Gol Linhas Aereas Inteligentes S.A.(GOL) - 2022 Q4 - Annual Report

Financial Reporting and Compliance - The consolidated financial statements have been prepared in accordance with IFRS, with amounts translated into U.S. dollars at a rate of R$5.2177 to US$1.00 for the year ended December 31, 2022[19]. - The report indicates that certain figures have been rounded, which may affect the arithmetic sum of totals presented[22]. - The company has not independently verified third-party market data, which could impact the accuracy of competitive position and market share assessments[21]. Operational Performance Metrics - The report includes key performance metrics such as available seat kilometers (ASK) and revenue passenger kilometers (RPK), which are critical for assessing operational efficiency[23][27]. - Operating costs and expenses per available seat kilometer (CASK) are used to measure operational cost efficiency, with CASK ex-fuel providing insights into costs excluding fuel[26]. - The load factor, representing the percentage of seating capacity utilized, is a vital metric for the airline's performance[25]. - The company achieved a daily aircraft utilization rate of 11.0 block hours per day in 2022, up from 10.0 in 2021 and 9.6 in 2020, contributing to revenue generation and cost dilution[94]. - The average load factor for the company was 80.0% in 2022, maintaining best-in-class performance even during the pandemic[110]. Economic and Market Conditions - Brazil's GDP contracted by 4.1% in 2020, grew by 4.6% in 2021, and 2.9% in 2022, impacting the demand for the company's products and services[41]. - The SELIC rate was 2.0% in 2020, increased to 9.25% in 2021, and further to 13.75% in 2022, affecting the cost of indebtedness[51]. - Inflation rates in Brazil were 4.5% in 2020, 10.1% in 2021, and 5.8% in 2022, which may influence operational costs[50]. - Political instability and economic uncertainty in Brazil could adversely affect the company's operations and market perception[42]. Fuel and Cost Management - Fuel costs represented 28%, 23%, and 43% of total operating costs in 2020, 2021, and 2022, respectively, indicating significant volatility in fuel expenses[63]. - The average price of West Texas Intermediate crude oil was US$39.13, US$67.34, and US$94.33 in 2020, 2021, and 2022, respectively, affecting fuel cost dynamics[63]. - The company maintains a fuel hedging program to manage price volatility and reduce exposure to fuel cost fluctuations[167]. - Fuel costs increased significantly from R$2,631.9 million in 2021 to R$6,288.4 million in 2022, representing 43% of total operating costs[163]. Financial Stability and Indebtedness - As of December 31, 2022, 93.7% of the company's indebtedness was denominated in U.S. dollars, exposing it to currency fluctuations[57]. - The company had R$21,737.1 million in U.S. dollar-denominated indebtedness as of December 31, 2022, which may impact financial stability[57]. - As of December 31, 2022, the company's total indebtedness was R$23,191.8 million, an increase from R$22,663.0 million in 2021, primarily due to lease agreements signed in 2022[65]. - The company reported negative working capital of R$10,867.7 million as of December 31, 2022, raising concerns about its liquidity and ability to meet obligations[65]. - The average maturity of loans and financing decreased from 3.4 years in 2021 to 2.5 years in 2022, indicating a potential liquidity risk[65]. Competitive Position and Market Share - The company emphasizes the importance of maintaining a competitive position in the Brazilian and international airline industries, based on reliable third-party data[21]. - The Brazilian airline industry is highly competitive, with significant pressure from existing airlines and potential new entrants affecting fare levels and market share[85]. - The domestic passenger market in Brazil grew from 30.8 million passengers in 2001 to 82.2 million in 2022, with the company's market share increasing from 4% in 2001 to 34% in 2022[107][108]. - The company maintained a domestic market share of 33.7% in 2022, compared to 31.7% in 2021, while LATAM Brasil increased its share to 36.5%[199]. Strategic Initiatives and Future Outlook - Forward-looking statements in the report highlight potential growth opportunities and the effects of regulation and competition on future performance[31]. - The company plans to have 50% of its fleet as Boeing 737 MAX aircraft by 2024, having entered into purchase agreements for 28 additional MAX aircraft[110]. - The company aims to achieve a regular supply of sustainable aviation fuel, targeting a 1% biofuel supply by 2025[173]. - The company has a goal to achieve carbon neutrality by 2050, with its fleet transformation to Boeing 737 MAX aircraft being a key component of this strategy[110]. Customer Engagement and Loyalty Programs - The loyalty program, Smiles, had 20.5 million members as of December 31, 2022, contributing significantly to ticket sales and repeat customers[1]. - Smiles loyalty program allows members to accumulate miles through flights, credit card spending, and retail partnerships, enhancing customer engagement[205]. - The Smiles loyalty program had 20.5 million members as of December 31, 2021, contributing significantly to ticket sales and repeat customers[139]. - Smiles has established partnerships with major Brazilian banks and fintechs, including Nubank and C6 Bank, to enhance its loyalty program[206]. Environmental and Social Responsibility - The company has saved 9.7 million liters of jet fuel and reduced greenhouse gas emissions by 24,300 tons through the use of Boeing 737 MAX aircraft since 2019[110]. - The company reported total fuel consumption of 37,630,000 GJ in 2022, with greenhouse gas emissions of 2,737,745 tons CO2, a significant increase from 1,905,556 tons CO2 in 2021[189]. - The company is committed to achieving zero net direct carbon emissions by 2050 as part of its long-term corporate goals[173]. - As of December 31, 2022, the company employed 14,816 individuals, with 44% of employees being women and a 36% participation rate of women in leadership positions[175][176]. Operational Challenges and Risks - The company faces risks from fluctuations in crude oil prices, which impact fuel costs, particularly due to geopolitical tensions[30]. - The company has experienced operational disruptions due to liquidity limitations, resulting in certain aircraft remaining non-operational[83]. - The company relies on a single supplier for aircraft and engines, which poses a risk if there are negative developments related to Boeing 737 MAX aircraft[71]. - Regulatory changes in Brazil's civil aviation framework could increase costs and affect competitive dynamics, impacting the company's operations[76].