GOL Linhas Aéreas (B3: GOLL4 and NYSE: GOL) announced today (11/04) its consolidated results for the third quarter of 2020 (3rd quarter of 20) and outlined its ongoing initiatives in response to the global pandemic of COVID-19.
All information is presented in Reais (R $) in accordance with international accounting standards (IFRS) and also with adjusted key figures and is available to enable an abrupt drop in demand to be compared with the same period of the previous year in this quarter.
These adjusted indicators exclude expenses related to the percentage of the non-operating fleet that GOL maintained on-site during this period and are shown in the table in the “Operating Expenses” section below. The comparisons relate to the third quarter of 2019 (third quarter of 19), unless otherwise stated.
GOL maintained a solid position and ended the quarter with liquidity of R $ 2.2 billion. From March to September, the company made all the adjustments necessary to survive this period of reduced demand and prioritized the balance between inflows and outflows of its operating cash flow.
Since the pandemic began, GOL has worked with everyone involved to ensure the company has adequate liquidity. The company has realigned its debt amortization schedule, focused on maintaining jobs and strengthening relationships with its key business partners.
The credit markets recognized the strength and quality of this execution and increased long-term prices of GOL unsecured debt securities in the secondary market by more than 35% since the beginning of Q320.
Third Quarter Results Summary 20
The number of Paid Passenger Kilometers (RPK) decreased 72% compared to the third quarter of 19 to a total of 3.2 billion RPK. However, we saw the RPK rise 63% from July to September. The offered kilometer space (ASK) decreased by 70% compared to the third quarter of 19, but increased by 59% within the quarter. GOL carried 2.6 million customers in the quarter. a 73% decrease from the third quarter of 19, but an increase of more than 300% from the second quarter of 20. During the Independence Day, GOL registered 55,000 customers transported in a single day, 55% of those in the same period of the year 2019 registered customers. Net sales were R $ 975 million, a decrease of 74% from the third quarter of 19 but an expansion of 172% from the second quarter of 20. Monthly sales started in July at R $ 240 million and ended in September at R $ 465 million, which corresponds to a growth of 94% in the third quarter of 20. The other income (mainly freight and loyalty) amounted to R $ 95.9 million, which corresponds to 9.8% of total sales. The net turnover per offered kilometer space (RASK) was 24.42 cents (R $), which corresponds to a reduction of 12% compared to the third quarter 19. The net turnover of passengers per available kilometer space (PRASK) reached 22.02 cents (R $) , a decrease of 16% compared to the third quarter of 19. Adjusted EBITDA and Adjusted EBIT were R $ 284 million and R $ 114 million, respectively, and reflect the result of rational and responsible management of supply in relation to demand; e Net loss after minority interests was R $ 872 million (excluding currency and exchange rate fluctuations, net one-time losses, losses related to exchangeable notes and unrealized results from limited calls). In the year GOL already recorded a net loss of R $ 6 billion. The company’s net debt reached R $ 14.1 billion at the end of September, while GOL had a debt of R $ 9.4 billion at the end of the third quarter. Quarter 2019 and R $ 13.4 billion at the end of the second quarter of 2020. About R $ 5 billion of the R 14.1 billion are short-term payments.
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Network and fleet adjustments
Daily flights tripled to 360 in Q3 20 to serve 134 markets, 39% of the daily frequency in Q3 19. 118 of these stores were operated by the company and 16 through strategic partners.
The company opened 15 bases in Brazil: Viracopos and Presidente Prudente (São Paulo), Uberlândia, Montes Claros and Juiz de Fora (Minas Gerais), Santarém and Marabá (Pará), Vitória da Conquista (Bahia), Campina Grande (Paraíba), Caxias do Sul and Passo Fundo (Rio Grande do Sul), Londrina and Cascavel (Paraná), Joinville (Santa Catarina) and Sinop (Mato Grosso).
GOL remains disciplined in balancing supply and demand. In September, the company added 1,383 flights to major Brazilian hubs: Guarulhos and Congonhas (São Paulo), Santos Dumont and Galeão (Rio de Janeiro), Brasília (Federal District, Fortaleza (Ceará) and Salvador (Bahia)).
Compared to its reduced network in April / 20, GOL has reopened 36 bases in Brazil to serve 60 bases, which is 95% of its domestic bases that operated in early 2020. The company plans to open another six bases in the fourth quarter, ending the year with 66 operational. By the end of the first quarter of 21, GOL expects to serve 95% of its pre-pandemic targets.
Considerations for 4Q20 and 1Q21
Adjusting capacity to meet demand was a key benefit of the company’s fleet management. With a better view of the recovery, GOL’s current capacity planning scenario assumes 100% growth in fourth quarter 20 compared to third quarter 20, while maintaining considerable flexibility to respond to prevailing market trends.
In October / 20, the company operated approximately 376 daily flights (53% from the same period in 2019) and peaked at 500 daily flights serving 95% of the market. At the end of December / 20, GOL expects the restoration of the internal market from the time before the pandemic, which accounts for around 80% of the total capacity of 2019.
The company expects an average of 94 aircraft to be operating in the network by the end of December, which corresponds to more than 75% of the operational fleet in the same period last year, with the utilization of its load factor being maintained at around 80% in the quarter.
GOL expects to end the fourth quarter of 20 with liquidity of R $ 2.4 billion and adjusted net debt of R $ 13.1 billion. Several key initiatives are relevant to ensure that GOL maintains liquidity at the levels expected by the end of the fourth quarter.
For the fourth quarter of 2020, taking into account the estimated revenues without TAE reimbursement, the results of the agreements with employees, lessors and suppliers and the full payment of the finance costs, the company expects net cash consumption in the order of R $ 3 million per day, mainly due to of capital investments to get aircraft back into service by the end of the year.