GOL Linhas Aéreas Inteligentes S.A. Management Discusses Q4 2013 Results - Earnings Call Transcript

Mar.26.14 | About: GOL Linhas (GOL)

GOL Linhas Aéreas Inteligentes S.A. (NYSE:GOL)

Q4 2013 Earnings Call

March 26, 2014 11:00 am ET

Executives

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

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

Analysts

Bernardo Vélez

Thomas Kim - Goldman Sachs Group Inc., Research Division

Michael Linenberg - Deutsche Bank AG, Research Division

Duane Pfennigwerth - Evercore Partners Inc., Research Division

Stephen Trent - Citigroup Inc, Research Division

Savanthi Syth - Raymond James & Associates, Inc., Research Division

Renato Salomone - Itaú Corretora de Valores S.A., Research Division

Operator

Good morning, everyone, and thank you for waiting. Welcome to GOL Airlines Fourth Quarter and Year of 2013 Results Conference Call. With us today, we have Mr. Paulo Kakinoff, CEO; Mr. Edmar Lopes, Chief Financial and IR Officer; and Mr. Eduardo Masson, Financial and Investor Relations Director. This event is being recorded. [Operator Instructions] This event is also being broadcast live via webcast and may be accessed through the GOL website at www.voegol.com.br/ir, where the presentation is also available. Participants may view the slides in any order they wish. The replay will be available shortly after the event is concluded. Those following the presentation via the webcast may post their questions on our website. They will be answered by the IR team after the conference is finished.

Before proceeding, let me mention that forward-looking statements are based on the beliefs and assumptions of GOL management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements.

Now I will turn the conference over to over to Mr. Paulo Kakinoff. Mr. Paulo, you may begin with your presentation.

Paulo Sérgio Kakinoff

Hello, everyone, and thank you for being with us in our conference call on the 2013 results.

Let's begin our presentation with Slide #4, where we highlight GOL's major achievement in 2013. In fourth quarter of 2013, net revenues grew by 29% and reached BRL 2.7 billion, an increase of BRL 600 million compared to the same period in 2012. In '13, revenues reached approximately BRL 9 billion, an increase of over 10% in relation to 2012, representing the company's highest level of revenue ever reported. In other operating costs, we presented a reduction of BRL 320 million in the year, reflecting the constant monitoring of our cost structure. As a result of these actions, our EBIT margin reached 6% in fourth quarter last year, our highest operational profitability level in the last 10 quarters. In this way, in 2013, we reached the upper limit of our annual guidance with an EBIT margin of 3%, an evolution of 14.2 percentage points.

You see on Slide #4, it's important to emphasize that on the balance sheet side, we maintained a high level of liquidity. Our cash reached record levels at BRL 3 billion, reflecting the continuous improvement in our leverage ratios. Net financial debt totaled BRL 348 million, a 78% decrease compared to fourth quarter '12.

On Slide #5, we present in more detail the significant developments on the revenue side. In EBIT and EBITDAR, which reached BRL 1.5 billion, once again the highest level reported by the company, with a margin of 17%. We also note that this was possible due to the maintenance of a competitive level of cost despite the deterioration of the macroeconomic scenario, together with our strategy of flexibility and CapEx management.

Turning to Slide #6. We can see the highlights that allowed us to achieve these operational results. PRASK grew by 18% as a result of the process on seeking the combination of corporate and leisure customers through actions to deliver a superior flight experience and attractive rates for both clients. The management also drove the results, leading to a double-digit increase in RASK of 15% in 2013.

On Slide #7, we present evolution in cash and in major variables that impacted the CAGR, ASK, exchange rates and fuel price. Last year, we reduced total supply by 4.3% and domestic supply by 7.4% in an environment marked by low economic growth with the devaluation of the real against dollar by 11% and the increasing fuel price of 6% year-over-year. Even with this scenario, we were able to keep our CASK stable compared to 2012, a result of our constant discipline -- cost discipline.

Moving on to the next slide. We analyze the airline industry and compare our performance with our international peers. On Slide #9, we present the comparison from the perspective of the evolution in the RASK and CASK, including fuel cost. Among the companies that disclosed their results, we were the leader in the terms of RASK growth, with a 15.5% increase -- indicated while CASK, ex-fuel, remains stable. The evolution of these 2 indicators generated a strong operating margin improvement compared to the peers, as we can see on Slide #10. Among the companies analyzed, we presented the highest increase in EBIT margin for the year, 14.2 percentage points as previously said.

In the following slides, we will look at GOL's strategy. On Slide #12, we present our strategic alliances. The expansion of the Codeshare with Delta allows us to serve more broadly all customers as it includes approximately 400 destinations in more than 62 countries. The agreement also promotes collaboration between the 2 companies, allowing for the exchange of knowledge and improvement of products and services. Continuing with the strategy of forming international partnerships, in February this year, we further strengthened our alliances through a partnership with Air France-KLM. As we have already announced, it includes commercial cooperation, expanded flight sharing, joint sales activities and more benefits for customers through both airlines, lower its presence in the Brazilian and European market. As far as our total investment of $100 million -- Air France-KLM, we hold a stake of approximately 1.5% of GOL capital in preferred shares. The agreement is awaiting approval by CASK reviews and operations.

On Slide #13, we present expansion of our exclusive GOL+ product following its initial success on the reviews on public shuttle service. Aircraft identified as GOL+ ensure greater passenger comfort and an even better flying experience. By May, we will reconfigure 80% of our fleet for a total of 116 aircraft, serving 100% of our flights in the domestic market. By the end of 2014, we will have the highest number of category A fleet as classified by ANAC, the national aviation agency in Brazil -- in the domestic market. The strategy is part of a process involving standardization, operational efficiency gains and revenue generation.

In this sense, moving on to Slide #14, you can see that we maintained our leadership in on-time flights in the Brazilian market for the second consecutive year with a rate of 94% of flights with no delays. In order to achieve level of operating performance, we implemented the fast travel concepts, which reduces boarding times and adopted various measures to increase our efficiency, including streamlined check-in and allowing our customers to anticipate or cancel their boarding via our website at electronic kiosks or through smartphones.

The remote checking-in ratio of approximately 60% observed in fourth quarter '13 is one of the indicators which reflect the results of these actions. Additionally, we launched a new visual identity in airports, with more functional and practical bilingual communications, as well as a new website which makes the preceding process faster and easier. As a result of these initiatives, we carried more corporate passengers than any other Brazilian airlines in 2013 according to data from ABAV Corp, the Brazilian travel agents association, in line with our strategy and focus on the segment.

Everyone knows that Brazil will host the World Cup in 2014 and, as you can see on Slide #15, we have a special role in this process, being the strong official carrier of the Brazilian team. We have adopted measures specially developed to serve with excellence during these events, including supply and demand management which were required for 974 extra flights or -- operations, competitive rates for flight tickets, 75% below BRL 300, more or less $160, specific staffs training programs and the placement of professionals who are fluent in more than 1 language at the whole city airports, among others.

Turning to Slide 17, we highlight our SMILES loyalty program. 2013 was an important year for the consolidation of our strengthening strategy. In April, we completed the initial public offering, IPO, of Smiles S.A. The total funds raised, BRL 1.1 billion, was used to purchase advanced tickets. This transaction reflects our confidence in the growth of this market in the coming years and contributes to the strengthening of our liquidity and SMILES numbers prove that it was the right decision. At the end of 2013, SMILES presented a net margin of 36.3%.

I will now pass over to Edmar to present the results of the period.

Edmar Prado Lopes Neto

Thank you, Kakinoff, and good morning, everyone. Before going to the numbers, I would like to reinforce what we have been telling all over. And the fact is that in the fourth quarter of 2013, we have seen the results of the efforts that we have developed over the last couple of years. Our strategy of rationalizing supply is in place, is one of the main drivers that is causing our revenues to really move up and at the same time being -- at the same time that we keep the cost at the same level that we saw before in spite of the move against us of the macro environment.

So over the main numbers, Slide 19, I would like first to say that our -- sorry, the number of ASK in the fourth quarter was, in the domestic market, flat year-over-year. And at the end of the year, we posted a minus 7.4%, slightly below our target, which was close to 9%. And we did that because we saw an opportunity in the last quarter, especially in the month of December, and the numbers reflect that.

As for the macro environment, what we saw is that the FX has moved against the company by almost 11%, as well as average price for the year close to 6%. And in spite of that, we were able to increase our margins, as we have said, from minus 11.2% to 3% at the full year; and in the quarter, from minus 17% to 6 points. This is a real turnaround that is going on here and the numbers again allow us to show -- to say that.

As for the first 2 years -- first 2 months of 2014, it's important to say that we are entering the year at a new level. The company is indeed seeing a different structure as for revenues and as for load factors. So just to compare, at the end of the fourth quarter of 2013, load factors were close to 75% while 1 year ago was adjusted fairly below 70%, therefore, an increase of 5.1 percentage points in terms of load factors. At the same time, we were able to increase RASK or PRASK by almost 30%. The number was 27.5% for the quarter and for the year, beyond '15, that is 18.5%, even more than we have announced earlier in the year.

EBITDAR for the quarter posted a number of beyond BRL 550 million, bringing full year to BRL 1.5 billion. This is the highest level ever and it shows the recovery. As for debt, on the debt side, we have less debt in real. We have paid altogether BRL 400 million -- BRL 432 million last year. Out of those, BRL 250 million were prepayment of debt coming due. So our leverage has come down a lot, and as our results moved ahead, we will be that leverage will be again at lower levels when it comes to the end of this year.

As for fuel and FX, our view is that if there were no big changes or no such volatility that we saw last year, we could even have shown a better numbers on the bottom line because those 2 factors alone account for BRL 800 million alone in terms of additional cost that we had to face last year.

Moving on to Page 20. Again, it's the PRASK, that's a slide we have been using for a while now, and it shows how the company has evolved. Average PRASK for 2013 was close to BRL 0.1636 last year. And if you compare the average with what we had in the first half -- close to BRL 0.15 and the average that we have in the second half, close to BRL 0.18, and we will see that indeed, the company is moving up in terms of revenues.

Moving on to Page 21. It is, in a nutshell, what we saw in the main drivers here. The first one is on the revenue side. Revenues are up 11%. Most of that came in the second half of the year, roughly BRL 200 million in the third quarter and beyond BRL 600 million in the fourth quarter. On the cost side, we saw that we were able to have BRL 319 million less on this side in spite, of again, of the FX moving by almost 11% and the fuel moving at 6%. On the cost side, I would like to highlight that we had some additional cost in the fourth quarter. The main one, close to BRL 51 million, is related to paying bonuses for employees after -- the first time after 3 years of none of that, and this is a commitment that the company has to its personnel that has been the -- we have been very committed to making this turnaround. And we also saw some additional cost on the sales and expenses line, and this is related to the fact that in the fourth quarter, we had our -- highest level ever in terms of sales, not only of -- not only in terms of revenues, but also of sales. Therefore, we incurred an additional cost as for commissions, as for credit card fees, as well as for fraud in the fourth quarter.

Moving on to the next one. This is -- this slide shows our position over fuel and dollar hedges. Our fuel remains primarily the same in the last few months, that is we still believe that fuel for -- structurally should be at lower levels per liter. We have been seeing a lot of volatility in the short term. But in the longer part of the curve shows prices that are more attractive than again the short term. On the dollar side, on the FX side, remember that at the end of third quarter, we had several hundred million U.S. position primarily on the short term. We did not renew those positions, and we have been carrying more or less the same amount since then and recently brought us some constant position that we had a while ago was right.

Moving onto Page 23. This is a slide which is familiar to all of us, and it is our cash position. Again, highest level ever at the end of third quarter, BRL 3 billion, 34% of net revenues of last 12 months. Below you see that we have no pressure, no refinancing pressure on the short term. In 2014, we have less than USD 100 million debt coming due. Therefore, we have a lot of time to work on stretching or prepaying some of the debt coming due in 2015. And we also, in this chart, we bring the position that we have of our cash in Brazil and outside Brazil. And when I mean outside Brazil, I'm going over all the countries that we have cash. This is the U.S., Argentina, and it does include Venezuela. Okay. All of those together, in terms of cash, accounts for 8%. Venezuela is the major part, but we're bringing this new information to show you that we are -- our exposure to Venezuela is different than other -- peers of ours. And in number of ASKs, Venezuela accounts for roughly 2% of our total ASKs.

By saying that, I finish my short presentation, and I give the floor back to Kakinoff, who will talk about the guidance and the outlook for 2014. Kakinoff?

Paulo Sérgio Kakinoff

Thank you, Ed. On Slide #25, we present our flight plan for 2014. Since 2012, we introduced measures to adopt our restructuring to a scenario that appear increasingly challenged. These actions allowed us to achieve positive operating margin in 2013. 2014 will be the year of consolidation of our strategy, maintaining discipline and improving our products. Our goal is to increase the ability to generate revenues, combined with a continued focus on planning and cost control, critical to executing our short- and long-term strategies. For 2014, as noted on Slide #26, we project a variation in our supply in the domestic markets from minus 3% to minus 1% and an increase of up to 80% in international market. In RASK, we expect a growth of equal to or above 10% and an increase of equal to or less than 10% in cash ex-fuel. In terms of exchange rate, we estimate that the average dollar for the year is between BRL 2.4 and BRL 2.5, and the average fuel price rank between BRL 2.70 and BRL 2.85. With this, we estimate an EBIT margin of between 3% and 6% for 2014. We expect a new margin evolution BRL for this year as a continuation of the work we are developing in our day-to-day. Our commitment with the market to fulfill our projections is one of our main priorities, counting with our efforts and maximum dedication. I would like to thank you, everyone, for participating, and initiate the session of questions and answers.

Question-and-Answer Session

Operator

[Operator Instructions] The first question comes from Bernardo Velez with GBM.

Bernardo Vélez

Just a couple of questions. First off, if you're expecting a more challenging scenario in terms of FX and on fuel, would it be -- or what line of thought are you following in order to reduce your hedged positions?

Edmar Prado Lopes Neto

Bernardo, this is Edmar here. We -- one has to understand that our policy here is very conservative. So the hedge positions that we have, they are put in place in order to mitigate volatility because we look upon the operational front. So we have our budget. We try to protect it and we try to bring less volatility to the business. Primarily what we see is that we build up our positions in order to give sign on the operational side to respond to the challenges of the macro environment. So again, structurally speaking, on the real side, it's very, very difficult to say everyone is wrong, so we have seen the real starting the year at BRL 2.35 then moving up to BRL 2.45 and people saying that it will go even further. Now we saw that Brazil was downgraded and the reaction of the market was to appreciate the Real. Nowadays -- just today's trading, close to BRL 2.30, different than people will think a few weeks ago. So very tough situation here to predict any scenario. On the fuel side, I repeat, we have this structural view that in the near term, the jet fuel should be at lower prices and we try to participate in the market at prices that make sense for us.

Bernardo Vélez

Okay, got it. And could you give us a little bit more color about the write-off of VARIG and the software licensing? How much was it and how much is the remaining on your balance?

Edmar Prado Lopes Neto

Okay. Bernardo, so you've seen the financial statement. -- VARIG brand was a write-down, right off at remaining that we have, with BRL 6 million. And therefore software that we will not use any longer was roughly BRL 10 million, okay? It's also in the financials statements, in the impairment section.

Bernardo Vélez

Okay. So there's nothing remaining in VARIG, right?

Edmar Prado Lopes Neto

No, it's none. Sold.

Bernardo Vélez

Okay, perfect. And just one question, if I may. What would you say your EBIT margin or EBITDAR would have expanded if we take out the extraordinary effect that you mentioned earlier?

Edmar Prado Lopes Neto

We have a proxy here that on the bottom line, it would be BRL 490 million. This is FX variation. And on the operating side, it would be close to BRL 400 million, between BRL 300 million and BRL 400 million, primarily on the fuel side. Okay? But I guess -- it's just an estimation...

Operator

The next question comes from Thomas Kim with Goldman Sachs.

Thomas Kim - Goldman Sachs Group Inc., Research Division

You've done a tremendous job pushing up pricing, and I'm wondering to what extent there's still capacity to push up pricing to compensate for the higher -- or the weaker FX. I mean, are you seeing any signs at this stage that suggests that there is demand deterioration because of higher prices?

Paulo Sérgio Kakinoff

Tom, thank you very much for your comment. Actually, we can still further manage the capacity in order to continuously improve all of that. The company will keep its strategy of prioritizing PRASK increase instead of load factor. Ideally, we will grow both of them, but the priority going to be still to increase the PRASK at the level of 2 digits. So that strategy has been quite successful, and it has also helped the markets to drive towards better capacity discipline. So as we have already announced, we could further manage them by reducing capacity up to 3%. We could revise that guidance whether it would be necessary considering further macroeconomic deterioration or even further fuel price increase. The company has been quite fast in order to face the seasonality -- seasonality, I'm sorry, and also the macroeconomic variations. So this is, at the moment, our view on capacity, but we could go further.

Thomas Kim - Goldman Sachs Group Inc., Research Division

Okay. Can I also ask a follow-up question with regard to pricing? The fleet reconfiguration is clearly progressing. And I'm wondering to what extent does your forward bookings show or reflect that in your pricing.

Paulo Sérgio Kakinoff

Yes.

Thomas Kim - Goldman Sachs Group Inc., Research Division

Can you give us an idea in terms of the range? Or I mean, just to give us a little bit more context in terms of the impact on your pricing capability or pricing power?

Paulo Sérgio Kakinoff

Unfortunately, I can't, Tom, because that would constitute a sort of guidance in first place and secondly, this is one the most important strategic information we are holding today. It's basically related to the product attractiveness. And by changing that offer or that layout, we are offering today in Brazil a very interesting combination, the lowest fare at the highest comfort. So this is something that we would like to see being a unique offer for a long period of time. Therefore, we wouldn't like to disclose you any kind of information related to revenues specifically on the Comfort Class.

Thomas Kim - Goldman Sachs Group Inc., Research Division

May I ask to -- can you provide in terms of forward bookings? How does your March forward booking and April forward booking look relative to where it might have been last year, just as a rough gauge?

Paulo Sérgio Kakinoff

Unfortunately not. I can't give that, Tom. I'm sorry.

Operator

Your next question comes from Michael Linenberg with Deutsche Bank.

Michael Linenberg - Deutsche Bank AG, Research Division

I want to go back and just talk about the revenue increase, which -- very impressive, up 27%, 28% on only -- a modest increase in supply overall. How much of the increase do you think is being driven by going after a better mix, picking up more corporate customers? Can you talk about how that's trended over the last year? And maybe it's your relationship with Delta and now you have a stronger relationship with Air France-KLM. How much more business traffic is that putting on GOL's airplanes?

Paulo Sérgio Kakinoff

Typically, in Brazil, we have this fleet of 60/40, 60% corporate passengers and 40% for leisure. At the moment, at GOL, we are running at the level of 65%, which means a lot, the corporate -- for the corporate customers, and we have invested, along the last 14 months, also a lot in the revenue management area. We brought more than 50% additional headcount to that department. At the same time that we are continuously reducing the total company headcount. So we have invested in developing the best-in-class revenue management group in the country. And we are now getting the truth coming out such -- we are not only increasing the number of corporate passengers traveling with us, but better managing the revenue for the leisure customers. This is 100% related to capacity discipline, but we have also reallocated our frequencies and designed a brand-new network which was implemented in May last year. So the combination of those things has boosted our -- the GOL's attractiveness towards the corporate customers. And as a result of the strategy, last year was the first time ever when GOL was able to achieve the market leadership in number of passengers based on the ABRACORP figures, the Brazilian Association of corporate travel agents. So I would say it's a combination of revenue management skills, punctuality, better products at the lowest possible fare and also the capacity strength.

Michael Linenberg - Deutsche Bank AG, Research Division

Okay. And just a question for Edmar. I know you have a couple of flights a day to Venezuela, you fly up to Caracas. Every carrier is telling us how much cash they have trapped up there. Do you have them? Is it anything meaningful? Do you have any cash that maybe you're not able to repatriate or haven't been able to repatriate from Venezuela?

Edmar Prado Lopes Neto

Michael, just reinforcing -- our total cash at the end of December, 8% -- 8%, was in all of our branches, and I'm including Venezuela, Argentina, Uruguay, all of them, together, they had 8% -- 8%. Venezuela was the major part. Venezuela accounts for 2% of ASKs, of our total ASKs, and we have nowadays roughly 15 flights per week, okay. Per week. And as everyone else, we are evaluating Venezuela's situation on a daily basis. Just for you to know, most of our funds there were spent at the old FX rate, at the old BRL 6.3. So for the time being, we understand this is enough -- this is more than enough information for the market to understand our exposure there.

Michael Linenberg - Deutsche Bank AG, Research Division

Okay. That's very helpful. That is small. And then just one last one, and this is maybe more for Kakinoff. As we look out to the World Cup, I mean, it's still maybe early, but anything that you're seeing with booking trends and I'll tell you when we have we typically have these big events like the Olympics, we usually see a falloff in business travel, but see a healthy amount of leisure travel. So I don't know, maybe it's still too early to tell, but anything that you can tell us about maybe how bookings look out around World Cup or maybe it's too early?

Paulo Sérgio Kakinoff

This is -- it's really too early. But just to give you a flavor, we are foreseeing, at this point of time, the same low structure level that we would have without the World Cup. And that might mean a very interesting information. This is because we do not see a concentration on the routes serviced by -- or to serve the World Cup cities. I mean, we do not see at this point in time a strong deterioration in the corporate travel side for that period of time. That was something that we were worried about. I believe that it is still too early to be more precise in that type of projections. But there is no, I'd say, strong movement related to the World Cup, at least not at this moment.

Operator

The next question comes from Duane Pfennigwerth of Evercore.

Duane Pfennigwerth - Evercore Partners Inc., Research Division

On your unit cost guidance, on that 10%, or I guess less than 10% increase, can you say how much of that is being driven by taking seats off the plane for this -- basically economy comfort?

Paulo Sérgio Kakinoff

The economy comfort is going to increase in annual comparison, something like 1.5% of cost in case, this is exactly how much we are using in ASK in comparison to last year, and that's the annual effect. So basically, this CASK ex-fuel expenses projections of growth for the year is pretty much related to dollar-denominated expenses in comparison to the last year. So that is the main driver for such type of case increased projection that we are sharing right now. From those virtual 10 percentage points the change of -- would account just for 1.5%.

Edmar Prado Lopes Neto

And, Duane, this is Edmar here. And please bear in mind that 2014 will be the third year in a row that we'll take capacity out from the market. So altogether, just for the domestic market -- and if we go to the minus 1% or minus 2%, the total capacity that we will have taken out of the Brazilian market, in our case, would be close to 15%. And this, of course, takes pressure on our CASK because the dilutions will be 15% lower, okay?

Paulo Sérgio Kakinoff

This is 15% reduction in 36 months period of time, which means an average 5% -- 5 percentage points per year of capacity relation in the mass market. That's a lot.

Duane Pfennigwerth - Evercore Partners Inc., Research Division

That's a fair point. And then can you just comment -- it looks like based on the sum of the months, so for 4Q, we get to actually different PRASK number than what you reported. So I think on January 21, you said it was going to be up 24%, then here we are up 27%. Can you just explain what the difference is between the sum of your months and the quarter that you just reported?

Paulo Sérgio Kakinoff

Yes, breakage. Breakage was a little bit different. So that's what's bringing us -- bringing up the revenues when you compare to the preview that we give on a monthly basis. And we only have breakage after we have the year closed and all the tests are run here, okay?

Duane Pfennigwerth - Evercore Partners Inc., Research Division

Okay. So breakage as it relates to miles that you -- miles that effectively expired?

Paulo Sérgio Kakinoff

Not only miles, tickets that expire.

Duane Pfennigwerth - Evercore Partners Inc., Research Division

Okay, that is helpful. And then just lastly, can you remind us how many deliveries, not necessarily -- we see the net fleet plan in your press release, but the new deliveries you have coming, the number in 2014 and 2015 and then just help us understand what financing is in place, how do you plan to finance those?

Edmar Prado Lopes Neto

Okay, sure. We have 6 planes coming this year. And we will take out primarily the same number, okay? And the 6 planes will come in the first half of this year, maybe 1 will come in July. But this is a movement for the first half. For those 6, we have already agreements put in place, so there is no need of funding here. For 2015, we -- the final number for deliveries in the year should be close to 6 as well, and the number of planes that will be returned will be maybe 1 or 2 less. So at the end of the day, we do foresee our fleet at stable levels from now on. What is important to mention is that we are bringing new -- bringing in 800, while we are returning 700, therefore, the number of ASKs is a little bit different. For the planes which will come in 2015 and '16, we are looking upon putting out an RFP until midyear. And as we did a couple of years ago, we do not foresee any trouble in finding lessors or who would like to have planes with us, as well as our relationship with the Ex-Im Bank, which is -- have been very good so far. So there isn't a decision at this point in time which kind of funding we will use for 2015 and on. But for 2014, we have everything settled.

Duane Pfennigwerth - Evercore Partners Inc., Research Division

And sorry, on '14, those are leases? Or how are you financing the '14?

Edmar Prado Lopes Neto

Sale and leaseback with lessors. Sale and leasebacks.

Operator

The next question comes from Stephen Trent with Citigroup.

Stephen Trent - Citigroup Inc, Research Division

If I may ask on the fleet side, could you refresh my memory about the subleasing you sometimes do? I recall, if I'm not mistaken, that perhaps 2Q or 3Q, you were subleasing some of your aircraft to, I believe, a carrier in Europe. What's the idea going forward? Would you maybe look into opportunities to do that again?

Edmar Prado Lopes Neto

Yes, Steve, this is Edmar here. Thanks for the question. Yes, we will do the same. And the number of the carrier, you were trying to remember is Transavia. Transavia is the low cost operator from Air France-KLM. And this year, we will also have a new carrier, which is SunExpress. This is a sub, a joint venture between Turkish and Lufthansa. So altogether, at different times in the year, we will have 8 planes subleased during low season here in Brazil.

Paulo Sérgio Kakinoff

Stephen, here it's Kakinoff. This is part, I'd say one of our main pillars related to company's ability to face different demands along the year. So those type of -- has represented an important cost reduction on the -- along the low season. At the same time that it can have those planes back to face the higher demands on -- along the Brazilian high season. So this is the reason why we are increasing the number of aircrafts to be subleased this year from 5, which we had -- those were sent to Europe last year, up to 8 this year.

Stephen Trent - Citigroup Inc, Research Division

Great. Very helpful, guys. And just one last question, and I'll let somebody else ask. The 1 remaining Boeing 767 that's nonoperational, could you also just give me some color on what's the plan with that plane? I know it's small but just what are you...

Edmar Prado Lopes Neto

Okay. Steve, the lease of these 0767 will finish this year. So sometime during this year, we will return the aircraft. But please remember that this one is grounded, okay?

Operator

The next question comes from Savi Syth of Raymond James.

Savanthi Syth - Raymond James & Associates, Inc., Research Division

Just a simple question on the ASKs. I'm guessing because the aircrafts are coming in the first half, your first half ASK growth, like will be more flattish into the back half lower year-over-year? Or how does that progress throughout the year?

Edmar Prado Lopes Neto

Savi, this is Edmar here. Yes, the trend is very much like this. On the first half, we should go flat and we should see some increase in the second half. But primarily as Kakinoff mentioned before, we will try to be as flexible as possible. During low season, we have less planes here in Brazil and during high season, yes, we will see what can be done in terms of capacity, okay?

Savanthi Syth - Raymond James & Associates, Inc., Research Division

Got it. And then it looks like other revenue was very strong this quarter, and I know that it said cargo revenue was strong. Is that just more belly spaced dedicated towards cargo? Or was it pricing increases? Or what drove the other revenue stream?

Edmar Prado Lopes Neto

Savi, as in the passenger market, we are doing the same kind of work in the cargo market. That is, we are looking, we're aiming for any cargo that pays more. So this is light cargo. And we have, on our side as well, seasonality. Fourth quarter is a strong quarter for cargo here in Brazil.

Paulo Sérgio Kakinoff

The e-commerce increasingly becomes very, very strong at that time of the year. So once we have pretty much dedicated in high-value, low-volume packages, our revenues in the cargo side, it has been also boosted by such type of demand.

Savanthi Syth - Raymond James & Associates, Inc., Research Division

Okay, that makes sense. So I'm guessing then maybe that's mostly a fourth quarter strength and then as you go into the rest of the year, it'll look more normal?

Edmar Prado Lopes Neto

Yes, yes, you're right. But the full -- the number for full year should grow close to what that passenger will grow. That means we're looking for a double-digit growth as well.

Savanthi Syth - Raymond James & Associates, Inc., Research Division

Okay, understood. And then just on the privatization of the airport, is that having an impact on cost at all? I know based on your guidance, it implies that it doesn't seem to be any inflation in any of the cost side, instead it's just a matter of the U.S. dollar-denominated cost going up. I was curious as to what you're seeing in kind of the other line items.

Paulo Sérgio Kakinoff

I would say not yet. We are, at the time, discussing the new contract. So we are in the middle of that negotiation. We cannot give you a clear view on that at the moment.

Operator

The next question comes from Renato Salomone with Itaú BVA.

Renato Salomone - Itaú Corretora de Valores S.A., Research Division

Looking at the medium-term, I would like to have a sense of your view for when the domestic industry could start seeing capacity growth again? And on the same question, considering that the rebound in profitability for the industry as a whole has been driven in great part by yields and that fares have jumped to a very high level, how sustainable are such high fares once the industry starts growing again?

Paulo Sérgio Kakinoff

Starting by the end. Actually, those average, they are -- they have included more for -- by getting customers, those are purchasing their tickets shorter in advance to the departure date. So I mean, we are not increasing the revenue at the same -- I'd say for the same time of purchasing in advance. It means that we are better qualifying the customers. Therefore, the average tickets became stronger. It means that we believe it's pretty much sustainable, and it wouldn't be deteriorated over the following months. We do not see in the horizon, the time when the Brazilian domestic market will be able to accept additional capacity again. So that is completely out of our minds by this moment, and we do not foresee that to happen over -- at least over the following 24 months.

Operator

The next question is a follow-up from Thomas Kim with Goldman Sachs.

Thomas Kim - Goldman Sachs Group Inc., Research Division

I just did want to get through some of the opportunities of further rationalization. I mean, you've obviously done a lot with regard to headcount. To what extent do you think there are further levers to pull with regard to rationalizing operations to improve or enhance the margin profile just given the ongoing set of uncertainty and challenges, let's say, with -- possibly with the demand side?

Paulo Sérgio Kakinoff

There is still room for improvement. We are pursuing those opportunities on a daily basis. We have been able to further reduce our headcounts while we are increasing self check-ins process and stuff like that. And as we have delivered in our guidance, we saw that the CASK would increase up to 10%. But surely, the management has been told to find alternatives to minimize that possible increase. So we do see still further room for improvements related to CASK structure.

Edmar Prado Lopes Neto

And, Tom, just moving forward, we don't have any [indiscernible] resizing was primarily done a couple of years ago. And for us, it's very important that you look upon the output per employee. So in the last 2 years, revenues have boost by more than 20%, 25%. And at the same time, the number of employees is down by another 20%. So the output per employee has been a really strong driver for us.

Thomas Kim - Goldman Sachs Group Inc., Research Division

Absolutely. And that's why I'm wondering if there were further opportunities there just given how much you've already done. So I guess -- I mean, it sounds like you still have some incremental room perhaps with more self check-ins. But would you say that headcount is pretty much -- do you anticipate -- or actually, let me specifically ask, do you anticipate headcount being relatively flat this year? Or do you think that there might be room, or do you think you might be looking to reduce it?

Paulo Sérgio Kakinoff

There is, the self-check-in at the moment is at the level of 60%. We have increased some airports up to 70%, and a few of them, 75%. So we are considering to further develop such type of process that is pretty much dependent on customer's education, and they have also invested a lot on that. As soon as we can get this new customers profile in place, we will be able also to raise further synergies by reducing the number of headcount in those locations. But at the same time, as Edmar properly said, we are also looking after additional opportunities to improve the revenues per employee by reallocating them to either -- or reallocating the headcounts to other functions like revenue management. We are not -- surely we are not talking about the same person but the often placed headcounts to be reallocated for such type of revenue boost position like revenue management. So it's, as Edmar said very well, there is no silver bullet, but there are room for improvements in some minor areas. Those combined can still represent another year of cost reductions.

Operator

This concludes today's question-and-answer session. I would like to invite Mr. Paulo Kakinoff to proceed with his closing remarks. Please go ahead, sir.

Paulo Sérgio Kakinoff

I just would like to thank you very much for your attention and be advised we are available for further questions off line. So the whole team is here waiting for your calls. Thank you, guys.

Operator

This concludes the GOL Airlines conference call for today. Thank you very much for your participation, and have a nice day. You may disconnect your lines.

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