GOL Linhas Aéreas Inteligentes S.A (NYSE:GOL) Q2 2020 Earnings Conference Call - Final Transcript
Jul 31, 2020 • 11:00 am ET
[Operator Instructions] Our first question is from Mike Linenberg with Deutsche Bank. Please go ahead.
Michael John Linenberg
Richard, Kaki. I have a question, I guess, I would like to start on just liquidity and how we think about getting from the end of the June quarter to the September quarter. You did provide total liquidity at September quarter end of BRL2.9 billion. It does indicate in the guidance that it is subject to several important initiatives that will be critical to get you to that number. I guess I would point to the after quarter agreements or announcement to do advanced sale of tickets to smiles, it looked like that, that raised $1.2 billion. So presumably, that's one of the initiatives that you're referencing. Can you walk us through from end of June to end of September? And just also confirm whether or not the ticket agreement with Smiles, that, that is not in your June quarter number?
Paulo Sergio Kakinoff
No, that's not incremental cash. That's intra company cash. So that doesn't change total liquidity. Those numbers that we're reporting in total liquidity are the consolidated total liquidity numbers, which includes how we manage group working capital. Our liquidity initiatives, obviously, the main liquidity is sales, which are ramping up and following our network, which is based on digital analytics, which is identifying where the demand is. As of last week, we're firmly at a run rate sales booking rate of around BRL10 million a day. And so you have the network ramp up there, which is obviously the main source of liquidity. And within the airline operating company, we're matching our cash outflows to those cash inflows. As you saw in the quarter, we were a little we were around BRL200 million better than we had previously guided with the cash return for the quarter. And that relates to the combination of the ramp-up on sales as well as what we've been doing on the working capital side. And so the airline operations, we did we had about BRL2.5 million per day average of cash burn for the Q2. We gave you some guidance there on the on the Q3 in terms of our expected cash burn of around $6 million. That is within our matching of inflows and outflows. So the first point is that from an internal perspective, we've we're matching the inflows and outflows in the Q3. In terms of capital structure, which is really where you're going with that, we have a variety of initiatives that are in execution. I mean doesn't depend on us. We have alternatives with our banking partners on liquidity mechanisms, which include also rescheduling of obligations that we have there. We have received the final or I'd say, the final the approved terms and structure from a potential local Brazilian real debenture issue, which would have support of the BDS. And then over the next couple of weeks, the GOL management team is going to be presenting their recommendation to our Board of Directors on