Operator: Good day and welcome to the GOL Airlines Fourth Quarter 2021 Results Conference Call. This morning, the company made it’s numbers available along with three videos with the results presentation, financial review and preliminary question-and-answer. GOL hopes everyone connected, has watched them. After the company's brief remarks, we will initiate the Q&A session when further instructions will be provided. This event is also being broadcast 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 the webcast may post our questions on the platform and their questions will be either answered by the management during this call or by the GOL Investor Relations team after the conference is finished. Before proceeding, let me mention that the forward-looking statements are based on beliefs and assumptions of the company's management and on information currently available to GOL. They involve risks and uncertainties because they are related to future events and, therefore, depend on circumstances that may or may not occur. Investors and analysts should understand 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 the call over to Mr.

Paulo Kakinoff, CEO. Please begin, sir.

Paulo Kakinoff: Good morning, everyone. I would like to start by ratifying our most important results of the quarter which were made possible by the trust we received from our customers, employees, suppliers and investors. We had the best quarter since the outbreak of the pandemic due to a relentless focus on cost and the creation of a flexible and dynamic operation, reaching 36% adjusted EBITDA margin.

In the month of December, the volume of domestic travel was 77% of the same month in 2019 and we are projecting a more relevant demand recovery within the first half 2022. We are already flying to all the main markets in Brazil, including some new ones like Bonito and Pelotas, in addition to the return of international routes such as Montevideo, Punta Cana, Cancun, Buenos Aires and Paramaribo. We are also seeing encouraging signs of improvement in corporate segment, is a significant development given that business travel represented approximately 50% of the market in 2019. Gross sales in the fourth quarter 2021 exceeded the fourth quarter '19 and we've reestablished our market-leading shuttle service between core Brazilian market. Our disciplined capacity management has protected liquidity and positioned GOL for enduring profitably.

Load factors and aircraft utilization continue to improve. Flight frequencies increased by 22% and despite a disciplined approach to capacity management, market share grew in the fourth quarter 2021. We achieved the fourth consecutive quarter of growing yields, now exceeding pre-pandemic levels and with significant contribution from the Smiles' synergies. Our balance sheet was preserved and the short-term debt is the lowest in four years. Our liquidity will be further enhanced with the recently finalized investment by American Airlines.

We are accelerating transition to Boeing 737 MAX to further drive cost efficiencies create equity value and reduce carbon emissions. We expect a reduction of around 8% in our unit cost and the equity created with the fleet transformation and it’s respective financial plan should be around BRL4 billion at incremental present value. As a result of this acceleration, we expect better predictability in meeting the aircraft return schedule. We revised the forecast for the costs associated with the return of the NGs and we had to recognize an additional nonrecurring provision without cash effect of BRL1.6 billion in the quarterly results. This is related to contractual return obligations that we will occur until 2026.

We also expect a gradual reduction in maintenance expenses for the upcoming years. Such savings will increase as a greater number of new 737 MAX aircraft in the fleet intensifies the honeymoon effect. Smiles continues to show increasing results and we have already observed some of the synergies that the merger provided. In this quarter, we achieved synergies of BRL241 million with tax efficiencies. Finally, I would like to mention CADE's approval of the acquisitions of MAP.

As a result, we started to offer new destinations and routes departing from Congonhas Airport, expanding the number of seats per flight and achieving greater cost efficiency. With that, I will hand the floor over to Richard Lark, our CFO, who will present some financial highlights. Thanks. Richard?

Richard Lark: Thanks, Kaki. Our results reflect the social capital we have built up over two decades of collaboration with our customers, employees, suppliers and investors.

I'd like to make a couple of comments on GOL's liquidity and capital structure management. As for our detailed financial analysis for the quarter, it was in the earnings release and the video presentation shared today this morning and I hope that you've had a chance to access them. Our available liquidity remains stable at BRL3.7 billion at the end of the fourth quarter of '21, considering BRL1.2 billion of debt refinancing announced last October. Our short-term debt totaled approximately BRL635 million at the end of 2021, the lowest level in four years. Although we had another challenging year, we fully honored our commitments to the global capital markets and paid BRL525 million in leasing obligations in the fourth quarter of '21.

Our liability management program which achieved the lowest gross debt among industry peers is a competitive advantage in the current market environment. The net debt ratio, including aircraft leasing x7 to adjusted last 12 months EBITDA was 9x at December 31, 2021, stable in relation to September 30, 2021. This ratio represents the lowest financial leverage among our peers. Our initiatives to obtain additional sources of liquidity, ensure the availability of funds for optimizing cost of capital which will be sufficient for our growth during 2022. I will now return the floor to Kakinoff.

Paulo Kakinoff: Thanks, Richard. I'd like to close by thanking again our employees, the Team of Eagles, who are working with extreme professionalism and commitment. All this determination puts us in a solid position to expand operations. We reiterate our condition that GOL will emerge even stronger and more resilient with the normalization of the market. We now move on to the question-and-answer session.

Operator: And the first question will come from Alejandro Zamacona with Credit Suisse. Please go ahead.

Alejandro Zamacona: Hi, thank you for taking my questions. Just a quick question on yields. So how can we think about the normalized yield after the Smiles integration, considering that for this quarter we saw a significant improvement?

Richard Lark: Yes, I'll take that question.

The -- a couple of things, a couple of things. One, as we highlighted, from the Smiles reincorporation and unified yield management, already in the third quarter of last year, we worked on unifying yield management, creating better inventory management in the system there. And roughly by September, we had affected on an apples-to-apples comparison around a 15% to 20% increase in yields because of that. I can't really say what that means on a normalized basis because there's a lot going on with yields right now in general. And so that is already incorporated, that number into our inventory management.

Obviously, we're still recovering demand and we're also now dealing with the oil price increases. What's going on now in the very short-term environment and I'll take advantage of your question to make a couple of other comments that we've been getting related to yields in general where we are kind of right now which is the down seasonal months of March, April, May in the Brazilian domestic market, we're tracking at about 30% above 2019 in terms of yields in that comparison that many of you like to do. And the yield on what's been sold, we've been able to work hard and adjust ticket prices to deal with the current environment and our sold yields are up about 25% versus two weeks ago. That correlates to a yield today, a run rate yield of about BRL0.45 which probably should normalize in the short term at about BRL0.50. But obviously, it's hard to speak to a normalized yield because we have dynamic yield management which is made possible by the market that -- the characteristics of the market that we operate in and also it's highly influenced by capacity.

And so you've seen what we've done on capacity. Also, the market, the competitors also adjusting capacity down to adjust for the oil price situation as well as reduced their capacity by about 15% and LATAM has reduced about 10%. But those are the factors that will affect what happens with yield. The issue ends up being the velocity of a variation on costs and gradual adjustments that can be made as opposed to quick adjustments. But anyway, going back to your principal question, it's about a 15% to 20% increase in yields as a result of the Smiles transaction -- reincorporation.

Alejandro Zamacona: Okay. And then my second question, if I may. Just in terms of the capacity, we saw the new guidance which is implying a small reduction in terms of capacity. But then when we look at outlook, it has a meaningful higher decrease expected. So what are we missing? Because the load factor is roughly stable.

So I just want to make sure what we are missing there.

Richard Lark: Well, what you would be missing is understanding better what we're doing about fleet transformation, accelerating our transformation from the NG to the MAX which has a larger ASK production per aircraft and also how we're doing in terms of network and aircraft utilization. And so all of those factors are in the guidance that you're referring to, in particular in the second half. We're still not back to our high operating efficiency. That will only be the case when we're back with the full fleet operating at between 11 and 12 hours of aircraft utilization per day, that's what creates the ASK production.

And then at the same time, we're accelerating the transition from the NG to the MAX which has a slightly higher ASK production per aircraft. And so if you want to think about it is that our stores, if you will, our aircraft will be on a same-store sales basis, producing more on a capacity basis and that seats, right? That seats. And so the -- there's a slightly larger seat count in there. And then the other factor is aircraft utilization. But if you need any more details on that, we can help you with the modeling off-line, just reach out and contact myself and Mario after the call.

Paulo Kakinoff: Okay. Alejandro, I'd like to complement by saying that the name of the game now is capacity management. I mean, you have observed along last years that GOL have led the market in that sense, I mean, towards rationality. Now that's more important than ever, considering the current jet fuel, not the current jet fuel prices, the current oil prices. Because in Brazil, there is a kind of delay around 45 days between the international parity and the jet fuel price retail to the airlines.

But we are all envisioning those additional cost pressures coming from the oil market. And therefore, the industry has demonstrated an even higher level of rationality in comparison to what we have seen so far. So I believe that we could expect even further reductions in case that the oil prices will be kept at the level that we have forecast to the following 45, 60 days.

Alejandro Zamacona: Okay. Thank you, Paulo.

Paulo Kakinoff: Thank you.

Operator: The next question will come from Dan McKenzie with Seaport Global. Please go ahead.

Dan McKenzie: Hey, thanks. Rich, I'm looking at the fourth quarter yields, that was without the contribution of business.

So your comment of normalized yields being closer to BRL0.50. Does that include a full restoration of business? Or is that just simply a run rate based on the mix and pricing actions that we've seen year-to-date? And I'm thinking that business were back, that's about another BRL2 billion or another BRL2 billion of revenue in the quarter here.

Operator: Hello. Perhaps ours speakers are muted.

Richard Lark: Sorry, microphone disconnected.

Can you hear me now.

Dan McKenzie: There you go. Okay. Yes. Thanks.

Richard Lark: Yes. Sorry. I'll just repeat, because most of us think is normalized yields, Dan. The question I got was, what are your normalized yields and I didn't say what the normalized yields was. I said what's going on in the short term which is what matters.

You're asking about the Q4 but the yields will react to what's going on with industrial capacity as well as what's going on in the cost side. As Kaki mentioned, there's a high correlation between the Brazilian real and oil prices, there was an offset there. A lot of you guys internationally in the U.S. tend to focus only on the oil side of the equation. We also have the currency side of the equation.

The correlation hasn't been as strong recently. It's only about 0.5 negative. It's usually closer to 0.9 negative. But it does. It has offset some of the quick run-up in oil prices and has, if you will, put a little bit of a break on the immediate impact.

And as Kaki was saying, there's roughly a 45-day lag between when the producer of jet fuel passes those cost increases on to us which does give us time to adjust ticket prices. We can have some visibility on that. But just let me -- because I was answering the question and I realize that the platform here automatically put me mute. Just if you could just go back to the first part of your question there, so I can make sure I answer it.

Dan McKenzie: Yes.

Just the record fourth quarter yields, that was without the contribution of business. And I'm just trying to get a sense of what that addition is going to be in 2022 here potentially?

Richard Lark: Yes. Well, it's not that it's without the contribution of business. We started in the Brazilian market overall. Right around the end of August last year, we started to get the recovery of the corporate traffic -- the large corporate traffic.

And it's still not fully recovered. There's specific sectors that are not -- there are specific sectors that are above 2019 consumption, such as food and beverages and education and the specific sectors that are below. The main ones that are below today are the blue chips in oil and gas, metals and mining and financial services. There's some clients, massive global clients in there that are only 20% recovered. And that represents upside, especially for GOL because our network is most oriented towards the point-to-point direct place they travel.

So yes, that is something that continues to evolve positively as the travel restrictions that many of these large corporates have imposed on their employees and yes, that was less present in the Q4. The Q4 yields were more driven by VFR and leisure, probably kind of like a 60-40 mix of VFR, leisure/business. And we expect that by June, July, we'd be back to the more normalized mix of 70% of our customers traveling on the GOL network for business activity and then the rest being VFR and leisure. So there will also be with the capacity restrictions that are required by the increase in the cost of providing the service, there is going to be, to some extent, a crowding out of the lower-yielding passenger to the benefit of the higher-yielding passengers; so that is correct. What you're saying on a relative basis, if you take Q4 versus Q1 and Q2 and then very much the second half there, in our case, I can speak to that, we'll definitely have an alternation of the mix in favor of a higher-yielding traffic in general as, if you will, the pandemic rolls off.

And at the same time, as we're mentioning, there's capacity reductions happening in the industry and which you guys have all the data on that. And then there is fare adjustments that are happening. And so on a forward basis right now, we're at about an average ticket of over BRL500 which hasn't fully necessarily compensated the full burn of the oil price increases. Remember, the currency -- the Brazilian real currency appreciation has helped but there is room on the demand side overall. And also because of, what you mentioned, the large corporate traffic coming back where we can be looking at an average ticket somewhere between BRL550 and BRL600 in the near term.

And that would kind of correlate to that yield number that I was mentioning of kind of BRL0.45 to BRL0.50 which is not a normalized yield. It doesn't mean it's not normalized or it is. It's just what we would be achieving in the short term through a variety of things and it's not just increase in ticket prices, it's also eliminating private discounts in certain segments like OTAs and significantly reducing promotional tariffs that were used as well to kind of more stimulate activity in the VFR and leisure. So it's a variety of things that we're doing there to compensate for the increase in the fuel component of the unit cost.

Dan McKenzie: Okay.

I guess with respect to the video, thanks for that as well. You guys touched on M&A and highlighted MAP. And outside looking in, it appeared that LATAM just simply hasn't been interested in M&A but I'm wondering if fuel price volatility has had an impact on the urgency of any of your conversations.

Paulo Kakinoff: Dan, it's Kakinoff here. Just another information related to the large corporate before I answer to your question.

After the Brazilian Carnival, we saw, for the first time since the pandemic started, the strong catch-up on the corporate demand, is not yet close to the pre-pandemic levels but accelerating. It's coming alongside with the protocols relaxation that we have seen coming from the authorities. And I believe that from that moment on, we will have this positive curve affecting in a good way, the yields, mainly towards the second and the third quarter this year. Regarding the, let me say, South American environment, I think that this is -- there is no reason to believe that a global trend for the airlines will not happen here. I mean everybody is looking for additional synergies, cooperations, there might be some M&A opportunities.

We have prepared ourselves to play a major role in the trend, if it happens. But also in parallel, I believe that there are things to be done between the planned codeshare we usually get and a full merger. I mean the market is -- plenty of synergies and cooperations being developed and there are now some, I mean, possibilities that we can envision; nothing concrete but I believe that the market is moving towards this direction. It might involve GOL or other competitors but I believe that this is a kind of trend which is about to happen worldwide.

Dan McKenzie: Okay, thanks for your time.

Paulo Kakinoff: Thank you.

Operator: The next question will come from Duane Pfennigwerth with Evercore. Please go ahead.

Jake Gunning: Hi, this is Jake Gunning on for Duane. Thank you for taking my question.

Richard Lark: Sorry, who is on the call?

Jake Gunning: Jake Gunning, Duane's associate. So historically, Brazil has seen high inflationary periods where fares have typically risen with inflation. You also seem to be seeing it now relating to your comments on yield. Do you think this relationship is specific to Brazil or South America? Or would you expect recent inflation in the U.S. to result in a similar increase in ticket prices?

Richard Lark: Which relationship?

Jake Gunning: The relationship between inflation and ticket prices with broader market inflation?

Richard Lark: Yes.

Well, yes, again, the U.S. market is very different, right? You have much more view of our leisure market, it's much more price sensitive. The market in Brazil is much more price inelastic. Inflation, our main fixed costs are aircraft and labor. So the aircraft are more impacted by what's going on for the global supply and demand of aircraft and exchange rates.

And then the fixed cost of labor is what we have there in the contracts. And so we don't -- we have an annual cost of living adjustment on labor which was already negotiated in December. And so inflation does not really impact our fixed cost structure like you might see in the U.S. On the variable cost, it would vary but our main variable cost is the fuel component that we've talked about. And so the issue with inflation is more as it's impacting the overall Brazilian economy, not necessarily GOL directly.

And so it would be impacting the overall Brazilian economy. But as Brazil is a raw materials-driven economy, the main effect that is impacting the overall Brazilian economy, is what's going on with commodities prices, oil, iron ore, things like that. And so the current environment is bullish for the Brazilian economy. The issue then becomes is inflation at a point where the government -- in Brazil, I mean this is very Brazil-specific, is interest rate increases and the impact that, that can have on consumption as well as on us in particular. And so the impact of inflation ends up being more muted on demand.

Based on what I just told you, you can see that if it's related to the factors that you mentioned. It's a positive on demand. It's pretty much neutral on cost for us. And then it can have the impacts on the balance sheet. We don't have a very high component of variable rate real-denominated facilities.

So it has a more muted impact to us in terms of how we manage our balance sheet. And I guess the only final comment I would make in Brazil is that the price-sensitive customers are more insensitive to their ability to purchase retail goods and air travel on installment payments. And so we have that tool as well to manage that. Before we go to the next question, operator, I just wanted to address this in the queue is not -- I'm seeing the people in the queue. And I understand the pressure on sell-side analysts to rapid fire out reports sometimes without consulting with us and our buy side asks us to spend time to make sure that correcting misinformation that is put out by some sell-side analysts.

So this is an important point because it's a big mistake by the JPMorgan analyst. And I'll just mention it because many of you probably have not yet had time to look at it and it's complicated because it relates to how we manage the fleet and it’s accounting and we explained it in our release and as you have the time to go through it, you understand it. But in our 2021 results in the fourth quarter, we increased the provisions for the return of aircraft for early redeliveries, if you will, based on the specific contractual lease return conditions. That was provisioned in the 2021 results, it does not impact 2022 results. And it reflects the estimated costs, expenses of those aircraft returns through 2026, so over the next couple of years.

And the trigger on that was in the fourth quarter management made a decision to accelerate the transition from the NG to the MAX. And so those are future expenses to return NG aircraft over the next four to five years. Can you hear me okay, operators? So I'm not sure because my computer screen keeps looking off. They're not what Fernando Abdalla from JPMorgan said, a cost this year to put idle aircraft back into operations. That is incorrect and that needs to be said here because that is very misleading.

That's not what we disclose and that's not what the purpose of those provisions are but those provisions already made in 2021, they do not affect -- they won't impact 2022 or near year going forward. And then there was another component in the exact same research report that said we had BRL2.7 million -- BRL2.7 billion of short-term debt, that is not correct. We have around BRL600 million of short-term debt and that's a significant material difference and so the caveat and tour on that. So operator, we can go to the next person in the queue, please. And then after the next person in the queue, what I'd like to do is give some space for some of the questions that we received on the webcast platform.

Some folks are communicating with us that way in this new hybrid environment.

Operator: Yes, sir. Our next question will come from Savi Syth with Raymond James. Please go ahead. SaviSyth: Hey, good morning or good afternoon, actually.

If I may follow up on Dan's question on the business demand recovery. I was wondering if you could provide a little bit more color on like maybe versus 2019, where it is today, like either in terms of volume or revenue? And generally, what are you kind of assuming in the 2022 guide?

Paulo Kakinoff: Hi Savi, it's Kakinoff here 65% and 70% than we had in 2019. I mean, the percentage of corporate customers flying today and what we are forecasting, considering the current sales forward bookings is that, that number might achieve 80% to 85% in the -- along the second quarter. That's our forecast at the moment, 85% in comparison to what we got in 2019. SaviSyth: That's helpful.

And Kaki, sorry, I missed the earlier part. Are you saying it's 65% to 70% currently or...

Paulo Kakinoff: Yes, currently because you need to differentiate what we are getting on board today at the moment and what we are selling as forward bookings, okay? So that's the difference. If you would take a snapshot, what's the percentage of corporate customers getting on board today in comparison to the pre-pandemic levels, that would be 65% to 70%, 7-0. And the forward bookings are telling us that during the second quarter, we might achieve 80% to 85%.

SaviSyth: And along those lines, are you -- I mean, I don't know if you have great visibility but are you hearing from corporate clients like that there is going to be any -- is there kind of an assumption that we get back to 2019 levels and beyond just because there'll be growth beyond that as GDP grows? Or is there any kind of reason to think that there is some kind of permanent impairment in the demand levels there?

Paulo Kakinoff: Savi, there is an additional element now which is somehow disguising the real reasons behind the capacity. And these additional elements are those business travels not performing during the pandemic. And now they are somehow unleashed. I mean, we are combining the natural demand with those travels postponed during the pandemic period. Therefore, it's really hard to precise what exactly is the demand today but it's catching up pretty fast.

And I believe this phenomenon will last all over the 2022 year. SaviSyth: That's a good point. And then if I might, just a quick clarification question on the 2022 EBITDA guide. I think it says excludes fleet transformation maintenance costs. Is that related to the NG return cost? And I was wondering what the cash outlay might be in 2022 as we kind of forecast the cash component.

Richard Lark: Yes. All those are fully provisioned. So there's no expense impact going forward relates -- related to -- is how does it work with companies, you're supposed to have constantly provisioned your full cost to return your fleet based on the contract closets. And so you have to have that constantly updated. And the other point you're saying is that it won't be -- in 2022, what we're doing is matching the returns with the intake of the MAXs.

And what we're doing there is, as you saw we did with the transaction, we announced -- the $600 million financing transaction we announced in January. They're at specific conditions which allows us to almost fully finance the lease return conditions related to the NGs when we tie in those operations. So this year, in 2022, there won't be any significant cash outlay related to the redeliveries on a net basis. But on a gross basis, each redelivery can cost between $5 million and $7 million, mainly related to the engine overhaul expenses that are required to affect those returns. So remember, specifically in the case of GOL, we've been hit negatively over the last four years because of what was going with the MAX and two years of MAX grounding, two years of pandemic and our average fleet aged up to about 11 years which is not our plan.

And so you'll see in this acceleration as us getting back to our sweet spot of seven years or lower. So all of those components I mentioned are tied up in abnormally high engine costs because we've been keeping these older NGs operating for longer periods of time and also conserving cash and all the issues related to what's been going on with the pandemic. And so this year for us is a catch-up on that and we're going to reset the dial on that by the end of this year when we'll be finishing this year with above 40 MAXs in the fleet. But it's important to mention on a net basis, the MAXs coming in are linked not just on a replacement basis but also on a generation of financing basis to help us return the NGs. And how do we do that? We will be able to borrow against the equity value that we create when we buy a MAX; so all that data that I just gave you can help you figure out which or whatever it is you're looking for that.

SaviSyth: That’s helpful. Thank you.

Operator: Mr. Lark, would you like to take the webcast questions now?

Richard Lark: Yes, good question. Yes, I'll just -- there are so many.

I don't know which one to pick. I was just -- maybe this is one that probably some folks are going to ask and I think it's a person who's far down in the queue anyway, so I'll kill two birds with one stone. Can you provide additional color on hedges currently paid? How are you thinking about your hedging your fuel need in the current environment? Yes, we're about -- we've got a couple of things. The short answer is we've got -- for the exposure, we've got around 10% hedged for this year and next year around $70 but that's not significant enough given what's going on with oil right now. At this company, GOL, we generally have a program that works on a 24-month forward basis.

We're generally -- as you know, for those of you who have been following us, we'll be around 50% hedged, 12 months forward and then month 13 to 24 will be around 20% hedged. Given that we were 24 months in the pandemic environment, we are -- and given what's been going on with oil prices and given that our main focus has been cash and liquidity conservation, we have not hit many of our triggers that would have caused us to be hedged 50% for the next 12 months. Now a couple of comments on that. One is that literally almost 24 months ago, we had 0 or negative oil prices. And for those of you that follow us know that we were always fully mark-to-market and fully deposited with counterparties.

We're the only company among our peers that did so, everyone else defaulted. And we rolled out the 0 oil price scenario and then the situation in the Q2 of 2020, we had about BRL1.5 billion of assets in our hedging program. And then when oil went back into the mid-60s around September, we started monetizing our hedge position. And we extracted from our hedge positions end of '20 and then at the beginning of '21, about BRL1 billion of cash. And that's just an example of one of the points we say how we've imagined our liquidity using noncash current assets.

But having said that, the pandemic lasting around 24 months, we ran down all of those cash gains on the existing hedges, they were used to pay for pandemic needs but we still kept in the market with triggers and that's why I said we're -- these positions we have roughly 10% this year, next year in the low 70s, were put on prior to the run-up which started in November of last year, number one. Having said that, the industry right now is relatively unhedged or not hedged at all. And so then that puts the pressure, echoing Kaki's comments on the capacity side as a way to manage the cash flow situation. And then the final point I would make is that we've been doing this for almost 20 years. I mean this is the exact time when you should not be doing hedging.

There's around -- it's probably the uncertainty that's present in the market now dictates that and it's affected the entire curve. And there's at least a 30% premium across the entire curve, at least in the time horizon that we would look at which would go out 24 months. And so while we do have triggers, they're significantly below where the market is right now. And so I don't expect to see anything from us on that. And so that's a long answer to that question but there was a couple of other questions related to what we're doing on hedging.

Of course, all this data is in our financial statements as well but just to make it easier to get to. Operator, you can go to the next person in the queue.

Operator: The next question will come from Pablo Monsivais with Barclays. Please go ahead.

Pablo Monsivais: Hi, good morning and thanks for taking my question.

I have just a simple one. Looking at the jet fuel price that is increasing but the FX is moving in the right direction. What are your plans to deploy more capacity for international markets, particularly to the U.S.?

Paulo Kakinoff: So to the U.S., we are about to resume our operations in May. We have been pretty cautious in deploying additional capacity for that specific route. As you probably know, that is a unique offer to -- offer produced by GOL to fly directly from Brazil to Florida and that make us capable of operating such a route at a profitable level.

Regarding the capacity overall, we have good indicators that the industry is behaving accordingly, the strategy that I mentioned at the beginning of this presentation and was highlighted by Richard in his last answer. We do see a higher level of rationality. And that, in combination with the current indicators, we have foreseen the forward bookings such as load factor in March, April and May, pretty much in line with 2019, basically talking about the leisure travelers, we have exactly the same level of prepandemic demands but those tickets have been sold at a much higher yield level, precisely 30% above 2019. I mean this is clearly the outcome of a disciplined capacity deployed by the industry. And I think that it has been -- that phenomenon has been strong enough to cope with the additional operating costs imposed by the higher jet fuel prices.

The market has absorbed those additional yields and it wouldn't be possible to make so if not through a higher disciplined industry as we have seen so far.

Pablo Monsivais: Very good. Thank you very much.

Paulo Kakinoff: Thank you.

Operator: The next question will come from with MetLife.

Please go ahead.

Unidentified Analyst: Hi, Richard. Thanks for taking my questions. Most of my questions you have already answered. But regarding the fuel pricing policy but I think that you mentioned that a couple of minutes ago.

Richard Lark: Okay. Operator, we'll go with one other question in the queue and then I'll come back to a question on -- from the platform.

Operator: Yes, sir. The next question will come from Rogério Araújo with UBS. Please go ahead.

Rogério Araújo: Yes. Hi, Richard. Hi, thanks for the opportunity. I have one single question regarding the end-of-year aircraft fleet. So there was a slight reduction in this guidance.

I would like to assume first, the costs to return those aircraft were included in the provision already. And second, could we think capacity reduction beyond this level during the year? And can this create extra costs that were still not provisioned? That's it.

Richard Lark: Yes, that's a good question. The -- there was also some misinformation out there in one of the other reports, I think it was the Morgan Stanley report, I'm not sure. We haven't really changed the fleet guidance for this year.

We finished -- we just -- we made some adjustments on, if you will, Well, let me kind of walk through it. I mean, we finished 2021 with 135 total aircraft in the fleet. As you see in the guidance, it's between 130 and 140, so it's roughly the same fleet size. So then within that, we're working on accelerating the fleet transition. And we have three levers.

Either we can match a MAX in with an NG out. We can have MAXs -- we can have NGs going out faster than the MAXs coming in or going out slower. And so we can adjust our capacity pretty well to match demand. And so the first driver for us is really what's going on with matching our network with demand on the aircraft, we need to do it. And then the other lever we have in there is the level of efficiency.

And as it is expensive to return aircraft and then be short aircraft if demand picks up. The way we can regulate that is just by having a slightly lower operating efficiency through lower aircraft utilization. So those factors, when you see that level of operating aircraft go up or down with the total fleet size remaining the same, it's really related to how efficient we're going to be. And as I was saying before, we want to get back to roughly 12 hours day of utilization. GOL is one of the few airlines on the planet that can achieve that and that's kind of our sweet spot in terms of cost competitiveness.

Our competitors can't match that and we'll need to get back to that. Having said that, as I was mentioning as well, the majority of the return costs are financeable to some extent that it's tied into MAXs coming in which has also been very tight. And so what you're seeing there in the guidance,, any adjustments there on capacity, it's a combination of those factors. Number one, a lower level of -- potential lower level of operating aircraft while keeping the size of the fleet. Number two, adjustments on utilization.

And number three, how we're calibrating the MAXs coming in and the NGs going out and how that can mean more or less capacity depending on how we do that. I mean, Kaki, I don't know if you want to complement that.

Paulo Kakinoff: Well, this is basically the same comment that we have raised before. I think that you have already answered it completely.

Richard Lark: Okay.

Just -- I think we might have run out of the queue but maybe I don't have the updated queue but I'll just go to one other additional question on the -- from the webcast is basically -- what's the timing for us to close our exclusive codeshare with American Airlines? That is imminent. It's in the antitrust approval process which is expected to occur in the short term, after which we would affect the BRL1 billion capital increase. And then on top of that, do a preemptive rights offering. And it's just in the final days or weeks of the bureaucracy with the antitrust approval. So with that said, the message I'm getting here is -- so operator, maybe you can do the last call to see if anyone else wants to come in the queue.

Operator: Yes, sir. The next question will come from Mike Linenberg with Deutsche Bank. Please go ahead.

Mike Linenberg: Hey guys, thanks for squeezing me in. I'm just going to ask one quick one here.

Rich, on the forecast for 2022 now, the revised revenue forecast, the BRL13.7 billion versus BRL14 billion, we're only down a few percent. And yet it looks like when I think about your capacity, you shave five points but I think more importantly, the seats are down 15%. So there's obviously an elasticity here. And you mentioned it earlier that historically, demand in Brazil tends to be a lot less elastic than what we see in the U.S. And I'm curious sort of what you've baked in with respect to your ability to recapture the higher fuel.

And it may be that we have to go back to like 2011 and look at the Arab Spring, when energy prices were up 40%, sort of wind back the clock a decade, how GOL was able to manage through that period. And maybe you were able to offset 100% of the rise in fuel but with a lag. So anything to give kind of color on that, maybe past experience would be great.

Richard Lark: Okay. That is the question of everything.

No, just contextualize there. Maybe I'll start off and then Kaki can complement. A couple of factors. The -- part of it will depend on how long we stay at this altitude. Because, as you know, it could be over in two weeks, right? It could be over two weeks, it could be over in two years, right? So part of it is that and nobody knows, right? And I'll come back to that.

Number two is that very different. We're coming out of 24 months of a pandemic. And then there's that lever. And so the main driver for us, for GOL. Again, remember, GOL, it's not -- and I said -- you have to -- if you want to compare GOL to 2011, you'd have to compare networks.

You have to compare fleet -- I don't know if it's relevant but because we did some major reformulations of the GOL network post 2015, '16 recession, when GOL emerged as the number one market share, number one business airline. And once everything normalizes, GOL go back to that. And it's kind of a network today which is based much more on four or five central hubs around Brazil, a higher -- much higher percentage in point-to-point flights and a much higher shuttle business. And so it's a much more business-weighted network and revenue base. It's a much more higher yielding base than we had back in 2011, number one.

Then coming out of the pandemic, we're still waiting for the final -- the major large corporates to come back Petrobras, Vale, Bradesco which -- the blue chips coming back with consumption. And so they're most likely coming back dovetailing with this current scenario. So -- and both of those are factors that give us substantial leverage with respect to yields. And I would argue, Mike, that the yield numbers that I'm mentioning to you, I don't know, I don't keep the database in my head and I might be wrong but you might have to go all the way back to like 2006 to see those levels of yields if I am not mistaken.

Mike Linenberg: No, that's the first thing I said when you heard said BRL0.45 to BRL0.50 yield, that was like, wow, I haven't -- I don't think I've ever seen that before.

So that's...

Richard Lark: Yes. We had that in that phase. And obviously, it was a different environment as well. But -- and so just kind of wrapping all that together, the key measure to have that happen is this overall capacity.

And we tend -- GOL tends to outperform in these very high fuel price scenarios because of the cost advantage. Obviously, where the oil is right now, could have the potential for demand destruction but not yet. We haven't reached that limit yet. And as Kaki was mentioning as well, remember that we have the lag between an oil price increase and when it hits our cost structure which is around 45 days and then there's also a partial offset with the with the currency which has been appreciating. So there's roughly, call it, 30% increase in oil prices has been offset by at least 10% increase -- appreciation of the Brazilian real which kind of nullifies about half of the impact on oil prices on jet fuel.

And so all the numbers that you guys are thinking that's impacting U.S. airlines divide it by two, that's the impact that's hitting us. And then going back to the other question, we're just being prudent on capacity. I mean we -- during this entire pandemic, we've been the airline that's most kept capacity at the low end of the range, given that the slot requirements are suspended. And as you know, they've been suspended again for the next season all the way until September.

So there's no reason to focus on market share that's -- there's no reason.

Mike Linenberg: Rich, that's why I called out the seats. The seat number is a sizable decline. People will fixate on ASKs but your 15% on the seats is a lot. So I mean, you guys are definitely making a move on capacity, sending a message at least to the market that you're going to do what it takes...

Richard Lark: But that's just how we see it. And we have the ability to go up if we need to. But I would say what we see on the competitor side is rationality. I mean we didn't need to cut because of Omicron because we're already playing it at the low end and LATAM and Azul will have to cut, they have cut. And so part of it will depend on that.

And so -- the short answer to your question and I'll kick it over to Kaki, is yes, meaning, I think we do have -- we will have increasing pricing power, especially as the large parts of the corporates come back, also because of our network and we spent a lot of money in November, December, January, reactivating the traditional GOL network based on our four or five strategic hubs around Brazil and the point-to-point flights and the shuttle market. Those are all reactivated. They're not operating at peak volumes. We still do have inefficiency in aircraft on the ground, that will have when normalized demand comes up. But Kaki, I'll let you finish this question.

And this will be the last question we do on the call, operator.

Paulo Kakinoff: Yes. Richard, actually, I just would like to add one comment to the already very comprehensive answer provided by you is that in comparison to 2011, our revenue management SKUs and tools are much better, much more enhanced, I would say. Therefore, we can now not only, I believe, deliver the right message, as you said, Mike, regarding capacity discipline but also how much we have been able to correctly price our fares and through those enhanced tools, compensate through yields improvement. That would be my additional comment.

Richard Lark: Yes. Good question, Mike and appreciate this. We've -- it's something we take for granted because we had this investment on pre-pandemic. We made a big investment and big data and digital analytics and may be lost on most people but for those have been following us closely, even though we didn't have -- we don't have a crystal ball or magic wands, GOL has been the first company to identify the shifts in demand. And we've always been about two to four weeks ahead of the competition in either bringing capacity down or bringing capacity up.

That might not sound like a lot but at the margin, it's allowed us to conserve cash. In our work at this company which is on behalf of all stakeholders and all shareholders and in particular, our very large controlling shareholder, we just haven't had the leeway to take a month to figure stuff out. And so the digital analytics that we have in revenue management has allowed us to let's say, be much -- even though our -- the airline business model begs stability, I would argue that we are the most agile within that quadrant of stability. So that's a good question but it just kind of highlights the issues that you're talking about, Mike, relate to our business model and our operating model. And so we're managing on that strength.

Obviously, we're an airline in the pandemic and now with oil prices so we can't mitigate that. But it does give us -- and I don't think we get a lot of -- we don't get credit from the majority that might just lump us in with generic airline. But as Kaki said, the agility we have on the technology side and the system side and yield management gives us a bit of an advantage on that to kind of -- and we've been using that during the pandemic to conserve cash but it will also allow us to take advantage of upticks that you are hinting to. We tend to view this more as upside at this point. And that's why we're -- you see that gap between total fleet and operating fleet which is -- which costs.

But at the same time, we're trying to get back to be a seven year old company with the MAX. And so there's a lot going on. The only final thing I would say on that is that this year, even though we've gone back. I think we're probably the most courageous out there. We've gone back and put '22 guidance back on which is a big commitment.

But people need to take it in the following manner. It's -- there's really three phases. Q1 is the end of the pandemic. Q2 is this transition. And then the second half of this year will really be the first block of time that permits true comparison versus whatever was going on in any pre-pandemic period which I think probably most people are going to compare it to the second half of 2019.

And I think the characteristics of the second half of this year will be in a lot of ways, similar to characteristics of the second half of 2019 but it's really difficult to talk about 2022 as kind of one body of work because it's really kind of three entirely different environments in there. And we'll try, we'll try. But hopefully, we get a little bit of credit for having the guts to put '22 guidance back on.

Mike Linenberg: Well, we appreciate it and it speaks to your discipline. It speaks to your -- seriously, it speaks when you read it, you see the discipline, especially, like you said, between the operating fleet and the total fleet.

Richard Lark: We'll finish. I'll send it back over to the operator but I just wanted to say this is -- obviously, this is -- this call for us. We have our Portuguese call that starts in about 20 minutes and we need to switch over to that. But Kaki will give his closing remarks after me but I just wanted to thank everybody. So we're basically putting the -- as you can tell, we're putting the pandemic management behind us which has mainly been focused on two directives, one, making sure that we emerge from the pandemic which will be the second half of this year with the unit cost equal to or lower than our unit cost when we came in.

And we've already done all of the structural things we need to do to make that happen. That's locked in. And the other directive we had was to make sure that cash inflows and cash outflows matched, if you will, assets and liabilities. And we did that. And everybody who was paying attention to what we were doing.

So that we did that but it could not have been done with the -- with the support of everybody in our value chain. And clearly, everybody here on the call here, I mean, we've learned a lot from what both the sell side and the buy side are focused on. We've been able to raise over $1 billion during this pandemic from the buy side. And I think it was because of our relationship and it was one of the things that I don't know if people picked up on it but we put it in our release and in our videos. We recognize that this was possible because of the social capital that GOL had built up over two decades.

And so it's really important to us as a management team, the relationship we have with everybody in the ecosystem. I just wanted to recognize that as we pivot back to hopefully, what would be margin management as opposed to cash flow management. And with that, I'll -- Kaki, I'll shift it over to you to do the true closing remarks.

Paulo Kakinoff: Just to say thank you very much. I think that you have all of your questions properly answered.

But if not, please do not hesitate to reach our team. We are all available to you. Thank you all very much. Have a nice day.

Operator: This concludes the GOL Airlines conference call for today.

Thank you very much for your participation and have a great day.