Welcome to GOL Airlines Q2 2022 Results Conference Call. This morning, the company made available its results. After GOL's presentation, we will initiate the Q&A session for analysts and investors when further instructions will be provided. This event is also being broadcasted live via webcast and may be accessed through the company's website at www.voegol.com.br/ir and MZiQ platform at www.mziq.com. Those following the presentation via webcast may post their questions on the platform, and their questions will be either answered by the management during this call or by GOL's investor relations team after the conference is finished. Before proceeding, we emphasize that forward-looking statements are based on the beliefs and assumptions of the company's management and on information currently available to GOL. They involve risks and uncertainties given that they are related to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should consider that events related to macroeconomic conditions, industry, and other factors could also cause results to differ materially from those expressed in such forward-looking statements. At this time, I will hand you over to Mr. Celso Ferrer, CEO. Please begin. Good day, everyone. Thank you for joining us today. I took the role as CEO this quarter with the commitment to focus on three main pillars, growth, consistency, and proximity, and look forward to sharing more with you about this over the coming quarters. GOL's strength has always been its commitment to serving the customers and being the best for all, and that will continue to be the guiding light as a company. It is an exciting and dynamic time for the airline industry as new demand trends are emerging in the post-pandemic recovery. With the help of our team of Eagles, I'm confident in leading the GOL to even greater heights. Turning now to the results for the quarter, we recognize two very important achievements, especially considering the seasonality of the period, historically the weakest of the year. We grew our revenues and improved our operating results. Notably, we recorded one of the highest levels of quarterly revenues in GOL's history. The Q2 represents a milestone in the recovery of the demand for air travel. We had resumption of the corporate travel stimulated by new forms of hybrid working in companies and stability in the leisure market. The combination of the high percentage of the Brazilian population vaccinated and our future booking curves make us believe that demand will continue to increase in the coming months in a consistent and sustainable way. Once again, GOL's ability to efficient management this increasing traffic derives from the company's main differential, strong and disciplined capacity management, with a continuous focus on preserving profitability and liquidity. I want to draw particular attention to the 66% increase in yields and 51% increase in CASK. This yield was 35% higher than pre-pandemic numbers in Q2 of 2019, and our yields are growing faster than our competitors. Our capacity measured in ASK more than doubled, and we surpassed not only second Q 2021 sales but also those of second Q 2019. These numbers are significant to us as it implies that our growth is now returning to the track that was prior to the pandemic. Our unit cost ex-fuel decreased by around 45%, an important metric that demonstrates how GOL increased its productivity and efficiency during pandemic. We had an average of 500 daily flights in the quarter, reaching more than 200 markets and carrying approximately six million passengers, more than double the number of passengers carried in Q2 2021. The GOL network is evolving to account for a rebound of the corporate demand, which provides the best margins for our company. According to ABRACORP, GOL continues to maintain its leadership in this segment. We expanded our presence in regional markets with four new bases, Ribeirão Preto and São José do Rio Preto in the state of São Paulo, and Passo Fundo and Uruguaiana in the state of Rio Grande do Sul. The connectivity of these routes in Guarulhos Airport places us in a privileged position to serve these passengers and improve our customer services. In the international market, we resumed flights to Miami, Orlando, and Buenos Aires using the efficiency of our Boeing 737 MAX aircraft for a longer flight and greater fuel savings. In addition, we also resumed our operations to Paraguay and Bolivia, departing from Guarulhos. In the year-over-year comparison, we double our capacity, our demand, and our daily average flights. As a result, our unit revenue grew by 41%, leading us to achieve one of the highest quarters for the revenue in the GOL's history. Time after time, our business model and the lowest cost structure in the region proven to be highly efficient in challenging operating environment, and that put us in an advantageous position to capture the demand rebound on the Brazilian market. We are keeping the pace of our fleet modernization plan due to the combination of cost advantages and greater sustainability from the reduction in the carbon emissions. This quarter, we took delivery of three new 737 MAX aircraft and returned one 737 NG. By the end of 2022, we expect to have 44 737 MAX aircraft, representing around one-third of the total fleet. Our target is to have 50% of our fleet comprised by 737 MAX in 2025. The aircraft returns planned for the following quarters will preserve GOL's liquidity using the maintenance deposits accumulated to offset the aircraft return costs. Three aircraft previously scheduled to be returned will be converted to dedicated freighter models for the partnership with Mercado Livre, which will generate approximately BRL 100 million of potential incremental revenue to GOLLOG. The first aircraft is beginning operation next month. Turning to our loyalty program, the Smiles customer base surpassed 20 million members, and the level of sales achieved BRL 1 billion in the quarter. Synergies were generating from tax and seat inventory management, important levers that optimize GOL's working capital and liquidity. The acquisition of the minority interest in Smiles had a payback period of one year, and we still expect at least BRL 3 billion in additional synergies in the following years. Now, I would like to make a couple of comments about our 2022 guidance detailed in our earnings release. Adjustments in our capacity for the rest of the year reflect the industry dynamic due to a more challenging scenario in terms of fuel and exchange rate variations, partially compensated by a strong revenue environment. Thus, we expect lower margins and leverage to remain at around 8x adjusted net debt over recurring EBITDA. I would like to conclude by thanking you again our team of Eagles, in addition to our customers, investors, and suppliers who continually demonstrate confidence in the company business model and management. Now, we will comment on our financial highlights. Rich? GOL's ASK and RPK more than doubled compared to the Q2 of 2021, achieving approximately 80% of 2019 levels of the pre-pandemic year. GOL's yield and RASK presented an increase of 66% and 41% respectively in the same period, hitting 43 and 36 cents in reais. As a result, GOL had a record in terms of revenue for a Q2 of BRL 3.2 billion, which was around 3% superior to the Q2 of 2019 revenue and more than three times 2Q 2021 revenue. Ancillary revenues represented approximately 8% of total net revenue, mostly driven by Smiles and GOLLOG. GOL's recurring EBIT and EBITDA margins were 1.6% and 13.5% respectively, being the third consecutive quarter of positive recurring results. GOL had the fifth consecutive quarter of increase in the company's sales, more than doubling the level of sales registered in the Q2 of 2021, and approximately 20% higher than pre-pandemic Q2 2019 sales numbers. GOL is already at a higher level of average daily sales compared to the pre-pandemic level, with more potential for further growth, when ASK is increased to match a higher demand expected for the H2 of this year. Further, GOL realized a substantial improvement in the company's average tickets sold, which demonstrates our considerable experience in managing oil price and exchange rate volatility. We had a decrease of approximately 14% in our recurring CASK measured in dollars compared to the Q2 of 2021. In Brazilian reais, we achieved a 20% reduction in the recurring CASK because of our capacity rebound and lower levels of fleet idleness. Like all airlines, we were impacted by the surge in oil prices, which have increased 64% compared to the Q2 of 2021. Brazilian jet fuel prices increased 81% over the same period, and our fuel unit costs increased by 72% consequently. You'll note the difference there. The increase in fuel costs was partially offset by an increase in our fleet efficiency, which presented a reduction of 8% in fuel consumption per flight hour. As mentioned, we're continuing with our fleet renewal, which brings considerable fuel cost savings from the introduction of more 737 MAX into the fleet. Nonetheless, the recurring net result for this quarter was negative by half a billion BRL, driven by the increase in the jet fuel price and lower impact of exchange rate variations compared to the Q2 of 2021, partially offset by BRL 2.2 billion of additional operating income. Regarding cash flow, we had BRL 4.3 billion in operating revenues that, although impacted by the increase in the fuel cost, generated a positive operating cash flow of BRL 1.6 billion. As part of our investment in capitalized maintenance, spare parts, and inventory, we had an investment cash flow of half a billion BRL. Financial cash flow was a positive BRL 0.4 billion, including BRL 0.7 billion in aircraft lease payments. As a result, we obtained an increase of approximately BRL 0.7 billion in liquidity at the end of the Q2 of 2022, mainly due to the increase of 14% in accounts receivable when compared to the last quarter. We maintain continuous discipline in the management of the company's liabilities. We paid more than BRL 5.5 billion in amortizations and BRL 1.6 billion in interest and other financial expenses since the beginning of 2020. Funds raised during the pandemic period were cautiously used to reduce the company's cost of capital and to invest in assets which are with a high return, such as the acquisition of the minority interest of Smiles. We have significantly lower future commitments than our competitors, which benefits our focus on productivity. The company's successful liability management throughout the pandemic period has put us in a leading position with the lowest levels of short-term debt among our competitors. In addition, the recovery of our adjusted EBITDA margin will gradually reduce leverage towards pre-pandemic levels. Celso? I want to conclude our remarks today by emphasizing that we are committed to increase productivity and aircraft utilization, which will improve our competitive advantages during the high season in the H2 of the year. Also, I want to invite you to consult our annual sustainability report with a comprehensive ESG data and initiatives available in the GOL's IR website. Furthermore, I would like to thank each one of more than 14,000 employees in our team of Eagles and acknowledge that everyone's commitment to improving our results, in addition to build a closer relationship with our customer. Through their dedication, I am convinced that we are prepared to overcome the current market challenges and seize the opportunity to lead the airline industry in the next phase of growth. Operator, you may initiate the Q&A session. Thank you. The conference call is now open for questions. If you have a question, please press star one on your touch tone phone at this time or any time. If at any point your question is answered, you may remove yourself from the queue by pressing star two. We ask that when you ask your questions, speak close to the receiver of the device so that everyone can hear you clearly. Participants can also send questions via the webcast platform. You need to click on the question mark in the upper left corner and type in your question. Please hold while we poll for questions. The first question comes from Daniel McKenzie from Seaport Global. Please go ahead. Oh, hey. Thanks. Good morning, guys. Rich, you know, I'd like to put a finer point on this morning's outlook. You know, the one thing that stands out to me, we've got an improved revenue outlook and an unchanged guide for, you know, a flat full-year pre-tax margin despite the H1 losses. That implies you've got line of sight on meaningful profitability in the back half of the year. I'm just wondering if you can flesh that out a little bit more for us. Is the thought behind that that, you know, just given increased corporate travel spend, we should see a better supply-demand dynamic as we move forward? Yeah, Dan. Thanks for that question. Yeah, a couple of things. One is, you know, at the industry level, you know, the H2 of the year is more significant in terms of results from our business, with Q3 generally being, you know, the strongest quarter, and Q4 also being strong in terms of the beginning of the holiday travel season. Number one. Number two, as you know, you know, since the end of February, we've made some significant adjustments in our fare structure, which we do expect to maintain, going forward. Number three, the Q3, I would say kind of Q2 but into Q3 will kind of mark the end of the full transition back of corporate travel in our business here in Brazil, which is significant in terms of ability to increase fares and continue to improve average ticket and increase yields. At the same time, as you know, we're being very disciplined on capacity, given what's going on with costs and particularly fuel costs. That does tend to crowd out a bit VFR and leisure in our mix. The combination of those factors as we go into the high season part of the year will give us some good tailwinds as we go into the back half of the year this year. Against that, as you saw, is some slight increases in our ex-fuel unit costs because our initial target, when we started this year, was to get back to, you know, full peak GOL productivity, which is roughly 12 hours a day per aircraft across the entire fleet by the Q4 of this year. Given what's going on in capacity, where we're being, you know, and this applies to the market as a whole, you know, rationally, you know, cutting capacity to help compensate the increase in fuel costs, for us, for GOL, that peak productivity will be pushed to the Q1 of next year. All those are kind of what you're seeing going on there. Obviously, a big driver is the increase in revenues. We're, you know, managing the cost side of the equation through a combination of fares, but also through the capacity dynamics. Let me just pause there, see if I respond to your question there. Yeah. Yeah. Understood. No, I appreciate that. You know, I guess my second question here, and I'll just let others sort of dig in as well, but to put a finer point on plans for reducing leverage and strengthening the balance sheet from here, you know, the PowerPoint presentation this morning and the earnings release, you know, seems pretty clear that that's the direction GOL is gonna go. I'd just like to put another finer point on this. You know, it looks like, you know, GOL should see yet another cash build in the Q3 and then again in the Q4. I'm just wondering if that's a fair conclusion, just given the positive movements we're seeing in air traffic liability, you know, lease returns that are financed, you know, and you know, maturities that seem, you know, pretty de minimis from here? Yeah. I mean, when you put it in the context of leverage, I mean, obviously our target, you know, from a WACC optimization policy perspective, as you know, is three times leverage. That's a process that's gonna take, you know, 24 months to achieve. You know, the yields today, which are, you know, over 50% higher than 2019 levels, resulting in these higher revenues, is where it needs to be. The fleet efficiency component needs to catch up, and that's what we're dealing with here. As you know, we, through the pandemic, were able to manage our relationships with the aircraft suppliers, so that we kept the aircraft we're gonna need on the other side of this pandemic, and that has meant inefficiency during the majority of the pandemic, including up until now. When fleet efficiency goes back to our 2019 US dollar CASK levels, you know, on a pro forma basis, you know, EBITDA would surpass the 2019 EBITDA of BRL 4.1 billion. The question is when that's gonna happen. As I was saying previously, originally we thought on a run rate basis, we would be hitting that into Q4 this year. That's looking more like it's gonna be into Q1. It's taking longer on the cost side. We also have further room to improve in terms of cost reductions given the scenario. You know, we're still in relatively better performance for Q3 and Q4 this year, still carrying idleness, which we're gonna be carrying until probably until you know January, February of next year. When fleet efficiency is corrected and CASK is normalized with the normal run rate capacity, you know, we'll be hitting those numbers. That's really more just to complement what you said. I mean, you know, those projections that you're talking about for Q3 and Q4 is how we're managing the business. You know, the other component that hopefully everybody appreciates is, you know, we're still not back to margin management at this company. We're still doing cash flow management. Even though, you know, we're providing guidance on margins, and you have the margins in our financial statements, those are accounting conventions that come out of how we're managing the business, which is not yet back to be focused on margin management. We're still focused on matching assets to liabilities, matching inflows with outflows. That's just how we're managing it, and it's probably not gonna be until we hit the Q4 this year that we're gonna be back to that component. I'll just pause there, and see if. I think Celso wanted to comment or add to that. Yeah. No, on your point then, on your first question, I just want to raise some points here about how we are doing the yield management. We have a very strong increase in oil prices concentrated in the Q2 this year. Once you are there, I mean, you already sold partially your inventory by lower fares, and then you need to somehow compensate that, and we steep that curve. We steep the pricing curve so much, and the industry follows because now it's really time to be rational. What we expect is that yield management will come back in the sense that we will be forced to have a parallel curve on the pricing side instead of so steep a curve like we had in the Q2. That will drive inventory management and create more value for the company. Terrific. Thanks for the time, you guys. Thank you, Dan. The next question comes from Michael Linenberg from Deutsche Bank. Please go ahead. Oh, hey. Good morning, everyone. Can you guys hear me? Yeah, it's a little fuzzy, but we can hear you. Oh, you know, let me pick up my speaker. A couple questions here. I guess number one, Celso, congratulations on your new role, well deserved. Now, you've obviously been in the C-suite for some time, and you've had, you know, a lot of opportunities to watch the company develop and grow. Normally with the change of leadership, you know, sort of bringing in, you know, maybe a slightly different perspective. I'm just curious as you think about GOL over the next five years. I sort of think of GOL historically as just, you know, a low-cost carrier, you know, with a very strong Brazilian position. You know, today, you know, news out, I guess, you know, recently with GOL looking to fly all-cargo 737s, and maybe you can touch on that. You know, now you own 100% of your Smiles business. You know, there's this opportunity with Abra. I see stepping stones to kind of take it to the next level, and it's the timing is propitious with you moving into the leadership position with all these things on the horizon. Can you talk about, you know, maybe GOL moving to that next level and maybe any things that you may do differently than your predecessor or maybe it may be the same? If you could give us some perspective on how you're thinking about leading the company and seizing some of these opportunities I just mentioned. Okay. Thank you, Michael Linenberg. Thank you for your kind words. We are coming from the worst two years that the airline faced ever. We need to change. I mean, we need to change. We had, at the beginning of the pandemic, we sat down here. I was with Jackie and Richard and everybody here, and we decided we don't need to change our business model. Let's treat the pandemic as a transition to a new market. In this new market, we'll deserve, we'll require a company like GOL, with simplicity, adaptability, and a strong business model. We don't expect to change the business model of the company. Quite the contrary, I want to really focus on cost and productivity. It's, I mean, the main pillar right now, I mean, we came back from the pandemic, the business model is there, but like Richard just mentioned, we need to recover, and we need to bring back the planes to fly more than 12 hours per day. We need to turn planes in a faster way. Of course, we increased turnaround times during the pandemic, and now it's time to bring it back to what we should be. We want to really transform the digital platform of the company. We changed our PSS system from Amadeus to Sabre last year. We faced some problems with our customers, but now it's solved, and now it's time to really leverage this to the digital transformation where it's gonna be really my focus going forward to reduce certain costs and also have more productivity in the airport and also in all the customer-faced environments in the company. Like you just mentioned, Smiles is a priority. I mean, we are generating a lot of synergies together. We have now all the customer areas that go in the same structure as Smiles. So what we really want is to customer will look for Smiles and GOL as one company, and we want to leverage that position. This is one of my first focus and incremental e-commerce and also new revenue that we can access through Smiles' platform. There are also, as you mentioned, looking for new revenue opportunities on the cargo business. This partnership with Mercado Livre, we are facing this as a new airline that we are gonna launch. We are talking to the employees here. We are saying that we start Gol with six aircraft, and we are starting the cargo GOLLOG operation with Mercado Livre also with six aircraft. This is the way we are facing this. It's a tremendous opportunity for us also to have more synergies on the productivity side. It's the same pilots that we fly, same aircraft, same maintenance. We're gonna start to convert cargo for the cargo planes in our facility here in Aerotech, so many things to do on the cargo side as well. You mentioned Abra, and I think the way we see the market now is a tough market. I mean, it's a tough scenario that we have in front of us. Fuel costs are at the highest level. Air tax is super high in Brazil. The combination of the two is putting us in a very tough position at this point. Consolidation, new forms of alliances, joint ventures, and also Abra, which is a new kind of airline alliance organization, a new way of thinking, is where we are putting a lot of our efforts now to make sure we are gonna leverage all the synergies on the cost side and also develop a strong network to cover Latin America. These are, I mean, the key items in my agenda right now. That's a great rundown. Just on Abra, a finer point on that. I had hoped that we would be hearing something maybe by now. There may be some regulatory, you know, hurdles. Can you just update us on when are we gonna hear? Because it sounds like there's a rollout coming. You go to the website, and it seems like it's only one or two pages deep. Presumably there's gonna be a lot more behind that when you have something to announce. Is that end of our summer? When should we expect to hear something that goes into a lot more detail on that structure? Yeah, in the near term. I mean, obviously we've planned it very carefully, and it has to go through the proper regulatory approvals before we can all sit down at that table. Yeah, it's definitely inside of the Q3 here, Mike, and you know, perhaps sooner. It's basically just been, you know, our expected regulatory approval process that's happening in the various domiciles. Okay. Rich, if I could just squeeze in one more. I'm— You may have said this, and I apologize if you said it, but on you know, your waterfall on your cash flow, super helpful. I know you were guiding BRL 3.6 billion at quarter end. You came in at BRL 4 billion. You have a lot of different buckets here on page 13. Now, where did that additional BRL 400 million? That's what it looks like. It looks like you came in BRL 400 million better. Maybe my math is wrong, but it looked like you came in better than what you were guiding to from your last guidance. Yeah. It's basically higher than expected sales, which produced higher than expected accounts receivable. Yep. As you know, we need full access to those receivables and, you know, the accounts receivable are in the liquidity calculations. There was also a slight increase in the value of our deposits of about BRL 100 million due to FX changes. Okay. Use those deposits to, you know, cost out, you know, aircraft related activities, be it, you know, you know, maintenance or engine maintenance overhauls or aircraft redeliveries. Those deposits we include in our liquidity because we use them to offset cash outflows that we have to make. That's right. That increase in the receivables, though, is very supportive of your pretty meaningful upward revision in revenue for the year. That makes sense. Thanks. Good quarter. Appreciate it. Thank you, Michael Linenberg. The next question comes from Stephen Trent from Citi. Please go ahead. Good morning, gentlemen, and thanks very much for taking my questions. I just had two quick ones. First off, your comments were very helpful on focusing on cash flow management versus margin management. When we think about 2023, you know, any high-level view to what extent we'll still be dealing with fleet idleness expenses when we think about EBITDA versus adjusted EBITDA? Yeah, Steve, thanks. Thanks for asking a question about 2023. You know, as I was saying, you know, when we began this year, you know, our operating plan, our network plan, our fleet plan, were all calibrated to get back to what we call normalized operation into Q4. You know, as you know, we've been carrying aircraft that we need to serve demand on the other side of the pandemic. Because of what's been going on since the end of February with fuel, you know, into Q2, we recalibrated our capacity plan, you know, for lower capacity, you know, through roughly December of this year. You know, that's reflected in what you guys see in terms of the schedules. It's also, you know, what the overall industry is doing as well. At the same time, you know, we are trying to accelerate our fleet modernization from NGs to MAXes. The short of it is that getting back to that, you know, goal peak operating efficiency of 12 hours a day per aircraft across the entire fleet, you know, we no longer are planning on doing that into Q4. That's gonna get pushed out into the Q1 of next year. We do expect to have full normalized operating efficiency by the Q1 of 2023. The difference in the question that you're asking, I mean, the results going forward are not including idleness anymore. There's either no adjustment or a very low adjustment. The difference is not idleness, it's the transformation costs related to the transition from NGs to MAX aircraft that is in that non-recurring number going forward. We'll continue to separate that out. Those will continue throughout the rest of this year, but by the Q1 of next year, that should also, for the most part, be behind us, you know, 'cause we'll be approaching, you know, in the H1 of next year, we'll be approaching around 50 MAXes in the fleet and really kind of be on the other side of this acceleration of the fleet transformation that started in the Q4 of last year. This acceleration component will end probably in the Q4 of this year, and we'll be back to a more normalized fleet replacement next year. I think Celso wants to complement a point on that. Yeah. Steven, we also expect our healthy environment on the revenue side next year. Not only the customers that will now understand better what price level the market should be running, and this year has been a big transformation for the customer perspective, and they see the fares we are practicing right now. I think next year is gonna be more naturally the way they're gonna face the fares. We're gonna have the results of these Smiles and also the cargo activity in our top line revenues as well. We expect a strong year in 2023. Alberto, I'm gonna just weave in to the comments from the questions from the sell side, some of the questions we have from the buy side on the webcast platform. The question here is from Cristian Mayer at LarrainVial Asset Management. Can you provide more information on how much leases you're expecting to pay during 2022? Are you working on any types of deferrals for this year? You know, according to our guidance, you know, where you have the $3.2 billion dollars of adjusted lease debt, that implies BRL 2.4 billion reais of annual lease payments. You have that in our guidance. You know, some quarters can have a different cutoff on payments that can shift from one quarter to the other. As you know, we have you know negotiated terms across our you know lease portfolio, which includes almost 30 individual operating leases or lessors, and there's different agreements in place across that portfolio. You know, we manage our payments that we can do in the current month based on the concept of matching assets and liabilities, inflows and outflows. The BRL 2.4 billion is approximately $40 million of monthly lease payments, which is very similar to our pre-pandemic levels. We've you know been refinancing some of our deferrals by you know including as supplemental rents for new upcoming MAX deliveries. Before going to the next question from the sell side, I have one other question that I'll squeeze in here from the platform from Lucas Barbosa of Santander. How is demand responding to fare increases? In your view, is there still room for fare expansion in the H2 of this year? How do you expect the competition to behave regarding capacity and fares? Yeah. I will take that, Richard. We see we grew a lot of our revenues during this quarter. Like I said before, the curve was pretty steep at this point because we need to somehow compensate the revenue and make the results that we were expecting for the network. At certain point, at certain segments, we may achieve probably a cap on this, but we are gonna pass through the fuel cost, and we will adjust capacity accordingly. Like you can see in our guidance right now, we are reducing our capacity going forward. We are doing this inside the quarter as well. From August and September, we cut capacity by more than 10% right now as the other competitors also follow. We think there's gonna be even more rationality going forward. The other thing that is important is that the air traffic liability for the next half of the year grew by more than 50%. The good news on the H2 of the year is that we had been prepared to face higher fuel costs. We started to work in the long advanced purchase contracts much prior to the quarter. We are entering in this quarter with 50% more revenue on this segment, and we are gonna continue pass through the fuel on the remaining passengers. They will be responding accordingly because they already are in the Q2 right now. Corporate demand and frequent flyer, we expect also a faster catch up. We saw at the beginning of the year, 70% of the customers, corporate customers back. Then we had a peak in April of almost 90%. Then it is now flat between 60%-65% during May and June. In June, we also had some increase of COVID cases that hit a little bit of our load factor in June. We don't expect the COVID to be hitting us in the third and the Q4 going forward. The next question. Alberto? Yep. The next question comes from Savanthi Syth from Raymond James. Please go ahead. Hey, good morning. Just, can I ask on the MAX and capacity side, you know, both Southwest and Ryanair have talked about delivery delays. I just kind of wondering what you are seeing in terms of kind of Boeing being able to deliver the MAXes. You know, taking that into account, what you think kind of 2023 capacity can be, kind of on the low end and the high end. Yeah. Hi, Savi. We are not facing significant delays, and any delay has impacted our plans so far. We have received in the Q1 of this year eight new Boeing 737 MAX 8, and now three in the Q2. We are facing a 25-day delay, but we have been able to accommodate those delays. Most of the planes we took delivery of in the last 12 months, they were planes that were already built, and they were like sitting in Seattle, and they are just doing all the pre-delivery package and all the activities to deliver the aircraft for us. We are gonna start to take deliveries of the production line by the beginning of 2023. That's our own configuration, our own order. We don't have a red flag on those. We expect to continuously and to deliver the plan that we have of 44 this year and growing the fleet accordingly to our fleet plan. Great. Just any color on that 2023 capacity, like what we could expect, especially it sounds like you're thinking of returning to full utilization by the Q1, so it should be kind of full fleet flying. Kind of curious what the likely capacity growth could be in 2023. Yeah. The way we are seeing the last quarter of this year, it's we are gonna achieve the 2019 levels, and then we are planning 2023 according to our view of 2023 right now, which is likely growth for the domestic market, especially if we compare the H1 of this year where we faced Omicron in the beginning of the year, and now the spike on the fuel prices, the war and everything, and all the global concerns about interest rates. We expect the H1 of next year to represent a significant growth comparing to the H1 of this year. In the H2 of next year is where we think that we can sustain this level of productivity. Our fleet plan now represents what we think our view of 2023. We are ending the fleet next year of this more or less the same size. We are now the total aircraft this year for us is 136, and next year 139 aircraft. It's a small growth in terms of aircraft. We need to return the NGs. We are returning NGs. You know, you remember how many NGs we have returned during the pandemic, 18, and we are keeping that pace going forward. We are gonna have the fleet slightly bigger, but we are gonna have the productivity of this fleet back in terms of the utilization growing at least 10% comparing to what we have this year. That's super helpful. If I might just get a clarification on a comment on kind of the corporate back, you know, in here in the H2. I was kind of curious if that's corporate demand back in terms of volume or revenue. I'm just wondering if there might be kind of more upside here as well as we get into 2023. Like I said, it's 70% in the Q1, then we had a peak in April. May and June, more like kind of a plateau. July was also a plateau in terms of business travelers. What we expect from August and September is a little increase in number of tickets comparing to what we had in June and July. From October on, when we have more clarity also on the elections and everything, we expect more business travelers to come. What we have as a year recover plan for the corporate segment is around 65% in terms of passengers and more than 100% in terms of revenue. We also see an upside if more than 65% passengers come to our system. Super helpful. Thank you. I'm just gonna before we go to the next sell-side analyst question, I'm gonna insert a question from the platform, from one on the buy-side from Matt at DWS. Matt's question is what is the remaining costs of fleet transformation this year, and how will that be funded? There's about BRL 100 million per quarter of prorated costs, which goes according to the number of hours and cycles being incurred every quarter. Because remember, you know, the accounting rules require us to always have fully provisioned the expected return costs of the entire fleet, and then we'll adjust those up or down based on revisions to either the lease return conditions or the redelivery plan. Deposits will be utilized and self-financed by new credit lines related to MAX deliveries. Right now, most of the provisions are non-cash. You know, the costs of the return of the fleet are fully provisioned. How is that financed? Through a combination of credit mechanisms that we use on, you know, new MAX deliveries combined with use of our deposits, which we include in our liquidity. Operator, you can take the next question. The next question comes from Pablo Monsivais from Barclays. Please go ahead. Hi. Thanks for taking my question. I know you already talked a lot about yields and capacity, but if I can just ask a little bit more on the competitive environment. How are you seeing your competitors following your efforts on raising fares and lower capacity? Have you seen competitors moving with you or they are not following these efforts? Thank you. Hi, Pablo. I mean, we had a spike on the fuel price, so the entire industry was forced to be rational, especially at the beginning of Q2. What we are seeing in the market is really a rational behavior in terms of fares during the Q2 and also now in July. What we see is that we are leading the capacity adjustments. Actually, if you look at our view when we start the year, we start this year not loading all the capacity we can fly. We have been cautiously introducing step-by-step increase in our schedules when we are loading the system, while we saw the competition loading much more flights than us at the beginning of the year. This behavior is changing to a more rational scenario right now, also on the capacity side. What we saw for September and October was a cut, and I can say it was an industry cut because we also cut 10%. We saw also competition cutting 10% to sustain all the fare activity that we are required to do in this very high cost environment. We have been more cautiously since the beginning, but now we see competition also being cautiously and trying to preserve as much as we can the pricing power that we need to deal with these circumstances. Perfect. Thank you very much. The next question comes from Alejandro Zamacona from Credit Suisse. Please go ahead. Thank you. Hi, Celso Ferrer. Thanks for the job. Thank you for taking my questions. In terms of the yields and fuel prices, how much of the higher fuel prices would you say it is already reflected in the current yields? Or in other words, to what extent you have been able to do the pass-through of higher fuel costs to final customers? I have that. Let me just. The connection's a little bit bad. Your question is, how we're managing the increase in fuel prices? Was that the question? Yeah. I mean, how much of the higher fuel prices is already reflected in the current yields? Okay. Well, if I follow the question, you know, since February twenty-fourth, when, you know, this new scenario began, up until now, we've been able to recapture around 100% of the impact on our costs from increased fuel prices. Remember, you know, in Brazil, you also have the exchange rate effect in addition to the oil price effect. You know, in Q1 we had much less of an increase in our local fuel price than, let's say, U.S. airlines, which is gonna predominantly carry the tenor of the market, and in Q2 that was a little bit different. In the numbers we're providing you for our view on how we're gonna be managing the business for the H2 of this year, in our planning, we assume roughly a 70% recapture. That's generally how we've managed our business normally. You know, roughly a 70% recapture up or down, meaning if fuel prices go down, we'll only retain 70% of the benefit. If fuel prices go up, we'll be able to recapture 70% of the increment onto fares. That's just generally how we did the planning. You know, Q1 and Q2 was abnormal in terms of being able to get the roughly 100% recapture, which was combined in our case here in Brazil. Obviously in different markets, there's different effects. You have to be careful about, like, comparing the US market or European market with Brazil. In Brazil, in the last week of February up until now, you know, we had the accelerated return of the corporate travel. That was the main element that allowed us to achieve that here in our business at GOL specifically. Having said that, you've seen that same phenomenon coincidentally in majority of markets, at least that we follow in the Western Hemisphere. You saw a very similar phenomena, which probably most likely just has to do with the return of demand as COVID restrictions, you know, travel restrictions, both domestic, internationally have fallen off. I don't know if you wanna comment on that. Yeah. Alejandro, it's exactly what Richard mentioned. I mean, we need to deal with this. We are adjusting the whole pricing structure to be able to capture as much as we can. We expect also the competitive environment to support, I mean, the pass-through rates that we need going forward. Okay. I'm just gonna- Thank you. Oh, go ahead. No, go ahead, Alejandro. Yeah. Just another question. Go ahead. Mike. Yeah, thank you. Just another question in terms of the Abra, it's a follow-up. According to the formal announcement, there was a commitment of $350 million in Abra. How much of these resources could we expect is being considered for GOL? Thank you. Yeah. Yeah. Alejandro, the announcement was made in May is all the information that's being provided at this point. You know, once we get to the closing of that transaction after the appropriate approvals, we'll have more information on that. Okay, perfect. Thank you. Okay. Just to finish, we have, I have one other question from the platform that I'll answer. I didn't forget you, Florencia. From MetLife. What are the main sources of liquidity available at present? Well, you know, as you've seen how we've been managing the business, and this is also pre-pandemic, this is nothing new. There's been more of a focus on this during the pandemic. The main source is working capital management, in terms of how we, you know, match assets liabilities and manage that. Hopefully, there's no doubts on how we do that, you know, in terms of the information and the transparency we provided on how we do it. You know, that has generated, you know, more than BRL 1 billion to our cash flow. We continue to count on that on a relative basis to the overall size of the business. As you saw, you know, in the Q2, you know, the receivables increase is gonna be the main source of working capital as we normalize from now to Q4 and then through Q1. You know, we're still missing a piece of current assets through accounts receivable, but we do expect that accounts receivable balance relative to the size of the business to be normalized by the end of this year. You know, from a current asset, current liability perspective matching, that's where we expect to be Q4, Q1 of this year. We continue to do sales of Smiles tickets and points to banks and partners with Smiles. We continue to do that consistently. That I think is something also that many have kind of glossed over or perhaps not included in how they look at our business. As Celso mentioned, you know, we reacquired the minority interest a little over a year ago. You know, we closed and paid that transaction in June of last year. The cash component of that, including the recycled dividend, was about BRL 1.3 billion. We've already achieved the one-year payback on that cash payback on that. Then the loyalty program is increasing its volumes, and its value also increases to customer. That continues to be a very solid and consistent and growing source of liquidity, which is, you know, fully incorporated in how we do our working capital management here. Those are really the main sources. All those are kind of in our working capital management, and those are, you know, highly liquid sources. Obviously, requires management. Very precise and agile management. In addition to that, which, you know, outside of working capital, you know, you have the data on how we use our deposits, both aircraft deposits and maintenance deposits as it relates to the fleet renewal process. We're able to offset a large portion of those cash outflows with those assets. Then finally, you know, as you know, we have a significant amount of unencumbered assets that can be levered either through our existing programs that are already created that have generated financing on our unencumbered assets as well as other assets which are unencumbered, you know, such as related to the loyalty program. I guess just finally, we just got one final question here, which I'll slip in because we do have another five minutes here. The question is just, "Can you talk about your fuel hedging programs and activities?" You know, we continue to execute the same set of programs across oil FX that we've had always built into GOL's management since 2003. In terms of fuel hedging, which is specifically the question, our hedge position is roughly 25% for the H2 of this year and 25% for 2023, via instruments that do not have any downside risk, but provide protection in the mid- to high 90s Brent. That's important as you do comparative analysis of how different companies are doing hedging. You know, we have opted, you know, since the Q2 of 2020 to allocate budget basically through paying premiums for call options roughly. Not using costless collar or swap strategies, which can produce some significant downside risk and margin requirements. That's on the oil side of the equation. Roughly 25%, H2 of this year and 2023. On the FX side of the equation, we're also around 25% hedged for the H2 of this year and 0% for next year. I think that we've run through majority of the questions, and our time is almost up, so I'll flip back over to you, operator. All right. This concludes today's question and answer session. I would like to invite Mr. Celso Ferrer to proceed with his closing remarks. Please go ahead, sir. We appreciate your time and interest in our company. I hope you found our presentation and Q&A session helpful, and our investor relation team is available to speak with you as needed. Thank you very much. This concludes GOL Airlines conference call for today. Thank you very much for your participation, and have a nice day.