Brazil-based domestic airline GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL) (B3: GOLL4), has announced a May 2020 update to investors, the company said.
During this pandemic, GOL will continue to provide monthly updates of results and liquidity to its constituents and stakeholders.
Since the last monthly update on May 13, 2020, GOL has strengthened its liquidity position to over 12 months of cash reserves to shield and strengthen the Company through this crisis.
The Company´s vision is that recovery will lead to a more structured industry, in which GOL has the opportunity to play a greater role. The Company believes it is well-positioned in the recovery due to its 38% market share of the domestic passenger market in Brazil with a network that serves both business and leisure travelers.
The Company continues to make the necessary cost reductions and shore up liquidity to withstand the crisis.
With improving visibility into the recovery, GOL´s current capacity planning scenario assumes 90% in 2Q20 over 1Q20, +290% in 3Q20 over 2Q20, and +135% in 4Q20 over 3Q20, and it has significant flexibility to respond to prevailing demand trends.
The Company is maintaining a level of conservativeness in its cash forecasts, which is prudent given the expected demand recovery curve, especially with the lower expectations for international travel during this pandemic.
On the basis of GOL´s current liquidity levels, as well as its flexible fleet management model, which enables it to offer the lowest cost structure among its peers, and its consolidated network in Brazil, the Company believes it has a strong advantage in a recovery relative to its direct competitors.
During the month of May, the Company returned two aircraft to lessors to finish the month with a total fleet of 130 B737s. With 13 aircraft operating in its network, flight operations averaged 7% of last year´s May network, ramping up to 10% at the end of the month with the re-opening of bases at the Foz de Iguaçu and Navegantes airports and the re-initiation of a limited number of flights from the Congonhas airport in São Paulo to the Santos Dumont and Galeão airports in Rio de Janeiro.
By the end of June, flight operations are expected to be around 20% of last year´s June schedule, with 27 aircraft operating in the network.
Thus far in 2020, GOL has reduced its fleet by 11 B737-800 leased aircraft, plans to return an additional seven leased aircraft in 2H20, and can reduce up to another 30 in 2021-2022, with the flexibility to return a higher number if demand is lower. GOL has reduced its 2020-2022 Boeing 737 MAX deliveries by 47 aircraft and capex to a total of BRL 300 million for June to December, with plans to fully finance aircraft all capex and engine overhauls remaining in 2020.
For the remainder of 2020 (June-December), the Company estimates a net cash burn of BRL 4 million/day.
As of May 31, the Company had approximately BRL 3.5 billion in total liquidity, which implies over 12 months of cash on hand (excluding refunds and restricted cash). In the month, GOL used approximately USD 30 million for settlement of oil hedge operations.
GOL Linhas Aéreas Inteligentes S.A. serves more than 37 million passengers annually with more than 750 daily flights to over 100 destinations in Brazil and in South America, the Caribbean and the United States.