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Executives

Adalberto Cambauva Bogsan - Vice President of Technical

Edmar Prado Lopes - Chief Financial Officer, Financial Director, Investor Relations Officer, Member of Financial Policies Committee and Member of Accounting, Tax & Financial Statement Policy Subcommittee

Eduardo Sanovicz

Paulo Sérgio Kakinoff - Chief Executive Officer, President, Member of Human Resources & Corporate Governance Committee, Member of Financial Policies Committee and Member of Risk Committee

GOL Linhas Areas Inteligentes S.A. (GOL) Rio de Janeiro Public Meeting August 14, 2013 8:00 AM ET

Unknown Executive

So we are opening up another opportunity, and I'm going to give the floor to Adalberto, who is our technical -- person in charge of the technical side. And we announced results yesterday, and it is always important to show what we've done from the operational side because we would not be able to show any financial evolution had we not based ourselves in our strengths, as we see it, which is operational -- the operational side. And Ada is the head of that, and he has 12,000 or 15,000 employees under him and he runs the whole business. So Ada, if you would, please.

Adalberto Cambauva Bogsan

I'm going to speak from the rostrum, which I believe makes it easier. Good morning to all of you. Thank you first to the President for lending us this house. It is the first time we're holding a presentation like this here in Rio de Janeiro.

My purpose here is to speak a little bit about the operational side because what we have done and with the improvement of costs we have had was based on decisions or operational changes in the company. And I believe it is important when we show our results to let people know where these results have come from and how the work was performed, so we are briefly going to talk about operational area.

My name is Adalberto Bogsan. People know me as Ada, which is my nickname. This is why he has called me Ada, which makes it less formal. I think that this is quite nice, actually, to have some informalities so that we can do this very much at ease. Also because what we have to say is a bit technical, so the idea is to be very much at ease.

So moving to our second slide. We have started a very strong campaign in the company of fuel savings. When we talk about fuel savings, this is very much in line with our fleet, which is one of the most efficient fleets we have in the market. This is the 737 NG fleet, including 700 and 737-800. We have done work of QAV consumption decrease. And if you look at it, ever since we started working in the first quarter of 2011, we had a few changes because this calls for a culture operational change in the company. We had to work with 2,000 employees, 2,000 pilots, so that they understand the actual need of decreasing consumption in the company and how much this accounts for in the company. Today, one of the biggest expenses we have is fuel. This is -- this has the biggest impact on our operational costs. So in looking at what we've done, we've worked in this following manner: We take consumption per liter per SK or seat kilometer. So we had a decrease of 5.6% almost of our seat per kilometer consumption. And this was a drop that took us 1.5 years to make our crew be aware of this, not only crew but also people that work in maintenance, especially in line maintenance. We will look at some actions that we implemented later on.

Today, we have one of the youngest fleets, on average 7 years. Our fleet today is considered one of the most efficient ones because of the type of equipment that we operate, which is Boeing 737 NG. We are the launch customer of 737. We have bought 60 737 MAX family planes. And to give you an idea, we will speak about these planes and what is it -- is its evolution. We had 737 Classic, which was 300 and VARIG and vast [indiscernible] planes. We had some in our fleet. And also to complement when we needed aircraft and -- when there was no aircraft in the market, we purchased some 737-300. And today, we only have 737 NGs flying in our fleet, not to speak about 737 Webjets, which are being phased out. And we have a fuel reduction of 30% from one plane to another that is from the Classic to the NG. And with the 737 MAX purchase, we have an expectation of 12% fuel consumption reduction compared to our current fleet. Together with Boeing, we have the Short Field Performance 737, which is the one that works on the Rio-São Paulo air shuttle service. This was designed together with GOL to meet our needs for short runways, some of the runways that wouldn't be able to operate with the original aircraft from manufacturers. GOL and Boeing developed some differences that were implemented in these planes, so that we could use these planes in -- at the more enjoying view some runways that we wouldn't normally be able to operate with the amount of passengers that we need.

Now according to the campaign that we performed and carried out, one of the ADS that we used was this one, "How much does 3 minutes, 44 seconds mean in a barrel?" And this is the time we need to use up 200 liters of fuel, that is a barrel of fuel. We can use that up in 3 minutes, 44 seconds, which is like one of the takeoff maneuvers that we do. And this is for us to understand how much this accounts for in consumption in order to try and decrease the original consumption level we had. So this covers several sectors, not just crew, but also maintenance and airports, people who care for the plane and its operational side during the day.

Today, we have 16 potential actions to improve fuel efficiency. Some of them have been implemented, others are being implemented. And of the 16 initiatives, 1 of the aspects that we have looked at is the carbon footprint. So this is why we have a green policy for fuel to reduction. So there are several initiatives. I'm not going to -- into detail about all of them. Otherwise, we'll be discussing here and talking the whole day, but this is to give you an idea what we're doing regarding our operations and to have fuel reduction that is sustainable.

Together with the maintenance people, I say that we have to understand the company as a whole. We focus on APU, which is a turbine that generates power for air conditioning when the aircraft is on the ground. So we have performed an action whereby we have decreased the use of APU on ground when we don't need it. Especially when the plane is on ground for a long time, we no longer use the APU, but we use GPU, which is the ground power unit, which is a ground plant that uses up 5x less than APU. So we have started using together -- working together with maintenance in order to decrease the use of APU on ground and to use GPU instead, and this yielded good results, especially overnight for maintenance. And min. dispatch fuel is a reduction of fuel consumptions through optimization of the minimum plant consumption policy. And this is particularly route optimization, together with aeronautical -- aviation authorities. We have managed to study and decrease air distances because, usually, an aircraft takes off and doesn't go to its destination on a straight line and has to go up or run a parallel route. So we're working strongly together with the program that we will look into later on an RNP, which is Required Navigation Performance, in order to have more direct routes. And we can decrease our flight time because consumption -- we can decrease consumption by decreasing flight time, and decreasing flight time is decreasing distances covered. So if we can decrease the distance covered, we can decrease aircraft consumption. There are several routes in which we have managed to perform this kind of change, especially routes where we -- in which we fly to the Northeast of Brazil, routes where you would have to fly over the shoreline all the time contrary in Brazil instead of going on a straight line over the interior. And this has decreased drastically our flight time, with gains of 15 to 20 minutes in flying on a straight line. So this is a policy that we are implementing and encouraging our pilots to request it, to request flights on more stable conditions, say, without such a winding path so that we can manage to have fuel consumption. It should be remembered or reminded that their flight safety comes first. Of course, when you request this and if there -- weather problems are on the way, you will have to take turns. But if it is a weather like we have today in Rio de Janeiro, we can implement it with no problem.

Destination maneuvering. Just for you to have an idea of what this is, optimization and reduction of fuel destined to the approach procedure in all bases operated by the company. We have been working with several players. One of them is DECEA, which is the one that controls air traffic in Brazil in practical terms. And GE is our consultant. General Electric is an expert in this kind of program. What we're doing is we're making approaches where you come in straight to a point of arrival where you don't have to fly in what we call the orbit, and you must have heard pilots talking about orbits -- in an orbit. And we don't know what this is. This is a sphere when the terminal point of arrival is congested and we have to fly on a sphere fashion in order to wait for landing. So we want the flow to be ordered so that we can approach without having to fly the orbit. And by so doing, if you assured to have precision technology for a purpose, that will lead you to a more stable approach, whereby you have -- you're assured to approach and land in safety. So you decrease consumption. And even when you're dispatching the aircraft, you can dispatch it with the adequate amount of fuel to that leg, without having contingency fuel. Usually, we take a lot of contingency fuel because of air traffic contingencies. So you can optimize your fueling. Whenever you fly with fuel, it means weight. So you have to burn more fuel in order to carry that weight. So the idea is to carry the amount of fuel to take you to your destination and to have a contingency for automation in weights, without having to have anything extra or on top. In the past in Brazil, we would always take another 30 minutes of fuel or even 40 minutes or 1 hour of additional fuel in order to arrive at the point of arrival, and you would never be sure of what is going to happen when you were in a sequence of approaches. Today, because of a series of changes that we have implemented and a series of changes performed by the controlling agency, we have few spots where we don't have this service, that is direct and more precise approaches. And this comes together with another procedure that we're going to talk about that we have been able to certify here, such as demand basis, alternate selection. This is reduction of transport fuel not used in flying even in adverse situation. So I do São Paulo-Rio by alternating São Paulo. Why can I not do São Paulo-Rio with São José dos Campos or nearest cities. So by making weather analysis which are precise and well-trained people, today, we are capable of assessing what is the actual need of having a longer alternate or a shorter alternate. Of course, if you take a day when you have clouds, mist, fog and bad weather, you are going to take a longer alternate. But this requires meteorological analysis, but you don't need to do this analysis with the longest leg alternation in all your flights. So as a company policy, we always have 2 alternates, a longer one and a shorter one. This is always true. But we have started to work with alternates close to the destination when you are sure that the weather is going to be the same for a longer period of time or for almost all the time. So almost 75% of our operations today are operated with -- in good weather and not in adverse weather, thank God. We always have adverse weather, but with a small percentage in some areas of the country. And then we work point to point with dedicated people, looking at what is going on in that area so that we can work in alternance and meet our needs. So these are intelligent changes that we have implemented in order to constantly optimize our flights.

RNP AR, which is required navigation performance for approach. What we've done with GE, which is our consultant for implementing this procedure and [indiscernible], we have developed this procedure which assures much greater precision than we used to have in the past. And by so doing, we can fly and do curved approaches while going down constantly. That is my cruising level, as we call it, down to landing. I go down constantly until approach and landing at destination.

In the case of Santos Dumont, we have been able to develop this procedure, and I can assure a greater safety of approach, safety of our landing pathway and a much greater likelihood of landing. For you to have an idea, our operational ceiling here at Santos Dumont was 1,100 feet. We calculate this. So we've been able to land at Santos Dumont when the ceiling was higher than 1,100 feet. With this procedure, we can approach at 305 feet ceiling. And this is for the headway of Pão de Açúcar, for headway 20, which is that of the Rio [indiscernible] bridge. Because there are no obstacles, it is much easier. But the 02 headway has always presented more restrictions for our operation. So we work on 02, the threshold 02, we operate in large airports where there are no obstacles. Because of the procedure that is provided, that is all GPS-based all the time with onboard state-of-the-art technology, so that we can have this precision. The precision is 0.1. That means 0.1 mile for every side to the center of the trajectory. So the biggest deviation you have is 0.1 mile. And when you get to the runway, it gives you 50 meters of deviation. So the pilot has to see the runway to land. But 15 meters when you have 45 minutes in width, it's almost nothing for pilot conditions in order to have a second -- a safe landing. So this procedure will be implemented now. It started at Santos Dumont, and we're going to start expanding it to other places. And it is proper for places where you have to take turns or go in a curve before landing. This is the case at Santos Dumont that you fly over Botafogo and you turn over Rio Sul Shopping Center and then approach the threshold 02 runway, with Pão de Açúcar or the Sugarloaf at the back. So this is certified for Santos Dumont. And the next airport to be certified will be Joinville. This is another critical area for us.

Now speaking about -- we've spoken about approaches and what we have today, which is also called RNP AR. This is en route. This shows that we have gained almost 3 minutes in approaching Santos Dumont, and this is how we optimize time. We decrease time and thereby, we decrease consumption.

Now talking a little bit another project that we have, which is also part of RNP, that is en route procedure. Today, it's not on this slide, but we are operating on routes with 10,000 miles separation. With the precision of these procedures, we have cut down this from 10,000 to 5,000 miles and en route. In São Paulo and Rio de Janeiro, we have 5,000 miles of separation, and we've cut it down to 3.5 and in final approach, down from 3 miles to 1.5 thousand miles. And this puts us at any threshold of any developed country, like United States, Europe. Any country that we operate outside of Brazil already operates with this kind of a procedure that has been proven to be completely safe because of the type of approach and equipment we have on board, the newest generation aircraft, which is the case of the new 737. So more precise landing procedures, generating or creating less noise and less equipment, where improvement of flight safety, optimization of airspace, reduction of crew flight hours, potential for new markets in harder-landing airports, reduction of passenger costs and alternate flights. So the -- if you have missed in Rio de Janeiro, we alternate to the International Airport Galeao, and then Santos Dumont opens back again and we bring everybody back. We have decreased this population drastically, and we have been offering our uses stability -- much greater stability of our operations. Displacement reduction, less go-arounds, less alternate flights and fuel savings.

Now I'd like to talk about the airport policies, for you to have an idea what have we done with catering. We have started working with catering, because we have air tanks for the toilets. So they would arrive at -- we would fill up all water tanks, and we would take 200 liters of water onboard the aircraft than necessarily in a 30-minute flight. And do you think we're going to consume the water tanks that usually goes -- prepared for a 6-hour flight or 6.5 hour flight in a plane like this? We would take the same thing between Rio and São Paulo. So there is no need to do -- to take all that onboard. So we have decreased the amount of water we take on board to -- for toilets in less-than-an-hour routes. And in every route for less than an hour, there is a precise amount of water that we take. And so we take less weight and we can optimize fuel consumption also.

Now talking about airports, and I'm also responsible for airports now. We have done very intense work at airports, and this is still being done. This is no short-term work, it is long term, so that we can improve our airport process. For you to have an idea, in these first 6 months of the year, we were #1 in punctuality. We were the most punctual company in the market, so we moved from 92% punctuality to 94%. So this is 2 percentage points improvement semester-on-semester in comparison to last year.

Remote check-in. We've moved from 41% to 54% remote check-in, and we're talking about self-service, web-based check-in and check-in on the go. So this is an objective that we pursue very strongly because passengers that do not have a piece of luggage do not have to go to the counter, do not have to queue and be serviced by one of our employees. The important is that for our user public, we can make users do the check-in without -- before going to the airport and they go straight to the boarding gate, and check-in will be left aside for people who need assistance or who have luggage. So this is the idea. So increasingly, we are fostering this policy amongst our users. You can see that this has improved positively. In large airports, for you to have an idea, we are reaching indices or rates as high as 80%. This is the average for the company. But in large airports, it can be as high as 80%.

Now talking about customer satisfaction index, I don't know who's flown GOL, and after landing you receive an SMS asking you to grade the experience from 1 to 10. This grading system is very important for us so that we can improve our processes continuously. And this is valid or covers the point when you came to the airport or even when you purchased your ticket and you checked in or had your first access to the time when you come out of the plane in the airport and picked up your luggage. So we want you to assess all of our chain and processes in the company, so that we can have an accurate snapshot of what we have to do to have continuous improvement. We have indications for all situations. Indications for how much -- how long you take queuing, how long our users take in check in -- in checking in, how long we take to board our patients, how long -- how much ground time our aircraft have before turnaround and how long it takes for the first piece of luggage to arrive at the conveyor belt up to the last one. So we want service to be continuously improving.

Check-in standardization in all airports. We have started working to improve visual identity and improving our communication at airports. The first airport that -- where we implemented a new identity is called [indiscernible]. That was a pilot, and now we are expanding that to all airports. So whoever goes to [indiscernible] will see there's change in the queue layout, change in the identification signage. Signage is at a greater height, so that people can see from a greater distance. Also, our service totems or terminals will be placed in strategic points so that it is being seen. And -- because if people don't see it, people will queue at counters, which we don't want. And also, baggage drop for those who go through check-in. So this is the idea or rather you do your check-in at the terminal and you go to check just baggage drop with ticket printing. We want to do this -- to be done by terminals at check-in. The baggage tags will be printed at the machine, and you will just drop your bag. Of course, those who need help will have someone, like a host to help you, that will help you put the luggage on the conveyor. So this is the idea in order to make the airport more dynamic. And so we will improve our assistance flow. Continuous service improvement at present serviced by constantly training our supervisors and managers at airports, and to cut down check-in lines and queues. This is the main purpose here.

Action. Flow analysis and arrival of customers. We had talked already steady of client flows, check-in in stores. This is something that we do constantly. The assessment of the minimum queues for type of service, transit between check-in and totems. We reproducing, as I say said, our totems at the airport. We revised all the operational signaling, the new roles and responsibilities for all of those who operate in the check-in. We now give more autonomy to those that work at airports for them to be able to decide contingency situations, improve our decision-making at the airport through better training.

As I said, referring to training, as you can see, in peak times in São Paulo, 9:00 in the morning, which is the peak time, as well as 5:00 p.m., you can see that the flow of passengers is normal now, and the queues are well organized. Meaning, nowadays, we only use queues for those who really need it or who want to drop off some luggage.

At boarding, we improved the lines. We separated lines in 2 lines and 2 queues so that the clients have the possibility to view the gate, the boarding gate. We work our Diamond clients better. We give them special services. This is one of the differences that made us achieve more efficiency and punctuality. So we've been more agile boarding. Also, the ground time is lower. So with this, we were able to, in 60% of our flights, close the doors 10 minutes before departure time. And this, to us, is a lot of efficiency advantage.

This is what we did. In the A group, we had group boarding. They are called by groups. And here, we do the boarding, dividing the aircraft so that we start from the back first. And also, head and the B group is the parking of premium client or customers. They board as they get to the lines according to their arrival at the gate. When we call their flights, they are the first to board. But also, if they arrive a bit later, they have the possibility to board immediately.

The dimensions of our luggage. We prepared this box that allows you to measure if your hand luggage is fitting into the adequate proportions. If it's not adequate to standard measures, it is ticketed and is then dispatched right at the door of the airplane. With this, we want to create or add facilities to our clients. Sometimes, you're in the airplane and there are -- there's already a lot of hand luggage in the bins and some passengers are not able to accommodate their luggages in the bin above their seats. So we want to serve our clients all -- equally and adequately. And this measurement in the box allows you to see if the luggage will fit in the bins or not. And with this, also, we improved the perception of quality of services to our clients.

We have Orange cap. Orange cap is actually -- we say that is a flight manager on the ground. If -- when the aircraft has landed, this is what is responsible for the aircraft. So this person goes to the aircraft. And the moment the aircraft stops at the airport, he starts his organization job to organize deboarding of passengers and also, the service providers, the third parties. They are organized around the aircraft since the fueling procedure, the opening of the luggage compartment, they do all the safety checks around the aircraft. This is the person that is actually controlling all of the involved people, if they are arriving on time, if the cleaning was done properly, et cetera. This is the person that is constantly checking the job of all of the parties involved. He is also in charge of the punctuality of all the services on the ground at the airport. When the doors are opened, he is -- while the doors are open, he is the person in charge of maintaining punctuality. And if the services are late, he has to optimize the services in order to prevent delays or at least minimize delays. And in every airport where we land, we are improving our ground time and avoiding delays. This is a very important person in our staff. Because first of all, he is responsible for the safety of the aircraft while it's on the ground. He organizes all the safety issues. He will check if the service providers on the ground are following the requirements of safety equipment while they are performing their work and also, the way that the luggage is being handled. He checks everything that goes in and out, if the luggage is being dispatched accordingly. Once the doors are closed, he gives the document to the pilot and this finishes his job. This is also another gain in quality at the airport services from our staff. It makes the processes more fluent. And the main focus is on safety around the aircraft to avoid incidents or even incidents that might happen, smaller accidents, I'm referring to, like the luggage trolley is sort of hitting another equipment. So he coordinates and controls all the items around the aircraft if everything is running according to the guidelines. He is actually the guardian while the aircraft is on the ground.

Well, thank you very much for your attention. This is I what I had to tell you today. And now I would like to forward the floor to Edmar, Financial Vice President and Investor Relations.

Edmar Prado Lopes

This presentation was used yesterday when we were publicizing our results, a few things we discussed with Adalberto already. There are some important points which we did not discuss yesterday which we want to show you today.

Okay. To start, the main highlights of the quarter is the -- when -- from the operational margin EBIT, you can see a negative result of minus 335 [ph] to less. The second quarter is seasonally always the weakest quarter in Brazil, the low season, but we had an improvement of BRL 320 million of operational result. Accumulated in 6 months of the year, we went from a margin of minus 8.7% to a positive margin of 1.7. Also, this is a very good development from BRL 30 million in 6 months even in an adverse scenario. When we talk about EBITDAR, which is cash generation, we have accumulated in 6 months BRL 602 million, compared to a bit over BRL 200 million in the last year. Once again, we have a good development in our company with the main indicators.

So what are the highlights from our point of view here in GOL's operation? The growth of PRASK for the 15th consecutive month, PRASK is the revenue per seat per passenger. RASK involves auxiliary revenues and also growing importantly, 7.5% in the yearly comparison. Once again, we continued in our strategy to reduce supply to maximize the use of our fleet. The fees and yield indicate this. There is an improvement increase in yield of 13%. And from the cost standpoint, Adalberto mentioned this already, or the fuel consumption, we reduced around 6%. And also, there was a reduction in total costs CASK, not just refer to fuel, as was mentioned, but also in the part that is nonfuel, which is where we have a bigger influence that was important reduction, although there was a reduction of capacity, which leads the indicator to be affected.

In April, we were able to use the market window. We made a program with miles and that generated cash. And this shows a better position in the nominal aspect, BRL 2.8 billion cash. Also from the relative point of view, this is a position equivalent to 34% of LTM net revenue of the last 12 months, a very important indicator for an airline. When you have an average number of around 50%, 20% as a result of this work that we have been doing, the improvement of our results also strengthening the liquidity part, so our financial leverage decreased 44% between the quarters. And we believe that this trend will be kept.

Here are the main indicators. I want to highlight the following. If we start at the top line, you will see that in 6 months' time, there was practically no variation. That is the company is still the same size in the revenue. We have a difference of BRL 1 million and almost BRL 4 billion revenue. In total costs, we decreased 10% our cost basis and this led us to improve our results. Also, we were able to maintain the level of revenue, reducing our capacity. We were able to use our aircraft much better. And at the same time, we reduced the cost basis in a relevant way, 10%, even in adverse scenarios.

If we look at the lower part of this table, you'll see that dollar, the average dollar rate increased 10%. So 55% of our cost, including fuel, is related -- or is based on the dollar. If we are able to reduce cost in the scenario of increase of exchange rate, this is very important, important achievement for us as Eduardo's several initial initiatives led us to achieve such improvement.

Next one, RASK and CASK. RASK and CASK, these are the indicators of our -- the sector that shows us the individual revenue per seat, and CASK is referring to cost. What happened in the second quarter? We are highlighting what happened. Important point is the evolution -- the development of this. So we compiled the data of different companies of different airlines from Europe and the U.S. that publicize their results of second quarter. And here, you can see in the comparison that GOL has a very good position in this development. If we went from very challenging scenario, negative.

And now looking at the revenue, which is the higher part of the graph, and the cost part, which is the lower graph, so we are one of the companies that positively developed over the years. When we look at the bottom line, which is evolution of margins, our margin improved 18 percentage points between 1 year and the other, comparing quarter-to-quarter. Up to yesterday when we compiled the results, this was the biggest evolution or development of margins for an airline currently in the year 2013. So this is just to highlight the relevance of what we have been doing even in an adverse scenario.

Our strategy. What have we been doing from last year on? Our perception was that the Brazilian market was having an excessive offer. The airlines have been growing strongly in the past years, either through the exchange rate or due to economic scenario. We knew that this would -- the scenario, the economic context would not perform like this forever. So now we are in a scenario of less growth and lower levels of PRASK, and this led us to reduce capacity.

In the first moment, the company Webjet, we were using the older airplanes of Webjet to reduce our capacity. There was less efficiency in fuel. And this is what we have been doing now with GOL's aircraft. So we reduced the size of the company, in an operational point of view, without affecting our results.

So from the second quarter on, the lower part of the graph, what you see in gray shows how much we removed in capacity. 2% -- second quarter '12, less 2%. In third quarter last year, 8% -- less 8%, so 6% now, we are decreasing, and 6% capacity at GOL. The superior part, the upper part, is seat revenue. In the first moment, when we removed 2% of our capacity, the seat revenue increased 6% and so on and so forth.

So what are we experiencing right now? Even if we see a smaller reduction in capacity, what we see in the second quarter, at 6%, we were able to maintain our growth of seat revenue. We are adjusting, so we have been privileged in the less profitable routes, reducing frequency, exchange aircraft to smaller aircraft, et cetera. We are flying less than we would like to, but we have no doubt that the size of the company has to be adjusted in order to face the challenges of recent scenarios, dollar exchange rate, BRL 2.30, so we're getting ready for that.

Adalberto mentioned this as well, the good job we have been doing in terms of punctuality in airports. This is important for our passengers -- the corporate passengers. These are the passengers that pay for -- higher for their tickets, since they do not buy in advance. And to them, we have been developing several products in order to attract the passengers more and more. One of these possibilities is to choose their seats, or possibility to move their flights, delay their flights and postpone their flights without charging extra fees. And what you see on the right side, we were able to close the gap for corporate passengers comparing to other -- our main competitor. We were 3 percentage points below our competitor. And, nowadays, we are exactly the same size, and we are still improving our services.

Talking about the efforts. BRL 400 million revenue, BRL 147 million saving in fuels, that was helped by the prices in the third quarter, and BRL 266 million were other operational costs. As Adalberto said, bigger part of them is related to the change of -- in processes, and consequently, also the expenses that we have to manage.

Labor costs are an important item. And here, we see some variation from 1 year to the other. We mentioned this as well, commented that it's important to highlight the labor force. We don't want to affect our quality of services in cutting jobs. We maintained all our operational indicators, even if we have a smaller headcount now. And the productivity of people in 20% represented 15% higher productivity from 1 year to the other. It's an important industry that has very low marginal -- operational margins. An airline that has 5% or 10% of margin is really a challenge. To improve productivity, 15% per employee is very important achievement.

Talking about SMILES, our mileage program. We want to highlight, we made this spinoff at the end of the first quarter, and we were able to acquire BRL 1.1 billion. GOL is the controlling agent, has 57% of the capital. SMILES published its results by the end of last week. We see positive results. Our income with a great potential for growth in Brazil, with this closing the gap compared to our competitor. The company has been listed at the end of April, and we started paying dividends and interest on our own capital, so to the shareholders, all of this is very important.

Financial result. We mentioned already the improvement of our revenues. I also mentioned a bit about cost and the challenge of the new exchange rate level. And the balance, we will discuss this later on. So the new exchange rate in the financial line, this represented the BRL 333 million. This is in our debt. And this alone is 77% of the negative result of the losses of this period. So it's a challenging scenario, since the new exchange rate level of BRL 2.30 is here to stay. We were working previously with BRL 2.10, BRL 2.20 not very long ago. Eduardo said, like, just 2 months ago, this is a challenge for the industry at large, not just for GOL, but for every airline.

Nonrecurrent results, let me explain to you a bit what happened. We have 2 events that we highlighted, 1 of them was the issue of gains and savings and banking. In the 2 quarters, we had gains of BRL 30 million, and, say, leaseback transactions. And we started to work on the flexibility of managing our capacity more actively through subleasing.

How do we do that? We have a reversed seasonality compared to the Northern Hemisphere. When we are in the low season here in Brazil -- now from April on, in the Northern Hemisphere, this is the highest season. So last year, we had subleasing done through a KLM subsidiary. We had 2 airlines -- 2 aircraft, sorry. And this year, we made it with 5 airlines -- sorry, with 5 aircraft. From April to October, we have the subleasing of aircraft. And so, probably, next year, we'll do the same. This is part of our strategy to flexibilize our capacity in the foreign domestic market.

As he mentioned already, BRL 6 billion in fuel. The account of fuel at the end of the year is something close to BRL 4 billion, the spending. So even 1% makes a huge difference in this amount.

Here are the operational indicators of the company. Once again, from the supply, the total supply decreased 2.7% in the quarter. When we look at the domestic market compared to year-by-year, domestic market, the decrease of capacity was 11%, even higher than we saw in the beginning of the year.

Occupancy rate has been one of the focus of our attention. We have a strategy to privilege price and not occupancy. This is one of our main differences to the competitor. We believe that this was a good strategy with good results, with -- since with a lower capacity, 7.5%, we maintained our revenues, and also, our cost basis was reduced 10%.

Here are the EBIT. The first highlight we made, operational margin increased BRL 320 million from 1 year to the other, BRL 400 million -- over BRL 400 million in 6 months. And EBITDAR, which is the cash generation of the industry, we tripled the amount of the first 3 months of the year. When you look at the right part of the list table, we went from BRL 206 million, over BRL 600 million. This is an important figure since it has an impact on the leveraging, which you see at the bottom line. And leveraging improved from 1 quarter to the other and will go on improving over the year.

We have faced huge challenges to maintain our results, but it's important to show this new take up. If you take the average of the analysts that follow us, advice us, we are not very far away from the numbers. And EBITDAR will also change level from 1 year to the other. We closed 2012 with a figure a bit over BRL 250 million. And looking at the average of the estimates, this number will go to over BRL 1.2 billion, so leveraging just in recovering results. This led to an improvement, 6x, not considering the additional capital injected with SMILES.

Here are other highlights that -- increasing net revenue and RASK, reducing cost and also CASK. In the lower part of the slide, here is the highlight of EBITDAR, BRL 602 billion (sic) [BRL 602 million] increasing -- improving sixfold the result of last year. This is our cash situation -- cash position.

In 2012, we burned some cash. We used our reserve in order to face adverse scenario with a lot of difficulties. With the IPO of SMILES in April. Additionally, we were able to sell anticipated miles with the banks. And with this, we were able to go back to a very healthy cash level. No one is arguing this. This is one of our strength in difficult scenarios. This adds a lot of confidence and also leads us in a good position. We are on a comfort zone now since not all of the airlines can show this. And we have a lot of assets.

People ask us, "What happens in a stress scenario? What will you do?" We still have a lot of assets in the balance sheet. And in adverse conditions, we could use them. SMILES is doing very well. Yesterday, it was BRL 27 million after the IPO, started with BRL 22 million an improvement of 30% in 3 months at the stock exchange. We have over BRL 2 million in our balance sheet, so with a good asset value. And we have 40 aircraft in financial leasing, which is also in our balance sheet in case we have to go for some liquidity.

Important, and this is not just nowadays. From 2009 on, when we restructured our financial capacity, we started to carry a lot of cash. We also extended our debt. This allows us -- allows the airline to have an adjustment, over time, in these volatile times. So we do not have relevant financial pressure for the coming 2 years. So if you ask me what is my Christmas list, certainly, it will include renegotiating this -- the debt in order to push them forward, so we can look at a scenario where, at every 24 months, we are not really pushed by financing, and with those, we're able to deal much better with a challenging scenario.

And this is just to summarize what happened to our debt in the second quarter, explaining to you what happened with leverage. On the left side, we see EBITDAR of the past 12 months. It went from BRL 357 million to BRL 654 million, just in this quarter. We have now quarters that are much better, and this is reflected in our results. There was no acquisition during the quarter. We had BRL 150 million amortization during this quarter, in this semester, it was BRL 320 million. And the last box is the effect of the exchange rate. Exchange rate alone represented in a scenario of debt. In this quarter, BRL 260 million. And, obviously, this pushes the debt up, although we have done some amortization.

Before I will show you the final table, what did we talk yesterday during our call. I want to repeat some of this. The dollar at BRL 2.30 or possibly BRL 2.50 next year, this has not been in the estimates of our company a year ago when we started to adjust our capacity and size. An important point is that now we have a company that is prepared and has already a reshaped size. The job is not over, but the important point is that we get to a scenario that will be even more challenging. We get there more prepared. So this is something we have stressed continuously, because we have learned a lot over these past few months. And the company has become increasingly agile, quick and flexible and fighting this adversity.

Eduardo is going to talk about the scenario for the industry, but we know that the fuel price in Brazil will reach its historic -- historical record, even above October last year. We are thinking that the aviation fuel will be as high as BRL 2.70 because of the exchange rate and oil prices. I've been in the company for 2.5 years. When I first got here, this number was BRL 1.80. So our main cost has risen more than 50% in slightly over 2 years. So people ask why is the ticket so high? Why is the ticket this and that? And looking at our numbers, we now charge BRL 250 on average for a 1,000-kilometer ticket. So when you look at your main import that has gone up 50%, you can see what happens to the average.

So let us move to the last one. This is financial projections of the company that we update every quarter. So it all boils down to the following: Although there is deterioration in Brazilian growth, we still believe it can be as high as 2%. And although there's a new exchange rate threshold and a new fuel threshold, all of them against the company, less demand and more cost pressures, our operational margins and operational terms will be between 1% and 3%. And this is a result of all the effort that has been put in, as Adalberto described.

So taking the dollar of evolution in the last 6 months, this has an impact of at least BRL 250 million. So the company is taking that in and is keeping things at level. And we believe that with this, we can -- we have taken an additional step towards credibility even in a challenging situation.

So I will close here, and we will take questions, but I will now move to give the floor to Eduardo Sanovicz, who is going to talk about the industry prospects and how the industry has positioned itself in its relationship with the government and what is to come. Thank you very much.

Eduardo Sanovicz

Good morning. It is a pleasure to be here with you. Just very briefly, I will show to you what ABEAR is, what information we have to share with you. This is an association that was started last year. This is 1 year old now. And it represented, at the time, the 5 civil aviation groups in Brazil. It was the coming together of the Azul and TRIP group. We have TAM group -- TAM, Azul, Avianca and GOL. These 4 groups account for 99% of all air ticket sales in Brazil. The 1% we don't represent is air taxis and executive aviation, small companies.

So we have 3 points in the agenda. First is to deal with competitiveness to make Brazilian in aviation competitive domestically and internationally, and to work on 2 main sustainable lines, technology, the use of new tools, fuel and board resources. And also, in terms of the environment, to decrease the environmental impact of our industry. And thirdly, with people. This is a labor-intensive activity. We always need to train, build capacity and hire labor.

Now the big numbers in this industry. We have more than 1 million people working in direct or indirect jobs, more than 73% -- billion of the GDP. You have the numbers of levees and so on. But it is important when we discuss aviation to say that although Brazilian aviation accounts for slightly less than 0.2% of the cargo volume in the Brazilian trade balance, aviation accounts for 10% of the balance of all of the trade flow in the country.

Last year, taking everything that Brazil imported and exported, Brazil moved almost $0.5 trillion. 10% of this came and went out of the country by plane. Although this is 0.2%, what does that mean? A big soybean container travels by ship, but a small micro ship and all of your mobile phones comes in and out of the country by plane, or several of the imports for drugs that each of us consume every day come in and out of the country by airplane.

Our industry is multiplied in our economy, and this is another important point. Take a city like Rio de Janeiro. It is unthinkable for you to plan and think any kind of activity related to tourism. This is one of the very important activities in Rio's economic activity with hotel shops, leisure and so on. This is inconceivable without air traffic. And this accounts for a chain of activities and jobs that fundamentally depend on connectivity, efficacy and speed and growth of air aviation.

We are the third-largest market in an interesting, competitive environment. Sometimes, lay -- people say, well, is our market competitive? The best thing to do in order to assess this is to compare it to the international market. In 2002, there was a major change in Brazilian aviation, with the deregulation of tariffs. Some of you, ladies and gentlemen, were a bit more classic like myself here.

Remember that before in the air shuttle, there was this plastic slip -- people from the old days like me. There was this plastic slip. It was because the air shuttle price was regulated by the government. So you would always pay the same thing. So you take your plastic slip and queue and take any plane, because it would make no difference. In 2002, when the freedom of prices was instituted, we completely changed Brazilian aviation, because companies started to compete, changed services, changed prices and so on. So over this past decade, the average tariff has gone down to half in real values. There was an average tariff of BRL 500, approximately, in 2002, and now BRL 250 for the average ticket.

As the average ticket goes down, and there was a period that we've been living through since 2003 with a social inclusion and increase of average income of the Brazilian people, there was a difference in threshold. We moved out of 30 million air tickets sold in the country in 2002 to something like 100 million air tickets sold here in 2012. And this is domestic and international. So this turned the country into the third-largest domestic market.

And in our country, with 81 million for domestic passengers, another 18 million or 19 million international live -- fly in Brazilian companies. We have the same 4 companies that we have versus in China, with 260 million passengers almost. So with the United States, American, and it's trying to merge with another company as was -- as came out in the papers today, heading towards 400 air companies, with 600 million passengers. And even if this is so, the American market is 6x our market and the Chinese 4x larger.

The fourth domestic market which is Japan, like ours, has 2 companies. And in comparison with Argentina, for you to have an idea of how this works in Latin America. So in this regard, the Brazilian population assures a higher average -- of a flight average. And in 2002, none -- no passengers flew in this country for less than BRL 100. There were no tickets sold for less than BRL 100. In 2012, 16% flew for less than BRL 100, and slightly higher than 68%, 69% flew for less than BRL 200.

This means that we have -- do we have tickets of BRL 700 and BRL 1,000, BRL 1,500, of course, we have. We will have those 2 descending curves at the end of the chart there. But when you arrive at 100 million tickets sold, 1%, you have 1 million passengers flying for more than BRL 1,200 or BRL 1,500. And this 1% passengers is last time a passenger usually flying for a company, and his schedule is partially not under his control. A passenger who can plan his trip and schedules it 1, 2, 3 months in advance are passengers, who pay in the lower fees.

An interesting comparison is if you take a flight from São Paulo and compare it to flights to Fortaleza, Natal, São Luís, you can see that in some legs, if we -- you plan your trip, we are fighting with highway transportation. 2012 was the second consecutive year that amongst Brazilian states, and this is official information from regulatory agencies, more passengers traveled by plane than by bus. And this is an important achievement by this country that was built or arrived at because of a set of economic decisions related to income and employment and Ada and Edmar have described this. There was in-house work on risks, costs and activity that was done in companies.

So several of you, ladies and gentlemen, in the financial markets have worked out this calculation. Just in this company, we made BRL 260 million by cutting costs. And we lost BRL 304 million to BRL 350 million, because the exchange rate went up to BRL 2.30. So during carnival, which is a topic dear to Rio de Janeiro, the exchange rate was BRL 2. And we are in August, so we're not talking about prehistorical times in Rio de Janeiro. This was just a moment ago.

So today, we are extremely competitive also from the point of view of average ticket charged in comparison to European flights. The second chart is a comparative chart, a bit difficult to see from afar. But it shows similar flights charged for by a low-cost company in Europe and sold here to the public at average prices. Some of our routes are extremely competitive. Where we have a very competitive market is just after this scenario of incorporation and inclusion, which is what is shown here. This inclusion scenario took place when there was very major fleet investment. The Brazilian average is seen in green, and we have the second lowest average age in the planet -- on the planet, and we have supplied it until the end of 2012 was growing. And we have an interesting process, where customer service has also been improving.

The decreasing line, according to polling institutes and ANAC, the agency, that is the volume of complaints recorded. We still have homework to do. And the first thing to be done is to admit it, in several situations, we have a problem to be faced, namely, according to polls and surveys, this has been very well mapped. The situation to be described is you're here today in this environment, and then you have to catch up plane 50 minutes from now at Santos Dumont Airport. So you go down, and you take a cab, and you fight traffic, and you get there very -- with very little advance. So if you've driven your own car, parking is bad, and it took you a long time, you go into the airport, and you want a little bit a little snack and you pay BRL 10, which is a lot of money. And then you're on Gate #3, and you listen to the announcement, that, "Let's go. You should move to Gate 310." And then you have to rush and take a bus.

And so the fact that made you come to the airport is the fact that you bought a ticket. But all of these steps that I have described in your flight experience has nothing to do with the company. We are not responsible, unfortunately, for traffic or for your arrival to the parking lot or for the -- your expensive snack or for gate allocation. All of these are acts that are not under our management. But what we understand as an industry is that we are also responsible for improving these steps. And we work with these instances, so that they can work better. Some of them more efficiently, others not.

Those that we can act upon more efficiently are inside the airport. Those outside the airport are more difficult. We're good in traffic rationalization. Nevertheless, we cannot -- we have not been able to act upon the traffic in big cities. But it is important to explain this so that people can be aware of a discussion that society has to carry out about aviation in this country.

Several of you, on Saturday, with your family have said, "Oh this airport is hell. It is packed with people." Yes, it is. The number of people traveling over the past 10 years has tripled. So imagine if as an industry we have not invested something in the order of $350 million in the industry, in order to take several of you out of the check-in queue, the number that Adalberto quoted here of 54% is an average.

In some airports, imagine, Congonhas and Santos Dumont or Rio de Janeiro, São Paulo, linking the 2 domestic airports, we have had as high as 80% or 85% of passengers that do not queue at check in. And so, we still have people who get upset queueing. Imagine if this were the other way around. If everybody had to queue for check in. We, today, would have no flights, I repeat, no flights, by no companies on time. It would have been totally impossible, because the airport is the same size. So we can start understanding the challenges we're living through.

Yet when we think of 2020, we envisage a major growth rate twice the volume we have today, and we believe that we can have more than 200 million passengers in 2020. That is going to add to the industry another 600,000 jobs. It is going to add another 1.5% or 2% of the GDP. And then to build this scenario, a scenario of growth of contributing to the country's economy and a contribution, it should be said, that spreads out through a very large number of production change and destinations around the country literally north to south, this entails some challenges to be faced.

The first one, slightly over 70% of the domestic traffic is concentrated around in some areas in the south and southeast of Brazil as well as airport infrastructure. Of course, this infrastructure is overloaded. It's the same airports today that transport the -- or that handle 3x as many people that they used to 10 years ago. Of course, it is extremely positive to have the proposal and programs for passing airports to concessions. Two have already done, and some others, yet to come. And we hope that this act so that this program can be expanded to an increasingly large number of airports, so that this will lead to a persistive service improvement and expansion.

There are several construction works going on, as you have may have read in the press. We would have liked to have participated more in this process, but the final proposal for the government for concessions excludes the possibility of airlines participating in terminals. In other parts of the world, this is possible. And we have proposed to join this process, but we have ended up not -- losing this discussion, so we will be left with just monitoring what is going to be done.

Infrastructure is important, because it will impact prices. And I will give you a very simple example. The airport of Rio Branco in Acre state. There's a series of restrictions on the runway. That is out in the very northern end of the country, northwestern end. And this impacts on the operation of flight decisions of Rio Branco. And our aircraft, not only have to land and take off in Rio Branco with less passengers. So an aircraft of 180 passengers takes off with 120, you say, something of that order. This 1/3 of empty seats, I cannot take out the seats and put in cargo, drugs or parrots or chicken. So this cost reflects on the set of passengers that are in that location. So this explains to you, in a very summarized way, some types of difficulty we fight regarding infrastructure.

Another important -- the other 2 important points, I think that fuel and exchange rate have been thoroughly explained here, but still I wanted to add another piece of information. Several of your consumers often sit down at a plane in Guarulhos and compare and say, "Well, I'm flying to Fortaleza, and the ticket is more expensive than the plane I've been -- I am taking to Buenos Aires." So have you asked this question? You must have. And we have not been very agile in explaining the society over the past few years, so this should be explained now. Not only do we have the exchange rate problem, the fuel that is around 40% of our costs and the planet average is around 33% for the cost of operations. But as fuel in Brazil can cost for the operation of an airline as much as 30% more than it costs to the company that works in the United States or Europe.

In Brazil, we cover the country. It is a continent-sized country, and we cover it thoroughly. So what you have outside the country, you also have here. Since Brazil is the only -- it was one of the few countries where aviation fuel is taxed, and this is not taxed in any place in the world. This is something that is completely peculiar to Brazil, like the native fruit, jabuticaba.

A question was asked and I -- the interpreter could not hear the question. ICMS or VAT is under the competence of every state. It can vary from 12% to 25% in every state. In my state of São Paulo, of course, it covers, naturally, the intolerable 25%. The 5 states that account for almost 70% of air traffic domestically are São Paulo, the Federal District, Rio de Janeiro, Minas Gerais and Paraná. Paraná, Minas Gerais and Rio de Janeiro, for a long time -- since a long time ago, have brought down this VAT to 12% ICMS tax. The Federal District had 25% until the beginning of this year. And then in a discussion of ours, with the Governor of the Federal District and the Finance Secretariat and businessmen, the government accepted our argumentation and brought ICMS down to 12%.

In 90 days, in a scenario of supply decrease, the Federal District started to have 56 new flights in less than 90 days after the ICMS was brought down, some of them temporary, some definitive. In São Paulo, 25% is still -- are still charged, and so we can work out. Since fuel is responsible for almost 40% of the cost, 40% of anyone's ticket purchase accounts for fuel. 12% or 15% of your ticket price corresponds to paying of VAT or ICMS. A same pump attendant that is pouring [ph] -- fuel in a plane to São Paulo and another one to Buenos Aires. I mean the fuel that is going into both planes is the same. But since there's no ICMS in Buenos Aires, we cannot charge for here -- for it here, so this is where prices start to vary.

And secondly, in the '80s, Brazil was coming out of dictatorship, democracy was new, we had a new constitution. In the '80s, we regulated an aircraft everyday life, how long it could work, a day or a year. The limit of yearly flights for a pilot is 850 hours per annum, like it is abroad. And there are regulations for every month and quarter. In the '90s, we have another generation of planes in the 2000 different generation. And now, we fly with the great-grandchildren of the planes that we used to fly in the '80s. And you heard the explanation on fuels that are made here.

The legislation in Asia, in Europe in the United States were adjusted to the technological changes. Today, in Europe and Asia, the cap for a pilot's flying -- flight time is 900 hours, and in the United States, 1,000 hours per annum. That is approximately half the time that someone working on the ground. And in Brazil, we capped the -- a cap of 850 hours, and it is a discussion we can never win. You can imagine the political consequences of this process.

So the result of this is that when you catch a plane of ours to -- outside Brazil, and you compare it to a foreign company, we take 25% or 28% crew more than the foreign company. At the end of the day, not to kill you with boredom, if the company, the most efficient airline in cost trends in Europe, by magic, would start operating in Brazil tomorrow, if it a were Brazilian company, it would cost 27% more. So this is the final calculation of all of the items added. So this is a great discussion. And the main motto of our agenda for an everyday discussion with government, with the media, with society, of consumers' opinion makers and so on.

So what you can see in that bar chart there, in yellow, is the price of fuel in different airports around the world. The first green bars are the price of fuel in Brazil for international flights. The green ones there are price fuels in Brazil for international flights. So this is information from IATA, which is our international association. The most -- more expensive than Brazil are Rwanda, Burundi and Malawi. So if you can tell where these are without leaving this room or checking Google Maps, you will be granted an executive ticket to wherever you like. If you know exactly where they are, these countries. But I can assure you that none of them is produced -- important producer of oil or fuel.

The table on the right is the famous ICMS Brazil map -- tax map. At the bottom, you see the states with the lowest VAT or ICMS tax, and at the top, the ones where the ICMS tax is 25%. We understand that it is very -- it's highly important to change this tax scenario. If we achieve that, we will be more competitive, lower our cost, be able to charge less for our tickets, as we really would like to. This is the account that I made about the 27% and the issue of airport taxes. Airport taxes, it's a sort of tax that we pay to fly.

You have -- we have several taxes, TATS and TAMS [ph], which are the navigation taxes, et cetera. But these fees represent around 6% of our costs and the financial aspect, as I mentioned, where I talked about working hours and 2 other important points that are part of our agenda. Foreign capital, when we didn't have airplanes , we limited -- historic times, we limited the participation of foreign capital in 20%. We understand this is completely outdated. You here in the room that work with investments, you know that was just a bank account and a cell phone, while I'm talking to you here. You can transfer money from 2, 3 or 4 countries, even before I'm done with my presentation.

So the issue of controlling -- the financial controlling is a bit abstract. What is important to us today is that the political, strategic and management control of the country has to be made in the country, domestically. So with the legal instrument that the market makes available like a golden share and the way to set up shareholders' assembly, all of this is important.

What is the advantage to the market? We don't have to explain this, but I have to stress that this is an activity with intensive capital use. So the easier the access to capital, the better the rates you will pay, the better market relationship you can establish and also better products we will be able to offer, not just to our consumers but to the whole market, we will become much more and more competitive from the point of view of our shareholders' position.

Open skies is the third point. What is Open Skies? We have to stop the restraint to bilateral agreements, like, if I give 10 frequencies to Germany, if the Germans give me 10 frequencies to Brazil. And this is also from historic times. This is outdated. This is being reviewed. We are favorable to reviewing this, directly related to facing the issues of infrastructure and competitiveness. The assets that this country constructed, and we are part of this in setting up and building these assets are also creating our consumer market of 100 million passengers flying.

People are coming from abroad to Brazil, not just because we are friendly. They do that, because we are friendly and charming, but they also do so, since the Brazilian market is attractive, competitive, with a huge growth potential in several areas. And it's important to know that if aviation is something strategic for the development of a whole country, particularly, a country in which the decentralization process of the economic growth is now pointing to a few commercial sites, different than just the main urban centers as the São Paulo. And there, we have to be connected efficiently -- connecting efficiently to different urban sites. So we should not impose obstacles to a healthy growth of our activity.

Otherwise, we would be strangling interesting situations that we opposed that we see nowadays in the northeast and even in the Amazon, where new economic activities are being launched, new economic sites and new possibilities to develop our markets. So the investment in airport infrastructure is more than necessary and rational process to invest in new airports in cities that are not yet covered are served by airports. These cities have to be served in a rational way. And also, essentially, beyond technological measures for improvement of air traffic. Also, we have, again, to mention infrastructure. I always make an account with people, which makes it easy to understand the problem.

Some of you might remember one of the aircraft, before the 737, you remember Electra? Some of you have traveled in the air shuttle between Rio and São Paulo, flying with these Electra airplanes. You caught the airplane in São Paulo -- in Rio, and it would take you, more or less, 45 to 50 minutes to arrive in São Paulo. Today, we fly with the less generation Boeings and Airbus, and it takes approximately 45 minutes to reach São Paulo, and what happened? The airplane could get there in 0.5 hour, in 30 minutes. But when we take off here in Brazil, even before you're flying over, I'm going to say, it's the traffic controller -- air traffic controllers. Well, slow down since the airport is just too busy. So we have to like stand in line in order to land at our destination. So this, you won't believe, but this makes -- waste 7 or 8 minutes in the flight.

If you fly twice a week in a year, this would mean 56 hours of production hours that this process costs you to each passenger that -- so 56 hours of work of production is a load of money for the Brazilian economy. Mainly, if you think that transportation in the airports of between Rio and São Paulo's certainly takes 40% of the decision-making capacity of the economy in Brazil, the companies. So this is not a secondary activity. If you spend 15 minutes longer to punch a button, that leads to losses. So I lost other -- companies waste 56 hours in decision-making capacities of their management. So this the cost of our bad infrastructures.

So facing the challenges related to infrastructure, taxes and also pricing, when I talk about pricing, I'm talking mainly about the aviation fuel, which somehow through pricing structure of Petrobras still follows the same methods of the '80s. In the '80s, over 80% that we were using here in Brazil, the consumer goods in Brazil were -- coming from abroad were imported.

Well, everything also in the oil production. Nowadays, almost 90% of what is -- which is being used in Brazil is produced in Brazil. Recently the new management of FRP [ph] the refinery of Vale do [ph] Caçapava is located 60 kilometers from Guarulhos in São Paulo. So they said they are proud to have a team and that 100% of the air fuel consumed in São Paulo is produced in this refinery. But from Caçapava and Guarulhos, the fuel, we pay a tax fee of 1.5 tax on this fuel that is being transported on road. Between the refinery and the airport, we pay a merging tax. So all of these things have to be revised, because nowadays, not just the elite is flying, no. In former times, people would establish fees and so, because just the elite was flying, and they would accept it. You remember what the crisis in the '80s was -- of our merchant marine was here in Brazil.

But the scenario has changed. And the people that created that fee are no longer in business. So if, to us, 1.5 tax or fee would be removed, our result, and mainly, in the fuel cost would be 5% smaller or better. The figures in our business is -- are very small, but the scale is big. The problem is that we're talking about a business or an industry that, in this country, if we add the revenue of the airlines, this goes over BRL 30 billion. So if we're talking about 1% that we could improve, it's like BRL 30 million.

So all work is valuable to reduce cost. Our agenda is related to the discussion of the infrastructure. This is a conversation we are having with the federal government and through our minister, who is from Rio de Janeiro, also discussions with the state authorities, referring to the tax structure. Everything is just addressing a better pricing structure. All of these conversations and discussions, we hope that they lead to a greater influence on a better development of our economy, and it is directly related to the capacity of our society at large to go for their interests.

We are from a sector, where, obviously, the development of air traffic is important not just for us, but also due to the characteristics of our country and our economy, the development of air transportation is essential in order to ensure, in the future, more social and economic activities and better activities. So this will lead to the development of citizens that will, themselves, be in charge of developing a model of a better country. This is what I had to say. Thank you very much.

Unknown Executive

I would like to ask GOL's authorization, if I want to make a few announcements. One of them refers to the questionnaire. I would like to ask you all that you answer the form, the questionnaire that was distributed. It's important for us from APEMEC to assess the companies on a regional and national level.

The second part now, we want to forward the award or the plate of this first -- it is an award plate, the first of -- many that would follow. And please, you can hand it over to Edmar. He's the Investor Relations Manager of the company.

Edmar Prado Lopes

Also, I would like to say that next week, we will have meetings from Tuesday through Friday. And today, we'll have a meeting with Santander Bank. We would like to invite you all not to miss this meeting and go to the website of APEMEC to find out about the schedule. Your presence there will be very important. We are always stressing the importance of your presence in our meetings.

Now we would like to start with the Q&A session. Please always introduce yourself, and we would like to welcome 2 questions per participant.

Question-and-Answer Session

Unknown Analyst

I want to -- I would like to ask the first question. The second comment that you made during the meeting. Yesterday, a company was created called GOL Dominicana. This company has the purpose of acting in the United States and the Caribbean. Nowadays, you have 8% participation in the export market in terms of revenue. With this company, you want to reach 17%. Would you please tell us a bit more about the company and also about the meeting that you will hold with the Minister of Civil Aviation, Mr. Moreira Franco. The 2 items of the agenda would be subsidies from our federal treasury with capital and the problem of aviation fuel -- the pricing of aviation fuel. I would like to understand what pricing of aviation fuel means to you. And what the capital contribution is of the federal government.

Eduardo Sanovicz

So in the Dominican Republic, I want to tell you that after last year -- end of last year, we started to fly to the United States, and we're using Santo Domingo airport on that basis. We have a purpose to increase our presence in the Caribbean. And we go step by step, with no hurry. We're learning how to operate in that region. And the Caribbean is part of our strategy. So with this, we announced -- we've also announced the creation of GOL Luxembourg, which will also help us to acquire financial means abroad. So it's important for us to be present abroad. As it has been announced, our main purpose is to increase the participation of our dollar revenue, our revenue in foreign currency, with the purpose of doubling this participation in 3 years' period of time. So our presence in the Caribbean is part of this strategy. So about the meeting with the minister, Eduardo we'll talk about that since he has been in all these meetings. We have a meeting scheduled for August 20 next week with Minister Moreira Franco in Brazil. In this meeting, we would like to present to him 2 agenda -- 2 points. The first was already sent to the technical crew of the ministry, which is called operational agenda, where we proposed 5 measures, basically affecting the infrastructure. So that in the short periods of time, we could reach -- improve -- or get to more efficiency and quality in our service and not just on the ground but also flying. Also improvements in runways, improvement in airport terminals and the implementation of the procedure that Eduardo explained. RN-PAR, the acronyms are always confusing he says, so this procedure of landing and takeoff has to be made more efficient in most of the airports. Several measures related to the management of luggage. We also want to reduce luggage loss. So this agenda is an agenda more related to the governance of SAC, Secretary of Civil Aviation. So what are the issues to be implemented under this federal secretariat? And a second list of measures that are related to government decisions, important to say, taking advantage of the question he posed, we are not asking, in any case, contributions from federal funds or some type of subsidies to our commercial practices. I have been reading in the news. And the news sometimes are fragmented, some journalists sometimes convey wrong messages. We understand that if we -- if they ensure competitiveness condition, we will also build a competitive business and industry. What we're discussing with the government is what follows. The aviation fuel in Brazil needs -- and since our economy is huge -- has to have a cost that is compatible with the foreign countries. There is no explanation for a difference in 40% of the cost for the aviation fuel compared to Brazil to other countries. So we have to discuss this with the government, a national policy for aviation fuel has to be in place. Also, in the same way they did, I'm not arguing here about the efficacy of policy, but our country set up public policies related to other fuel modes, to other transportation modes, for cargo and passengers. And aviation is no longer an elite means of transportation for 20 million people. It's a public means of transportation, I repeat 100 million of passengers per year. We are reaching a per-capita transportation rate, which is comparable to other first-line countries. Two -- second, we understand that a national policy is necessary to unify ICMS, our VAT tax, which is applied on aviation fuel. In some countries, it's just 0. We can't -- it's difficult to us, since it is a state tax in Brazil. It's almost impossible to convince 27 governors to change their tax policies, but we are trying to unify this taxing issue with the different states. Otherwise, we will have to go on with this practice to carry onboard more fuel, and this is going to affect the ticket price in smaller airports, where the ICMS tax is higher. These are distortions that we want to remove. Third, we also think we can review the structure of prices in our tickets. Other fees. It doesn't seem to me that some fees like the car tax is 6% or 8% of a car, so we should never compare that, so -- but why is it that difficult? Ground transportation was stimulated for 50 years in Brazil, since President Juscelino Kubitschek made his decisions to build roads in Brazil. We are talking here about the '50s. 50 years later, historically, their decisions should be reviewed, or they should be constantly reviewed. But nowadays, our economy has different basis, so we have to review our cost as well on fuel. And the president sent -- Brazil's present sent to the Congress a draft of law that removes another tax fiscal fees on urban transport. This is 3.65% of the gross revenue of this sector, so we are proposing that this project also covers aviation, not just ground transportation. This would mean that the balance that we presented to you would have a different direction or a different figure. So all of these are measures that would favor competitiveness, everything based on legality, constitutionality based on act of the federal government, all of this requires a lot of discussion with the government. We don't expect that the meeting next week will solve all of the problems, but we have this agenda set up. It is now a public agenda. We're able to discuss this technically and with the government and also in the management terms.

Unknown Analyst

I would like to stand up so everybody can see me. Congratulations to GOL for that wonderful of cost reduction. Brazil, at large, as the third-biggest domestic market of the world, is attracting investors, competitors and other players. But with all the problems that you listed -- that Eduardo listed and discussed, and also due to the lack of sensitivity of the Brazilian government, since ever, with civil aviation, what can we expect from a regional aviation and the policy of Open Skies? Did you think this is something feasible? Or is it far away to reach?

Edmar Prado Lopes

Let me answer a little bit, and then Eduardo can add to that. Yes, there is a political will to grow regional aviation. The government has been saying that. But GOL is not going to act accordingly, while we do not perfectly understand what they mean or before they have a clear proposal.

Paulo Sérgio Kakinoff

This is -- what Edmar said is clear. We have to adopt the position after the government issues a sort of a package or a program. We are, obviously, considering several conditions and analysis, but before things are clear, we don't want to act. In terms of the Open Skies program, Eduardo just told us what the difference between cost -- of cost between foreign and Brazilian Airlines, a difference of 27%, the cost. So if you have a policy of open skies, then we can see exactly how we are positioned towards our international competitor. So we are still discussing this with the government. We are against the opening of the skies. I believe that the more competitive we are in the market, the better it will be for everybody, for our clients, for users and to us. But we have to do this consciously and with responsibility, not just to do an opening without analyzing the impact that this might cause on the Brazilian companies. Obviously, I think that this has to be done very cautiously. This is our position currently.

Unknown Executive

Just to add a few words. There's a question asked, very important. But also worth mentioning that I would not qualify the situation as insensitivity forever -- since ever. The government has some departments that is sensitive to the fee structure with -- like ANAC their regulator. Last year, they launched the plan Brazil [ph], because Brazil which helped us reduce the social contribution in our prices. But the agenda of aviation is endless. When all of us -- or when the exchange rate reached BRL 2 per dollar in 2011, '12 life got more complicated, and we made our homework which is showed in our balance. And now the exchange rate is BRL 2.20. So what we're doing now is we understand that we have a high exchange rate exposure, with over 70% of our costs are not under control or our governance, but we cannot just be weeping when the exchange rate goes up. Most of the Brazilian economy is favoring a higher exchange rate, to us, it's the opposite. So what we have to do is to show the data to the country and demand from our society and the economic players that they end up defending the economic interests and also end up defending the interest of citizens that want to travel. And this means that we're permanently in a tense position in this regard. We are expecting a revision of the cost structure -- but we know that nothing of this is easy. Otherwise, we wouldn't be here. It's -- but, in fact, our the daily routine of our interest, of our industry, is trying to control our emotions, and that we see this as part of our job. When we started our activity, we knew this was going to be like this. We would never expect it, an environment of economic stability, which we have been for 10 years -- seeing an exchange rate that affects us 1%, 2%, 3% to 4%, and also having to face devaluations of 12%, 15%.

Unknown Analyst

My name is Wellington Oliveira[ph] . I am from [indiscernible]. I have 2 questions. The first question is more encompassing, more general. And the other one is specific about the numbers presented by GOL. I'm going to start with the first one. The first question is, I'm going to speak from the investors' point of view, someone who is deciding whether to buy, sell or keep shares from a given company. So this is a more general question. You see you attend a presentation and you see that the company has done its homework. The situation is adverse and when you look in retrospect, the performance of airlines -- airline shares are as bad as they could be. I remembered 2 or 3 companies went bankrupt, VASP and Transbrasil. If you look at the international situation, there is no doubt that companies actually don't make money or very hardly do though. So the question is in a world scenario like this, why would an investor buy shares of a company like yours, this is the first question. Sir, I think I'll ask the second one right away. The second is, there's a business that was inside GOL, and it seems to be a very good one, it's SMILES. The market value of SMILES must be around BRL 3 billion. GOL has 57% of SMILES and this accounts for BRL 1.9 billion in the company's statement. GOL in the market is worth BRL 2 billion. Market value means the quotation of the shares times the number of shares. This means that the market as a whole believes that all of the assets of GOL are worth BRL 100 million. That would be the price of 2 planes or something like that. So my question is -- and also there's another point. SMILES had a negative result of BRL 433 million in this quarter. So my question is, an IPO was floated, shares were sold, this was booked in revenues, and where is the impact of this? Or does this go into equity and it's not shown in the results. So the first question regards the overall industry situation. And secondly, what about the SMILES results? And why is market assessment of your company so low?

Unknown Executive

So let's start with the overview. The airline industry is a challenging business all over the world. Several of us -- remember, several numbers of -- names of companies which are no longer here. And what happened over the past 50 years is that all of the productivity gains, be here or abroad, were actually passed on to consumers. The price of tickets have gone down, not only in Brazil, which where it was more dramatic, but it grew all over the world, which allowed the market to grow relevantly. So in airports appropriated of these gains as did equipment manufacturers and service providers but not the airline industry. What has happened in the American market, which is one that sets the standard, was that after the crisis of [indiscernible], companies have reorganized and started to post positive results. So for the first time, from the systemic point of view, based on a recent past of 4 or 5 years, you start seeing profitable companies, overall. To speak about the business model, GOL was born as a low cost, low tariff company. This model has worked well all over the world. You have several companies. You have Southwest in the United States, and you have to expand this. In Asia, there are several companies. And for you to have an idea, this last quarter, Southwest, which was the founder of this model, has been in operation for 40 years. And in 40 years, never has it -- not had a positive result, even in this challenging scenario where fuel moved from 10% of the cost of an American airline in the mid 2002, 33%. So companies have been dynamically adjusting. But I personally believe that we're going into a new period in which airlines are honoring their commitment to yield returns to shareholders. This is the first point. Now regarding the second point, to talk about GOL and SMILES, what happens is that the money of SMILES goes through the equity account. So the money of SMILES has arrived at the company by means of discounted advanced tickets. So this is reflected in GOL's consolidated cash. As a business, and I'm going to repeat what analysts have written about the company, today, we are covered by 14 or 15 analysts, if I'm not wrong. All of them have a buy recommendation. There is one neutral only, and all of them write precisely what you have said, the company has done its homework. Nevertheless, there is uncertainty about the macroeconomic environment. So what are we to do in this case? Shall I invest? Shall I not invest? What is the entrance point for this security? I am completely bought on and off GOL, literally, and what happens is this, literally, the company share is volatile. It is volatile because it responds positively and negatively to macro-economical variables, which are not under company's control, but there should be no doubt that this is a long-term play. In the short term, we will see, still -- we'll still see market volatility. This is a given. The company will vary in its value, so you have to leave your liver at home behind you every day. But I insist that all of the analysts that cover us are acknowledging the effort the company has been making.

Unknown Analyst

I am George Canero [ph] , I'm from [indiscernible] , the the Brazilian Society of Social Responsibility and I'd like to bring up 2 points. The first one is the exchange rates. If we look at the exchange rates over the past 10.5 years -- or 2.5 years, it has moved from 3.95. And with the crisis, it went back to 2.50, and then it went back, with the real appreciation process, it went down to 1.60, and now it's at 2.30. So if we look at the exchange rate in the longer term, we will see that the exchange rate is behaving very adequately in terms of what happened over the past few years. We don't have the balance of trade that we had when it was a 2.95 during the exchange crisis. Today, Brazil's balance of trade is extremely healthy. We have a foreign trade account of $400 trillion, and we also have a very large foreign reserve. So I don't think that exchange rate should be so much considered as a tool that could be negatively affecting economic activity in Brazil. So I think that it is important for this information to be contemplated and whoever analyzes the exchange rates. So this is not a topic for anyone. This is a topic for experts, and we have seen this. I think that Brazil is very comfortable in terms of balance of payment. And the second one, I would like to speak to Adalberto. A company like GOL should take into account other stakeholders. You talked about productivity and labor. These topics should also guide your meetings. I would like to reiterate the suggestions that I made to Adalberto.

Unknown Executive

Thank you for your comment. I'd just like to explain something that is very important, the issue of time and volatility. Ada explained that we requested or replaced an order for 60 new planes that will start being delivered in early 2017. The last one will be delivered after 2024. And these planes will be used by us, typically, for 8 years. So any of our decisions regarding fleet, which is our main asset, has an impact of 20 or 30 years. So although the average is not very different, the industry suffers a lot when you're in a volatile scenario, and this is what has affected us in the recent past, because how can you plan your fleet with investments of $1 billion if you're dollar is at 1.60. And 4 months from now, they will be at 2.40. Our cycles are very long. So it is important to add, as I mentioned, a volatility in any analysis that is made on the exchange rate. Because once again, when we announced the purchases from Boeing last year, we took up yet another commitment that will materialize after 2030. So after 2030, I will certainly no longer be working for GOL. So I have this responsibility, as Ada does, as we close these deals. So it is important to understand that it is not the exchange rate alone, but it's the volatility. We have testified to, recently, the Brazilian economical situation also of starting to grow and then stopping to grow.

Unknown Executive

I'd like to add something important to what you're saying. Besides volatility, it should be noted that we are not questioning the Brazilian exchange policy. I made a point in saying that we understand that we are going in the opposite direction of most of the economy, because a very large number of industries is favorable to the current process, where the dollar is closer to 2.3 than to BRL 2. What makes things more complicated to us is volatility and the fact that we have 55% of our operational costs free-floating at a time when our industry acquires a very large weight in the Brazilian economy and no longer the same weight it had 10 years ago. So this is one point of clarification. Secondly, purposely, during my presentation, I did not speak too much about the third point of our agenda because of your background. But just to give you information about our activity, we are investing BRL 10 million this year again in training, capacity building and development, and we are even covering, and we are one of the industries that does this practice as best as we can, probably in items regarding the inclusion of the disabled, and several of you have had the chance to see employees of ours who are disabled. So this is quite a serious point for us, not only because of legal matters, but also because we can do this as part of the process of inclusion.

Unknown Attendee

First, I would like to apologize because I have hearing problems, and I was looking at him while you spoke. During the ordinary assembly of this year, BRL 12 million were assigned to administration matters. At the same time, SMILES held at assembly and assigned BRL 14 million. So in 2 years, has the tail grown bigger than the dog?

Unknown Executive

Now we are comparing apples and pears here. What happened is we looked at the SMILES numbers and we mentioned that SMILES is already profitable and paying shareholders. In the specific case of GOL, we're moving to the third year of losses. In this case, and I can speak for myself and Ada directly, a significant portion is related to company results. So if you don't results, there are no variations. This is what we're talking about.

Unknown Shareholder

I'm an investor. I very much liked GOL's reaction and response. I always fly, and I'm not always happy. I am always upset at the airport. It's slightly better in airplanes. And as an investor, I am very worried. We have state-of-the-art technology. We need more planes. But the yield of planes and engines are coming to a limit, but my concern is about investors in Brazil. If you open up the market for foreigners, we're going to have a predatory war, and they will do everything possible to take over. And then 5 years later, everything will go back to the initial situation. So this should not be allowed as was the case with other industries. I think that there has to be a domestic market. We have to bring in pilots and aviation engineers from abroad. If the foreigners come into this market, there will no longer be a place for investors in this country, and this is a very serious concern.

Unknown Executive

Would Eduardo like to speak about it? I will insist on the point we have insisted so much, which is the issue that the company has adjusted and revised its processes and adopt it. And I will go back to what Eduardo said before, to operate in Brazil is more expensive. No matter for what reason, it is more expensive. So to be established in Brazil in equal conditions, we're at least reasonably confident that we are at least as competitive as anyone else. From the point of view of long-term horizons, our vision is still unaltered and changed. We believe, as Eduardo, that the market will grow and we believe that we will not be enough ground infrastructure to move people about in the country and that the aviation infrastructure will not only continue but we'll become more relevant in Brazil. So this is a difficult period, no doubt, but it is important that, once again, we are preparing not only to turn this number of 100 million to 200 million, but also to, once again, post positive results for shareholders. This is what we've been doing lately.

Unknown Executive

Well, I think it is worthwhile to add to what you've said. In times of difficulty, the industry tries to position itself very transparently to investors, not only to show its numbers, but also to make the scenario it sees ahead of itself very clearly. We have a scenario related to our homework or the homework of each of the companies. So the numbers presented here this morning made it clear that this homework is being done. And there's another portion of the task that is dependent on nationwide decisions, and it is important to share these decisions, because as leaders start taking a decision towards a given end, it is very important to make it clear, not only in the eyes of the government, but also of society. And I believe, and I'm about to conclude that, that it is worthwhile understanding that Brazil's economy has opened up some years ago, and almost all relevant sectors of the economy include International players. Aviation will go through this process at one point or another, but it will only build another scenario if it is competitive. And once again, going back to what Edmar said, as an industry, we are highly competitive because we can see the number -- I mean, you've seen the numbers that we've been able to show to you. Time is advancing fast and we have a plane to catch.

Unknown Shareholder

We name is Ara [ph] , I'm a shareholder. I'd like to give you a good example. I once took a plane from Rio de Janeiro to Porto Trombetas on Friday, just before Carnival, that would start on Saturday. And it took me 40 minutes to wait for the flight to take off. We ended up making a stopover in Palmas, and this is a Friday and there were 2 flights leaving from there, one from Guyana, one from Brasilia. And I was told by the pilots that there were 60 flights scheduled for that same period of time. So you had a high concentration in the airport of Brasilia and the airport was completely empty. So I would like to ask a question in 2 parts. The first to Adalberto regarding Confins and GOL's maintenance space. Why Confins -- how well is it working and so on? And then to Eduardo, I'd like to ask how is routing done. For instance, the airport of Palmas is a very well-located airport. Several flights, for instance, could stop over in Palmas instead of Brasilia. So how is this organized? How does this work? How is this thought of?

Unknown Executive

Maybe you should answer both of them, and then I will complement because he is in charge of that.

Unknown Executive

Well, the first one regarding Confins, when we started thinking about the GOL maintenance center, we started analyzing all airports that had room to have a service center. We have 170,000 square meters of maintenance area in Confins: 2 hangars, 2 -- 3 hangars, 2 for painting, that can take 7 planes at the same time in our hangars at Confins. So what was Confins -- I mean, why did we choose Confins? There was enough surface for us there, surface area. The area offered us -- the area we occupy now was offered by [indiscernible] . So we assessed what construction work we had to -- I mean, the construction work we had will perform? What was the investment? What would be the payback? And also, all of the facilities and resources the state offered us to locate our service center at Confins. Confins will be an airport where we will have many connecting flights. So although this is an average hub for us, we can position aircraft that needs to go to the hangar and to replace them at that spot. Maintenance is done at Confins. I mean, only 30% -- 70% of our maintenance is done in the 63 bases that we have, because we do SG3 [ph] type maintenance, as we call it, which is phased out maintenance. So we do part of our maintenance overnight, and this accounts for 70% of our maintenance jobs that the airlines check and only 30% do -- we service them in our hangars. So we have great availability of our aircraft in flight. If we did this otherwise, we would have to keep aircraft in our hangars for 30 days. But we -- today, we do 30% of them only for 7 days. So there's an agility gain. As to flight routing, where you talked about a stopover in Brasilia with 60 aircraft, the air traffic in Brazil, like anywhere in the world, is like a domino game. The times of our flights match those of other companies. If you start having many delays, you start having bottlenecks in -- somewhere in the air traffic match -- mesh, and this is probably what happened in the flight you say you took. So at one given point, 60 flights had to take off at the same time almost because of this sort of cumulative bottleneck effect. So if you look at the Brazilian routing scheme, they were not planned to be in that situation. There were probably recurrent delays that accumulated and led to that big delay. In the case of the Palmas airport, it is not a hub airport. It is not used for -- as a hub. Brasilia is a central airport in Brazil, and we distribute all the flights that go to the North and Northeast through Brasilia, because it's strategic. And even so more so now because of the VAT ICMS levy discount that we have. So these situations can occur, but this is not something normal. So all of our flights, when we hand in our flight plan or flight request to ANAC before they approve or freighting is approved, they are checked. What is the availability of that airport at that point in time? Is there really a possibility of flying outside? Will it not interfere with another flight? And the interval between one flight to another ranges from 3 to 5 minutes. When there are 2 runways, we can have a minimum time difference of 3 minutes. All of this is taken into account. And also the number of passengers that it is going to generate to that airport is it large enough to handle that amount of passengers in that point in time. So -- and on a Friday before the Carnival holiday, there probably were problems, you had problems at the end of the money -- morning, and that starts to build an impact on subsequent flights. So this is the explanation that I can provide you.

Unknown Executive

When operating under normal conditions as punctually as we have, and fortunately, we're one of the best in the market, currently, you don't see that kind of situation or you don't expect to be waiting to take off or waiting at gate. So we've been able to do this with a 10-minute gap. Now, you talk about Palmas, I think it is worthwhile to think of how we reason in order to organize routing. The first point is to determine if there's enough infrastructure, if it is safe? If there's a firefighting brigade? Can you operate it safely? Yes. The second question what is what is the demand capacity of that airport? And that means imagine that today in, roughly speaking, 75% of the domestic air traffic is determined by corporate passengers, that is 75% of our passengers travel for business or business meetings and conventions. And 22% -- 25% to 28% travel for other reasons: Leisure, visiting families, holidays, whatever. So the decision of allocating the flight this or that way is due to the consequence of these factors. A city like Palmas does not have more flights that it has today like the cities A, B, C, D and capitals X, Y, Z, not because we don't want to put in more flights, we always want to fly more. But when you work out numbers, this flight has to be sustainable and profitable. And as an equation, as a given city develops or a hub develops, there will be a flight getting there. If it is stagnant or goes backwards, the first symptom of how the local economy is doing at a given destination is to see whether the airport is growing or decreasing. This is what you can use in economic analysis, and I can't guarantee that this gives you a very straightforward information for a time. So Palmas has a limit, since this is a limit that it can sustain in demand and supply. So I have no idea how -- what the frequency of flight to Palmas is. But there is a ceiling, economically seen.

Unknown Executive

So on behalf of [indiscernible] Rio, the analysts, and the professionals, the investors, I would like to thank GOL's team for their brilliant presentation, and I would like to invite you to our next meeting, to a new meeting. And with this, I would like to give the floor to Edmar. He is the financial and Investor Relations, VP -- Vice President. To come back quite frequently to Brazil, to Rio.

Unknown Executive

I would also like to thank you, all, for being here, and it was a great pleasure for us. Thank you very much.

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