 2017 (2) World Bank,

10 1. Unparalleled and Irreplicable Network Leading Market Position at Key Airports That Represent 75% of Brazilian Traffic Salvador Punta Cana Belem 27% 24% 28% 27% 32% 16% 47% 16% 7% 3.6 Recife % Brasilia 8.4 Curitiba % 32% 35% 3% 33% Boa Vista Paramaribo Macapá Manaus Santarém Belém Sao Luis Fernando de Noronha Marabá Teresina Fortaleza Cruzeiro do Sul Carajás Natal Campina Porto Velho Juazeira do Norte Grande Joäo Pessoa Rio Branco Palmas Petrolina Recife Macció Aracaju Cuiabá Salvador Brasilia Santa Cruz de La Sierra Goiania Montes Caldas Novas Ilhéus Claros Porto Segura Campo Grande Uberlandia Belo Horizonte Juiz de Fora Vitoria Presidente Prudente Campinas Rio de Janeiro Londrina Maringa Assunçäo Sao Paulo Faz do Iguaçu Curitiba Chapcco Joinville Navegantes Florianopolis Caxias do Sul Córdoba Porto Alegre Santiago Mendoza Rosário Montevidéu Buenos Aires 35% 30% 20% 28% 15% 18% 18% 1.5 Fortaleza (1) 2.7 1% Rio de Janeiro (SDU + GIG) % 47% 40% Belo Horizonte % 57% 50% Gol is the #1 player in the two largest airports and the #2 player in Brasilia, Brazil s 3 rd largest airport 29% 9% 24% 32% Porto Alegre % Slot-constrained Azul Latam Others 39% 16% 7% Sao Paulo (CGH + GRU) % 41% Note: Figures inside each pie represent annual PAX/year in millions Source: FDC, Prof Paulo Vicente, ANAC. (1) Pro Forma for GOL s new seats available in Fortaleza 8

11 2. World-Class Low Cost Operator Over 20% lower than next Brazilian Peer (1) Lowest Cost Provider in Brazil (1)(2)... (CASK ex-fuel in US$ cents, stage length adjusted) (3)... One of the Lowest in the World (1)(2) (CASK ex-fuel in US$ cents, stage length adjusted) (3) RyanAir 2,40 4,41 easyjet 2,63 Volaris 4,26 4,41 Latam Brazil 5,40 Spirit 4,85 Southwest 5,40 Allegiant 5,67 Azul 5,62 WestJet 6,50 JetBlue Source: Company filings (1) LTM as of December 31, 2017 (2) Azul, Easyjet, Latam Brazil, Ryanair, and Volaris data as September 30, 2017 (3) Calculated as ((observed length of haul/base length of haul [Gol average of 1000])^.5) times respective carrier unit cost 9

12 2. World-Class Low Cost Operator Single, Optimal Fleet Type Boeing 737 drives lower cost and efficiency Simplified fleet (No. of planes) Type # of planes Seats per plane Total: 119 (1) Average: 167 B737 NG Latam TAM: 141 / Total: 298 (2) Average: 198 A320 Family A B Enables GOL s superior: Scheduling efficiency Maintenance efficiency Operating efficiency Flexibility High utilization B ER B787 Family Azul Total: 118 (3) Average: 111 Embraer E Jets ATR A320-Neo A Avianca Brasil Total: 53 (4) Average: 159 A320 Family A GOL has the highest service level (95.6% flights departing on time and 98.3% flight completion) (5) at the lowest cost (CASK R$ 20.3 cents) (6) South America s largest all-b737 fleet GOL total fleet: 120 aircraft (1) (average age: 8 years) fleet: 28 aircraft fleet: 92 aircraft Order for 737 MAX 8 6 deliveries in 2018 ~15% more efficient than 737 NG (1) Fleet as of 4Q17, four aircraft are sub-leased to another airline. (2) Fleet as of September 2017 (GOLs)estimate (3) Fleet as of 3Q17, 10 aircraft not included in fleet have been subleased to third parties and 14 ATRs (4) Release Fleet as of 3Q17. (5) 3Q2017 (6) 9M

13 3. Best in Class Operations and Service NOVAGOL: Driving Customer Loyalty in Brazil through High Value-added Products and Services Service oriented, innovative platform Most on time Departures 94.6% of on-time departures % flight completion + Easy and Fast Flight Changes + GOL Online GOL s Flexible ticket allows clients adapt their flight schedules Flexible fares give clients freedom to change flights at no additional cost Selfie Check-in Allows passengers to save time and check in from wherever they are World s first app to use facial recognition to allow customers to check in Only Brazilian airline with this technology ensures best-in-class passenger experience for high value customers Functional Aircraft Services Eco-Leather Seats provide comfort during journeys WiFi / Onboard Entertainment + Loyalty Program + Best Customer Experience Domestic Lounge brings home experience and comfort to the airport GOL + Conforto Onboard sales / menu GOL+ Conforto seats provide more leg room as well as priority boarding and check-in Best network The leading frequent flyer program in Brazil, with over 13mm members Key differentiator, critical driver of customer loyalty 11

14 4. Improving Macro Fundamentals in Brazil Inflation Rate (%) GDP Growth (%) 10,7% Inflation returning to historic lows and GDP growth normalizing 3,0% 2,8% 2,9% 5,9% 6.3% 6,9% 0,5% 1,0% 3,8% 4,2% 3,0% (3,8%) (3,6%) E 2019E E 2019E Source: Brazil Central Bank. 12

15 Flights per capita, Underpenetrated Market with Sustainable Growth Brazil has the 3 rd most flights per capita in Latin America, with significant growth potential 2,5 2,0 North America has over 4.1x the number of flights per capita compared to Brazil 1,76 1,5 1,21 1,17 1,0 0,5 0,53 0,52 0,43 0,43 0,39 0,38 0,36 0,09 - (1) North America Japan Europe Chile Colombia Brazil Peru Mexico Argentina China India Source: Airbus Global Market Forecasts (1) United States and Canada 13

16 4. Since IPO, Brazil passenger traffic has grown by 7.5% annually while GOL has grown by 10.4% Brazil Domestic and International Passengers 20-Year Annual Growth ( ) Brazil has Favorable Passenger Growth and Outgrowing the Broader Aviation Market 300 6,0% 5,6% ,0% 4,8% 200 4,0% 4,1% 3,4% 150 3,0% 2,4% ,0% ,0% Other Lines Gol Market 0,0% Asia-Pacific Brazil Latin America Europe North America Source: Company filings, Airbus Annual Report,

17 4. Network Diversification and Upgauging International Capacity will Enhance USD Revenue B737 MAX and strengthened international network provide increased USD revenue generation International Connectivity Unlocking Demand New FOR hub (with Air France / KLM) will allow more interline traffic and connectivity to Florida, Europe, the Caribbean and all major cities in South and Central America 737Max 8 to drive increased international traffic and increase demand Reinforcements on BSB hub; focus on international expansion and network integration Provides for enhanced USD revenue source (up to 20% of total) Higher utilization / lower costs driving operating leverage Besides FOR/BSB to FL, GOL could reach more than 16 new destinations with the MAX range. Range From BSB / FOR Range From GRU / GIG Strategic Partner Network GOL s Int. Network 12 Codeshares and 74 Interlines for Global Distribution 15

18 5. GOL s Recent Capital Structure Improvements Recent offering of senior notes has improved GOL's credit profile Steps Results Bond Offering Completed $500 million offering of Senior Notes due 2025 with a coupon of % + Re-Opener Raised additional $150 million on the 2025 notes = Increased Liquidity Retained over $200 million in cash from offering for general corporate purposes Lower Cost of Debt Decreased blended cost of debt to 7.9% from 8.3% Increased Debt Maturity + Increased average maturity of debt from 3.9 to 6.3 years Tender / Redemptions Over $395 million in aggregate principal amount of Notes were either tendered or redeemed Credit Rating Upgrade Moody s upgraded rating by 4 notches to B2 Fitch upgraded rating by 2 notches to B S&P upgraded rating by 1 notch to B- 16

19 5. Prudent Balance Sheet Management GOL s credit profile has markedly improved Balance sheet deleverage Short term debt reduction (R$mm) Net debt (ex. Perp) Net debt (ex. Perp) / LTM EBITDA (R$mm) Short term debt Liquidity / Short term debt 10,2x 8,0x 5,6x 4,2x 5,2x 4,2x 3,4x 3,0x 2,8x 2,1x 2,5x 2,3x 2,1x 2,4x 3,6x 2,7x Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Increased interest coverage (R$mm) LTM EBITDAR LTM EBITDAR / Interest Exp. + Rent 1,8x 2,0x 0,8x 0,9x 0,6x 0,7x 2,3x 1,0x 0,9x 2,7x 1,5x 2,4x 1,2x LTM EBITDA / Interest Exp. LTM EBITDAR / Interest Exp. 2,6x 1,5x 1,2x 1,1x 1,2x 2,8x 1,7x 1,3x 3,3x 2,1x 1,5x Increased liquidity (1) (R$mm) 23,3% 21,4% 18,6% 19,5% Total liquidity Liquidity / LTM Net Revenues (%) 30,1% 15,5% 17,8% 20,6% , Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 (1) Liquidity: Cash, equivalents, short term investments, restricted cash and receivables. 17

20 5. Solid Partnerships Best Strategic Partners Delta is a strong supportive shareholder of GOL, with 9.5% equity stake Best-practices sharing among Delta and GOL allows cost savings and efficiency initiatives, and incorporates knowledge and experience to technicians and crews Air France KLM holds 1.2% of GOL s share capital, in an alliance that significantly expands GOL s geographic reach 18

21 Familiarity (millions) 5. Most Valuable Loyalty Program in Brazil Smiles Members Market Valuation of World s Publicly-traded Loyalty Programs 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0-13,7 11,0 11,2 11,4 11,5 11,8 12,0 12,3 12,5 13,0 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 (US$ in millions) 1 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $0 >$3,000 >$1,500 >$200 Smiles Multiplus Aimia Provides GOL High Flexibility Smiles Familiarity 2 High value unencumbered asset 20 Managed as a separate business unit Program A 9 Advance ticket sales Program B 4 Program C 3 Increased load factor with low impact on yield Program D 1 Dilution of fixed costs Program E 1 Program F 1 Strong brand increases value perception to customers Program G (1) Source: Factset (2) Source: Brand Dynamics - Kantar Milward Brown - April/

22 Financial Review

23 Strong Margins and Cash Flow Generation Net revenue EBITDA and EBITDAR (R$mm) $8,104 $8,956 $10,066 $9,778 $9,867 $ $ (R$mm) 3,2% (4.8%) $258 17,0% 18,0% 9,2% 9,6% $1.526 $1.813 $827 $968 13,7% 2,4% $1.336 $236 21,7% 23,0% 24,6% 16,0% 11,6% 14,1% $2.710 $2.435 $2.141 $1.760 $1.144 $1.495 ($386) EBITDA EBITDAR EBITDA margin EBITDAR margin EBIT Operating cash flow (1) (R$mm) (4.8%) 3,0% 5,0% $226 $505 (1.9%) 7,1% 9,5% 11,0% $1.210 $990 $696 (R$bn) $1,0 $0,0 $0,1 $1,6 $1,8 ($95) ($0,5) ($0,1) ($906) (1) Net income adjusted for non-cash items and change in working capital. Note: 2018 estimated figures based on Company guidance. 20

24 Liquidity and Leverage Liquidity 1 (R$ MM) Total Liquidity + Deposits2 Liquidity 2 / LTM Net Revenues Interest Coverage (R$ MM) EBITDAR LTM EBITDAR LTM / Interest+Rent EBITDA LTM / Interest 27,2% 26,9% 1,922 2,759 3,482 36,3% 2,1x 1,7x 1,5x 1,2x 1,3x 1,5x Q16 3Q17 4Q17 4Q16 3Q17 4Q17 Short Term Debt (R$ MM) Short Term Debt Liquidity / Short Term Debt 2.7x 2.3x 3.6x Balance Sheet Leverage Net Debt (ex-perp) Net Debt (Ex-Perp) / LTM EBITDA 4.2x 3.4x 3.0x 4,789 4,345 4,417 4Q16 3Q17 4Q17 4Q16 3Q17 4Q17 (1) Cash, equivalents short term investments, restricted cash and receivables (2) Includes maintenance /and lease deposits. 21

25 4Q17 Highlights Indicators 4Q17 Var. x 4Q16 Operating Income (R$MM) % Operating Margin 13.0% +5.6 p.p. ASK (BN) % Traffic (000) 8, % RPK (BN) % Load Factor 81.0% +3.4 p.p. Yield (R$ cents) % Pax Revenue (R$MM) 2, % RASK (R$ cents) % CASK (R$ cents) % Net operating revenues: R$3.0 billion (+11.8% vs. 4Q16) Net Income: R$6 million Aircraft utilization: 12.4 block hours/day (+5.4% vs. 4Q16) Net Debt 1 /LTM EBITDA: 3.0x 1. Excludes perpetual bonds. 22

26 Outlook 2018 and Preliminary 2019 Financial Out lo o k Guidance Act ual Guidance Preliminary (Consolidat ed, IFRS) E 2019E 1 Total fleet (average) to 124 ASKs, System (% change) +0.5% +0.8% 1% to 3% 5% to 10% - Domestic +0.5% +0.9% 0% to 3% 1% to 3% - International +0.2% +0.2% 7% to 10% 30% to 40% Seats, System (% change) -3% -3,90% 1% to 3% 3% to 5% Departures, System (% change) -5% -4,20% 1% to 3% 2% to 5% Average load factor (%) ~ 79% 79,70% 79% to 80% 79% to 81% Cargo and other revenues (R$ billion) ~ 1.4 1,4 ~ 1.6 ~ 2 Total net revenues (R$ billion) ~ ~ $11 ~ 12 Non-fuel CASK (R$ cents) ~ ~ 15 ~ 15 Fuel liters consumed (mm) ~ 1,370 1,379 ~ 1,400 ~ 1,440 Fuel price (R$ / liter) ~ ~ 2.2 ~ 2.6 Aircraft rent (R$mm) ~ ~ 950 ~ 1,000 EBITDA margin (%) ~ 14% 14.1% ~ 16% ~ 18% Operating (EBIT) margin (%) ~ 9% 9.4% ~ 11% ~ 13% Effective income tax rate (%) - N.M. ~ 0% ~ 0% Capital expenditures (R$mm) ~ ~ 600 ~ 600 Net Debt 2 / EBITDA (x) ~ 3.4x 3.0x ~ 3.0x ~ 2.5x Fully-diluted shares outstanding (million) Earnings per share fully diluted 3 (R$) 0.80 to to to 2.30 Fully-diluted ADS outstanding (million) Earnings per ADS fully diluted 3 (US$) 0.50 to to to 1.50 (1) 2019 figures do not consider IFRS 16. (2) Excluding perpetual bonds. (3) Excluding non-recurring expenses from financial results. Downside risks: external shocks, intensity of competitive fares and/or capacity growth 23

27 Profitability (EBITDA) 4Q16 vs 4Q17 RASK (R$ cents) CASK (R$ cents) +17.1% EBITDA (R$ million) % % Q16 4Q17 Fuel CASK % CASK Ex-fuel -4.6% 12.0% 4Q16 EBITDA Margin 4Q17 4Q16 4Q17 4Q16 4Q17 24

28 Operating Cash Flow Generation 22% 17% 16.3% Full year Quarter 15.3% 21.1% Operating Cash Flow Margin 12% 7% 2% 1.3% -3% Q16 4Q17 in R$ million Q16 4Q17 Operating cash flow , Investing cash flow 95.6 (817.5) (234.6) (362.8) Financing cash flow 2 (1,062.8) (79.7) Net increase (decrease) in cash and cash equivalents (839.6) 1, ,068.9 Total liquidity 1 1, , , ,187.0 (1) Consolidated cash. cash equivalents and account receivables. (2) Includes foreign exchange variation on foreign subsidiaries. 25

29 GOL Operating Fleet Plan Aircraft Type Configuration Capacity: 138 Pax Range: 5,570 km Type: Capacity: 177 Pax Range: 5,440 km Type: Capacity: 186 Pax Range: 6,510 km Type: MAX TOTAL

30 GOL Today Better Relative Value The Market Leader with an Irreplicable, Highly Defensible Network World-Class Low Cost Operator: Significantly Better than All Peers Best-in-Class Operations and Service: Driving Customer Loyalty Positioned to Benefit from Stable Brazil Macro Recovery Right Sized Balance Sheet with Strong Liquidity Position 27