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1 A Consistent Story with Strong Fundamentals May, 2010 “Here Everyone Can Fly”

Gol Sg May2010

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Page 1: Gol Sg May2010

1

A Consistent Story with

Strong FundamentalsMay, 2010

“Here Everyone Can Fly”

Page 2: Gol Sg May2010

2

A Consistent Story with

Strong Fundamentals

1| Largest and less penetrated market in the region

2| GOL | Evolution of the low cost and low fare model

3| Consistent story with strong fundamentals

4| Appendix

Page 3: Gol Sg May2010

3

1| Largest and less penetrated market in

the region

A Consistent Story with

Strong Fundamentals

Page 4: Gol Sg May2010

4

Brazil is Growing ConsistentlyEconomy and consumer market growth is leading a larger addressable market

3.2%

4.0%

6.1%

5.1%

-0.2%

2005

2006

2007

2008

2009

Consistent Brazilian GDP Growth (%)

4.5%

5.6%

4.9%

7.5%

3.9%

2005

2006

2007

2008

2009

Strong and Continuous Brazilian Real Wages Growth (%YoY)

19.4%

12.3%

11.7%

7.4%

17.6%

2005

2006

2007

2008

2009

Domestic Air Transportation Demand Consistently Grows at Least 2x the Brazilian GDP (% YoY)

10.7%

10.8%

12.7%

12.5%

4.9%

2005

2006

2007

2008

2009

Strong Expansion of Disposable Income (%YoY)

Domestic Traffic Grows Consistently Above GDP

Source: Banco Bank and ANAC (Brazilian Civil Aviation Regulator)

100 107 96115 119

141 131 128140

127155

159

99 00 01 02 03 04 05 06 07 08 09 10/jan

Brazilian Consumer Confidence Reached the Highest Level In History

Page 5: Gol Sg May2010

5

Larger and High Potential Market...Although the low penetration, the Brazilian consumer base is

growing and pushing the addressable market

Brazil is Still is Under Penetrated Market

Flights per capita – Annual Average

1.3%

11.0%

5.6%

3.4%

7.6%

2004

2005

2006

2007

2008

Adressable Market (%YoY) Growing Very Strong

76

98

2003

2009

Brazilian New Middle Class Growth (mm)

98mm

128mm

+30%

+29%

22.6%

19.3%

18.3%

16.0%

2005

2006

2007

2008

Poverty Ratio (%YoY) Playing a Key Role to Expand Market Opportunities in Brazil

Source: IBGE – Brazilian Geography and Statistics Institute and Bradesco Bank

Page 6: Gol Sg May2010

6

8.0 9.1

9.8

11.8 11.5 11.4 11.5

2002 2003 2004 2005 2006 2007 2008

29 32 35 38 43 43 53 57

46 46

63 68

89 98 100 96

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Main benefits to GOL:

Boosts international and domestic traffic

Strengthens country's exposure to the travel and

tourism industries

Brazilian Government committed R$5 billion to invest in airport

infrastructure

Private sector and Government entities are already discussing

infrastructure alternatives

No significant infrastructure short term risk

World Cup hosting cities

Olympics & World Cup to Boost Traffic in BrazilPast events raised air traffic demand to new levels

31 31 41 43 40 43 44 51 59

71 86

120 137

156

180 186

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

China Germany South Africa

Air Travel Passengers Transported (mm)

Source: ICAO (International Civil Aviation Organization) – considers domestic carriers for both international and domestic flights

Page 7: Gol Sg May2010

7

2| GOL - Evolution of the low cost and

low fare model

A Consistent Story with

Strong Fundamentals

Page 8: Gol Sg May2010

8

TAM 46.3%

GOL 47.8% Oceanair

4.2%

Azul0.3%

Webjet0.6%

NHT 0.9%

Dominant Postion & Standardized B737 FleetWidest route network in Latin America: 50 destinations in Brazil and 11 in

South America and Caribbean Region

Standardized & Young B737NG Fleet

(108 aircraft ~150 – 190 seats)

“GOL’s Stronghold”

2 hour flight range

65% traffic

65% population

75% Brazilian GDP

Mainstream market demands

150-200 seat aircraft

Low cost and strong airport

position prevails

Avg.fleet age: 6 years

Congonhas Airport Slot-Share(São Paulo City) (2)

(1) Considering Pantanal’s redistribution: Azul and Webjet slots are weekends only and NHT 10 out of 28 slots’ are weekdays(2) Source: Infraero Brazilian Airport Authority From Jul-Oct/09 – Congonhas, Brasilia, Recife, Santos Dumont, Confins, Salvador, Galeão, Porto Alegre and Curitiba)

GOL42.6%

TAM38.2%

Other19.2%

High Frequency network (1) :

Next departure will probably be a GOL flight

Brazilian Market Rationale

No secondary airports

Unbalanced population and GDP Generation

Concentrated population density in few large cities

Slotted airports

GOL TAM Others

27% 43% 30%

Slots Distribution

Before VRG Aquisition

Highlights 1Q10

Net Revenue (LTM) – R$6.2Bn

EBIT (LTM) – R$500mm (8.0%)

Flights per day – 860

Destinations – 61

Operational fleet – 108

Page 9: Gol Sg May2010

9

Strong Code Share and Loyalty Program Integration Agreements

with dominant long haul players (2)

69% pax.

Brazil Spain

61% pax.

Brazil France100% pax.

Brazil Holland

36% pax.

Brazil USA

85% pax.

Brazil Mexico

47% Pax.

Brazil N.America

31% Pax.

Brazil Europe

Cost Leadership and Intelligent Sales ChannelsStrong position in Latin America and low cost high efficient sales

channels, generates cross sales and improves GOL’s dynamic yield

management

2009 Total Cost / Passenger (US$) (1)

Largest Loyalty and Client Financing Programs in LATAM

4.4

5.9 5.7

90.0%

92.4%94.0%

2007 2008 2009

Online seat sales (R$ Bn) voegol.com % of net revenues

One of the Largest E-commerce Platforms

in LATAM w/ 40mm unique visitors per year

Financing

+

Educating

+

Marketing

Customer Loyalty

+

Corporate Partnerships

+

Value to GOL Shareholders

Increase operating margins by selling “empty seats”

(1) Source: Companies reports: considers COPA, LAN and TAM as LATAM peers, and RyanAir, SowthWest, EasyJet, Westjet and

JetBlue, as low cost peers.

(2) Source: ANAC – Brazilian Airlines Regulator, 2008 Annual Report

110.0 112.2

178.3190.9

GOL Low Cost Peers TAM LATAM Peers

15% pax.

Brazil USA

Page 10: Gol Sg May2010

10

Fleet size management (demand x supply)

Maximize fleet utilization rate

Reduce fleet GAP

Next Generation Fleet

Reduce maintenance cost (spare parts inventory and

engine overhauls)

Reduce fuel cost

Higher utilization rate

Tap the new middle class

Further penetrate in the business segment

Increase sales to international clients

Increase ancillary revenues (new products)

Develop cargo business

New e-commerce platform

Buy on Board

Wireless onboard entertainment

Simple Strategic RationaleGOL will improve profitability by increasing passenger volume, generating

ancillary revenue and reducing fixed and variable cost in the short, medium and long run

Decrease CASKIncrease RASK

São Paulo – Fortaleza Interstate Bus GOL

Fare (one-way) R$347 R$358

Time 50 hours 3 hours

GOL x Interstate Bus Cost-Benefit Comparison

São Paulo – Salvador Interstate Bus GOL

Fare (one-way) R$317 R$261

Time 36 hours 2 hours

Inte

rsta

te b

us tra

nsport

s o

ver

60m

m p

assengers

/year

in B

razil

Page 11: Gol Sg May2010

11

3| Consistent Story with Strong

Fundamentals

A Consistent Story with

Strong Fundamentals

Page 12: Gol Sg May2010

12

2010 Results to Post Profitability GrowthGOL posted higher profitability growth rate compared to peers

Main Targets

Increase profitability in the next years

Improve cost structure

Upgrade quality of services

Develop new products / ancillary revenues

25% of cash versus LTM net Revenues

Reduce leverage ratios

Further align management and

shareholders

GOL Milestones

2001-2003: pre-ipo & nationwide coverage

2004-2006: IPO and network expansion

2007-2008: VRG Acquisition

2009-Post VRG Merge

2010 Guidance 2009 (A) 2010 Range

Brazilian GDP Growth -0,2% 5.0% 6.0%

Domestic Demand Growth (% RPKs) 17,6% 12.5% 18.0%

Supply and Demand Growth in relation to GDP NM 2.5x 3.0x

Passengers Transported (GOL million) 28.4 31.5 36.5

ASKs, System (billion) 40.0 45.0 47.2

Load Factor (%) 65% ~70% ~70%

Fleet (End of the period) 108 111 111

Yield (R$ cents) 20,34 19.50 21.00

RPK, System (billion) 26.1 31.5 33.0

Departures (000) 274 290 300

CASK ex-fuel (R$ cents) 9.5 8.9 8.5

Fuel litters consumed (billion) 1.29 1.45 1.47

Fuel Price (R$/ liter) 1.40 1.70 1.58

Average WTI (US$ / barrel) 62 82 77

Average Exchange Rate (R$/ US$) 1.99 1.85 1.72

Operating Margin (EBIT) 6.9% 10% 13%

Page 13: Gol Sg May2010

13

Demand Continues to Grow Above CapacityIndustry continues to show signs of focus on results in 2010

Demand (RPK bn) - GOLDemand (RPK bn) - Industry (ex-GOL)

Capacity (ASK bn) and Load Factor(%)

GOL

Capacity (ASK bn) and Load Factor (%)

Industry (ex-GOL)

8,086 9,396 9,817

1T09 4T09 1T10

ASK Doméstico GOL

Taxa de Ocupação Doméstico GOL

1Q09 4Q09 1Q10

ASK GOL - Domestic

Load Factor GOL - Domestic

62.8%

74.2%71.6%

+21.4%

11,666

13,554 13,938

1T09 4T09 1T10

ASK Doméstico Indústria (ex-GOL)

Taxa de Ocupação Doméstico Indústria

ASK Industry (ex-GOL) - Domestic

Load Factor Industry (ex-GOL) - Domestic

63.8%

72.4%71.6%

1Q104Q091Q09

+19.5%

5,079

6,972 7,032

1T09 4T09 1T10

RPK Doméstico GOL

1Q09 4Q09 1Q10

RPK GOL - Domestic

+38.4%

7,524

9,643 9,987

1T09 4T09 1T10

RPK Doméstico Indústria (ex-GOL)

1Q104Q091Q09

RPK Industry (ex-GOL) - Domestic

+32.7%

Page 14: Gol Sg May2010

14

Fare Options

Brazilian Economy

New routes to Caribe

Operating 1Q10 4Q09 Var% 1Q09 Var%

Demand (RPK - bn) 8.0 7.8 3.3% 5.8 37.9%

Capacity (ASK - bn) 11.2 10.6 5.5% 9.5 17.0%

Load Factor 71.8% 73.4% -1.5 p.p. 61.0% +10.9 p.p.

Break-Even Load Factor (BELF) 63.9% 68.0% -4.1p.p. 56.7% +7.2p.p.

Aircraft Utilization (Block Hours/Day) 13.0 12.2 6.6% 11.3 14.3%

Yield (R$ cents) 19.53 18.08 8.0% 23.82 -18.0%

RASK (R$ cents) 15.48 15.27 1.4% 15.89 -2.5%

CASK (R$ cents) 13.77 14.15 -2.7% 14.79 -6.9%

CASK Ex-Fuel. (R$ cents) 8.84 9.88 -10.6% 10.12 -12.6%

Departures 72,531 71,187 1.9% 66,224 9.5%

Average Stage Length (km) 895 894 0.1% 877 2.1%

Employees at period end 18,235 17,963 1.5% 16,799 8.5%

WTI (avg. per barrel, US$) 78.88 76.03 3.8% 43.18 82.7%

Average Exchange Rate (R$/US$) 1.80 1.74 3.5% 2.31 -22.1%

Growing Yields

CASK Fuel

CASK Depreciation

CASK Leasing

Higher frequency

Higher Aircraft Utilization

1Q10: GOL’s Traffic RecordCASK ex-fuel of 1Q10 in line with the Guidance of 2010

Page 15: Gol Sg May2010

15

Financial 1Q10 4Q09 Var% 1Q09 Var%

Net operating revenues (R$MM) 1,730 1,618 6.9% 1,517 14.0%

Ancillary Revenue 162 213 -23.8% 131 24.0%

Passenger 1,568 1,405 11.6% 1,386 13.1%

% Ancillary Revenue 9.4% 13.1% -3.8 p.p. 8.6% +0.8 p.p.

Total Costs (1,538.4) (1,498.5) 2.7% (1,411.9) 9.0%

Total Costs Ex-Fuel (987.4) (1,046.6) -5.7% (965.9) 2.2%

EBIT 191.4 119.2 60.7% 105.1 82.1%

EBIT Margin 11.1% 7.4% +3.7p.p. 6.9% +4.1 p.p.

EBITDAR 405.0 290.1 39.6% 359.3 12.7%

EBITDAR Margin 23.4% 17.9% +5.5 p.p. 23.7% -0.3 p.p.

Net Financial Result (133.7) (72.7) 83.9% (12.9) 939.7%

Income taxes (33.8) 351.4 nm (30.8) 9.6%

Net income (loss) 23.9 397.8 -94.0% 61.4 -61.1%

Net margin 1.4% 24.6% -23.2 p.p. 4.0% -2.7 p.p.

Charter revenue

Other Ancillary Revenues

(cargo, no show and

cancelation taxes)

Aircraft Leasing

Aircraft Insurance

Depretiation

Fuel

EBIT (higher since the

first quarter of 2007)

EBITDAR

Exchange Variation

Expenses (R$ 60MM)

Ineffective Hedge

Expenses (R$ 16MM)

1Q10: Solid ResultsCompany reaches operating margin of 11.1%, going in line

with its financial guidance for 2010

Page 16: Gol Sg May2010

16

Healthier Financial IndicatorsIncrease on operating results and the initiatives to add cash

made a stronger balance sheet, ready to support the accelerated growth

394

1,441 1,523

1T09 4T09 1T10

Disponibilidades (R$MM)

Disponibilidades/Receita Líquida

4Q091Q09 1Q10

Cash and Cash Equivalents (R$ MM)

Cash and Cash Equivalents/Net Revenue (R$MM)

8,184

7,688

7,317

1T09 4T09 1T10

Divida Bruta Ajustada

Divida Bruta Ajustada / EBIDAR + Rec. Fin. 12mAdjusted Gross Debt/EBITDAR + Fin. Rev.

2,936

1,692 1,740

1T09 4T09 1T10

Dívida Liquida (R$MM) Dívida Líquida/EBITDAR

1Q104Q091Q09-32.8

413 500

1T09 4T09 1T10

EBIT 12m (R$MM)

Disponibilidades/Receita Líquida

1Q09 4Q09 1Q10

Cash and Cash Equivalents/Net Revenue (R$MM)

Net Debt / EBITDARNet Debt

Adjusted Gross Debt

1Q101Q09 4Q09

0.4

2.4

2.7

Disponibilidades / Endividamento Curto PrazoCash and Cash Equivalents/Short Term Debt

Page 17: Gol Sg May2010

17

GOL Investor Relations

Rodrigo Alves

Head of Investor Relations

+55 11 2128-4700

[email protected]

www.voegol.com.br/ir

twitter.com/GOLinvest

This presentation contains forward-looking statements relating to the prospects of the

business. estimates for operating and financial results. and those related to growth

prospects of GOL. These are merely projections and. as such. are based exclusively

on the expectations of GOL’s management concerning the future of the business and

its continued access to capital to fund the Company’s business plan. Such forward-

looking statements depend. substantially. on changes in market conditions. government

regulations. competitive pressures. the performance of the Brazilian economy and the

industry. among other factors and risks disclosed in GOL’s filed disclosure documents

and are. therefore. subject to change without prior notice.

Page 18: Gol Sg May2010

18

4| Appendix

A Consistent Story with

Strong Fundamentals

Page 19: Gol Sg May2010

19

Competition and Fuel Price CorrelationFuel price and industry supply providing much better scenario for GOL

1.70 1.72

1.26

1.93

1.4017.2%1.2%

-26.7%

53.2%

-27.5%

2005 2006 2007 2008 2009

Average Fuel Price (GOL R$)

Average Fuel Price Change (GOL %YoY)

Fuel Price Evolution

396 377

287

418

315

2.4%-4.7%

-24.0%

45.8%

-24.5%

2005 2006 2007 2008 2009

Industry Domestic Average Fare (R$)Industry Domestic Average Fare (%YoY)

Industry Domestic Average Fare Evolution

28.8%13.8% 8.2% 7.2% 13.0% 16.1%

43.0%

49.1%48.8% 50.4% 45.6% 42.7%

28.3% 37.1% 43.0% 42.4% 41.4% 41.3%

2005 2006 2007 2008 2009 2M10

GOL TAM Others

GOL Focuses on Market Strength not LeadershipDemand is Surpassing Supply Since 2H09

81 80

114 102

114

31

72.3% 72.2%

68.1%

66.8%

68.1%

72.7%

2005 2006 2007 2008 2009 1T10

Industry Suppy Industry Load Factor

Page 20: Gol Sg May2010

20

GOL’s code-shares created the largest network of foreign airlines in number of

passengers transported to Brazil

GOL Alliance

100% pax

Brasil Holanda

61% paxBrasil França

69%paxBrasil Espanha

85%pax

Brasil México

36% pax

Brasil EUA

47% pax31% pax

Brasil Europa

Brasil

EspanhaFrança

Holanda

Brasil América do Norte

paxBrasil EUA

15%

The code-share agreements generate greater

awareness of the SMILES value, reflecting increased

GOL penetration in the business segment.

Source: ANAC – Brazilian Airlines Regulator, 2008 Annual Report

Graphs consider only foreign companies carrying passengers to Brazil

GOL Alliance - USA41% of total international

passengersGOL Alliance - Global

29%

Star Alliance

27%

One World

17%

Sky Team

35%

GOL Alliance (Brasil-Mundo)GOL Alliance (Brazil-Global)

67%

GOL Alliance …GOL Alliance (Brazil-USA)

Page 21: Gol Sg May2010

21

Successfull Turnaround in 2009GOL: ready to grow and expand operating margins

Operating 2009 2008 Ch% 2007 Ch%

Demand (RPK - bn) 26.1 25.3 3.1% 29.2 -10.8%

Supply (ASK - bn) 40.0 40.1 -2.7% 44.1 -9.2%

Load Factor 65.2% 61.6% +3.7pp 66.4% -1.1pp

Net Revenue(R$MM) 6,025 6,406 -5.9% 4,941 21.9%

Ancillary Revenues 719 516 39.3% 374 92.1%

Passangers Revenues 5,307 5,890 -9,9% 4,567 16.2%

Ancillary Revenues Share 11.9% 8.1% -3.9pp 7.6% +4.4pp

Total Costs (R$MM) (5,612) (6,495) -13.6% (4,931) 13.8%

Total Costs –Ex fuel (3,799) (3,864) -1.7% (3,032) 25.3%

EBIT (R$MM) 413 (89) 566.2% 10 nm

EBIT Margin 6.9% -1,4% Nm 0.2% +6,7pp

EBITDAR (R$MM) 1.207 682 77.1% 598 101.7%

EBITDAR Margin 20.0% 10.6% +9.4pp 12.1% +7.9pp

Net financial result (R$MM) 343 (1,106) Nm (191) 79.5%

Income tax (R$MM) 135 (44) Nm (34) Nm

Net Income (loss) (R$MM) 891 (1,239) Nm 167 Nm

Net Margin 14.8% -19,3% Nm 3,4% +11.4pp

Page 22: Gol Sg May2010

22

3Q09

2433

40 4556 60 6219

22

2121

1515

17

31

37

4342

4040

40

5

28

14

9

111106

108111

115119

109

2007 2008 2Q09 2009E 2010E 2011E 2012E

n New, larger, fuel efficient SFP aircraft

n Fleet standardization of Boeing 737NGs

– Lower spare parts inventory needed

– Phased maintenance reduces ground time

n Installing winglets in all Boeing 737 -700s

n Expand in-house aircraft maintenance services to

achieve additional savings

Fleet Management Operating Fleet, Seats and Average Fleet Age

737-800 SFPs 737-800s 737-700s 737-300s 767-300s

Seats (‘000s)

18.2 17.4 18.1 18.2 18.9 19.6 20.4

’07-12E Seat CAGR 2.2%

n Boeing 737 -700 NG: low density markets or

restricted airports

n Boeing 737 -800 NG:Medium to high densities and

flexibility to land in short runways

n Average fleet age 5.5 years

n Returning all Boeing 737 -300 to be grounded until

december 2009 in process to be returned

Fleet Plan

Page 23: Gol Sg May2010

23

260 117 120 112 101

1,010

1.080

2010 2011 2012 2013 2014 After 2014 Total

R$ MM – as of December 31, 2009

Confortable Debt Payment ScheduleComfortable debt repayment schedule and looking forward to rollover

2010 debt maturities

Debt Repayment Schedule (R$MM) 2010 2011 2012 2013 2014 After 2014 Total

Capital de giro 185.0 - - - - - 185.0

BDMG I e II 2.9 3.3 3.3 6.1 4.0 12.6 32.2

BNDES 14.3 10.8 8.4 - - - 33.5

BNDES-Safra 6.3 9.5 12.7 12.7 3.2 44.4

Debêntures - 93.7 93.5 93.5 93.6 - 374.3

IFC 51.7 - - - - - 51.7

Senior Notes - - - - - 369.8 369.8

Total 260.2 117.3 117.9 112.3 100.8 382.4 1,090.9

Page 24: Gol Sg May2010

24

Current Shareholding Position

Composição Acionária ON % ON PN % PN Total % Total

Acionista Controlador 137,032,718 100.0% 36,635,380 27.5% 173,668,098 64.3%

Board of Directors 16 0.0% 1,865,686 1.4% 1,865,702 0.7%

Free Float - 0.0% 94,242,981 70.7% 94,242,981 34.9%

Treasury - 0.0% 454,425 0.3% 454,425 0.2%

Total 137,032,734 100.0% 133,198,472 100.0% 270,231,206 100.0%

Page 25: Gol Sg May2010

25

Strong Operational Support

Cash & equivalents higher than 23.9% of LTM net

revenues (R$1.4 billion)

Comfortable debt amortization schedule

Significant improvement in all financial ratios in 2009

Positive operating cash flow generation in the last 7

quarters (including 1Q10)

Strong Exim-Bank Support: US$280 Final Commitment

100% tag-along rights for non-voting PN shareholders

25% minimum dividend payout ratio

Active Board of Directors

4 independent members, including Chairman

Proactive advisory committees

Risk & Finance, Audit, Corporate Governance &

People Management & Strategy

Management compensation aligned with shareholders

and linked to share price

3m average trading volume R$71 MM

Financial strength and high corporate governance standards are key to

ensure long term profitability

2010

Ranked #1 (Market Pool)

Best Managed LATAM 2010 – Airlines & Aviation

Most convincing coherent business strategy

Sound practice of corporate governance