Conference Call Results Investor Relations May 15, 2014 1
Highlights 2
Highlights Net revenues of R$2.5 billion in the quarter, an increase of 20% or R$411 million quarter-over-quarter; EBIT totaled R$144 million in, an increase of 43% against 1Q13, with margin of 5.8%; EBITDAR totaled R$493 million, achieving a 76% reduction in financial leverage, which moved from 27.9x to 6.5x; net revenues (last twelve months) reached the highest historical level for the Company, R$9.4 billion; EBIT recorded R$ 309 million, an increase of R$1.1 billion versus 1Q13 ; CASK recorded an increase of 3%, while RASK grew 18%; EBITDAR reached the R$1.7 billion mark, the highest level in the Company's history; Total cash accounted for R$2.8 billion in, representing 30% of net revenues in the last twelve months. 3 3
Operating Margin recorded 5.8% in Strong Recovery over the Last Twelve Months Net Revenues +20% 2,083 2,493 1Q13 8,020 (1Q13) +17% 9,367 () EBIT and EBIT Margin +43 4.9% 5.8% 101 144 1Q13-812 -10.1% (1Q13 +1,121 3.3% 309 () Operating Costs +18% 1,982 2,348 1Q13 8,832 (1Q13) +3% 9,057 LMT () EBITDAR and EBITDAR Margin 17.6% 367 +126 19.0% 493 357 4.4% 1Q13 (1Q13) +1,295 18.0% 1.652 () 4
EBIT and EBITDAR Improvement over the Last Twelve Months EBIT and EBIT Margin EBITDAR and EBITDAR Margin +1.121 3.0% 3.3% +1.295 CAGR 47% 17.0% 17.6% 266 309-812 -492-254 -3.0% 8.1% 11.1% 1.526 1.652-10.1% -6.1% 4.4% 357 654 931 1Q13 2Q13 3Q13 4Q13 1Q13 2Q13 3Q13 4Q13 Consistency in Delivering the Results Improvement 5
Operational Performance and Efficiency Gains Human Resources Operations Net Revenue /Employes (000) Net Revenues / Flights (BRL) Employes (000) Flights (000) 21 18 16 16 326 349 316 317 367 458 549 580 +58.0% 23,122 23,247 28,301 29,514 27.6% 2011 2012 2013 2011 2012 2013 RPK / Employes Liters / RPK 21 Employes (000) 18 16 16 Fuel Liters (in millions) 1.597 1.655 1.512 1.524 1.658 2.059 2.125 2.223 34.1% 0,047 0,045 0,044 0,042-9.6% 2011 2012 2013 2011 2012 2013 6
Industry 7
GOL IAG Alaska Delta Southwest LATAM Spirit United Copa AF / KLM JetBlue Allegiant Westjet Lufthansa GOL Achieved the Highest Improvement in EBIT Margin EBIT Margin Development (percentage points) 13,4 10,6 6,4 4,5 4,1 3,7 3,6 2,9 2,2 2,1 0,7-0,2-0,8-1,3-1,4 AeroMexico 8
GOL Alaska United Southwest Copa JetBlue Delta Spirit LATAM Allegiant AF / KLM Westjet Lufthansa IAG AeroMexico RASK Evolution GOL Leads RASK Growth over the last twelve months 17,7% 4,0% 2,9% 2,1% 2,1% 2,1% 1,9% 1,6% 0,6% 0,5% -2,2% -2,3% -2,7% -4,3% -4,6% 9 9
Domestic Market Share and Operational Figures on Total 1Q13 % 4Q13 % ASK (million) 12,529 12,330 1.6% 12,677-1.2% RPK (million) 9,539 8,292 15.0% 9,484 0.6% Load Factor 76.1% 67.2% 8.9 p.p 74.8% 1.3 p.p Domestic International ASK (million) 11,075 10,897 1.6% 11,294-1.9% RPK (million) 8,502 7,415 14.7% 8,543-0.5% Load Factor 76.8% 68.0% 8.7 p.p 75.6% 1.1 p.p ASK (million) 1,453 1,433 1.4% 1,384 5.0% RPK (million) 1,037 877 18.3% 941 10.2% Load Factor 71.4% 61.2% 10.2 p.p 68.0% 3.4 p.p Market Share Development 1Q13 16.7% 0.6% 6.7% 34.8% 7.9% 16.7% 0.7% 36.6% 41.2% 38.1% Source: ANAC GOL TAM Azul + Trip Avianca Others 10 10
New level of Load Factor combined with an Increase on Yield Yield and Load Factor Yield Load Factor (%) Yield: Increase of 18,2% vs. 1Q12; Load Factor: 9 p.p. higher vs 1Q13. 20,26 68,0 1Q12 18,40 69,5 2Q12 Yield 18,35 73,8 3Q12 21,76 69,7 4Q12 +18,2% 22,99 67,2 1Q13 20,88 67,7 2Q13 Yield 23,58 69,6 3Q13 25,85 74,8 4Q13 23,95 76,1 load factor +9pp PRASK and Domestic ASK PRASK (centavos/r$) ASK Doméstico PRASK: Increase of 18% vs 1Q13; ASK Domestic: Decrease of 12% since 1Q12. 12.911 13,76 11.551 12,79 11.890 13,54 11.262 15,17 ASK -12% 10.897 15,46 10.870 14,14 11.049 16,41 11.294 19,34 11.075 18,23 PRASK 18% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 11
GOL Strategy 12
Strengthening Partnerships Codeshare Alliances 7 agreements signed. GOL Shareholder (3.0% of capital stock) GOL Shareholder (1.5% of capital stock) Interline Alliances 78 interline agreements signed by the end of. Strategic Alliances Delta Air France-KLM Two-Way Codeshare: allows for approximately 400 destinations in over 62 countries served by both companies to be interconnected and available for purchase on the Companies' sales channels; Exclusive Benefits for SMILES Diamante and SkyMiles Passengers; Codeshare agreement: allowing new flight options for all clients and connecting 318 destinations in more than 115 countries served by the Companies; More benefits for clients registered on loyalty programs; 13
New Flights: Income Opportunities Opportunity for increase in Dollar Revenues with new international routes (Chile, Argentina and Miami); 4 Campinas (SP) - Miami (USA) Three times per week, with stopover at Santo Domingo and option to continue to Orlando Reduction in the ICMS tax rate in the state of Ceará on jet fuel, from 25% to 12%, applicable to all domestic flights for Companies that also operate regular international flights to this destination; Increase in frequency between São Paulo and Rio de Janeiro, via Campinas and Santos do Dumont airports, totaling 130 daily flights between these two cities; São Paulo (GRU) Santiago (Chile) Resumption of flights between São Paulo and Santiago in Jul/14 3 2 1 Campinas (SP) - Rio de Janeiro (SDU) 12 daily flights between Campinas and Rio de Janeiro (Santos Dumont Airport) Fortaleza Buenos Aires (Argentina) Direct flight between Fortaleza and Buenos Aires 14
39% up to R$159 75% up to R$299 90% up to R$499 98% up to R$899 FIFA World Cup Operation GOL: Official Carrier of the Brazilian National Team GOL requested 974 extra flights and schedule changes in order to attract passengers flying to host cities on soccer match days; Price per flight ticket [World Cup season] Up to R$99 14% A total of 4.5 million seats are available to host city destinations during the World Cup period, corresponding to 85% of the total capacity of the stadiums during the first-phase of the competition; R$100 - R$159 R$160 - R$299 25% 36% New visual identity and electronic kiosks at the airports, website and mobile platform available in three new languages; R$300 - R$499 R$500 - R$899 8% 15% Specific training programs and employees with language skills at the host-cities. >R$900 2% 15
GOL+ Expansion: More Space between Seats : Superior Flying Experience Expansion of the GOL+ product, according to customer perception GOL+ Comfort Seats offered free of charge to Smiles Diamante and Elite Delta Air Lines clients and from R$30.00 to other customer; Standardization and improvements in operating efficiency, focusing on flexibility and income generation; With these changes GOL will offer the largest number of category A seats according to ANAC classification, equivalent to 42% of the domestic market; By the end of May, 80% of GOL's total fleet will have the new configuration. Currently, 80 Airplanes already with the New Configuration: 70% of the Schedule Completed Phase 1: Nov/2013 Carnival: Mar/2014 Phase 2: May/2014 7% of the fleet 10 airplanes 24% of the fleet 33 airplanes 80% of the fleet 116 airplanes 16
Smiles: Highlights Voted the best loyalty program in Brazil by Melhores Destinos ( Best Destinations ) readers in April Capital reduction of R$1 billion, without reducing the number of shares; Approval of R$160.3 million in dividends relating to 2013; Exercise of call option of Smiles shares by General Atlantic; Approval of participation by Smiles in Netpoints equity of R$25 million; Partnership with Aerolíneas Argentinas and TAP, allowing accumulation and redemption of air miles; Launch of the ticket reservation product for flights operated by GOL; SMILES Financial Highlights Net Revenue Operating Profit Operating Margin Net Profit Net Margin R$ 188.1 million R$ 69.0 million 36.7% R$ 78.3 million 41.6% 17
Financial and Operating Results 18
Main Indicators Highlights 1Q13 Var% Var% 4Q13 /1Q13 /1Q13 Total RPK (mm) 9,539 8,292 15.0% 9,484 0.6% Total ASK (mm) 12,529 12,330 1.6% 12,677-1.2% Total Load Factor 76.1% 67.2% 8.9 p.p 74.8% 1.3 p.p Net YIELD (cent. R$) 23.95 22.99 4.2% 25.85-7.4% Net PRASK (cent. R$) 18.23 15.46 17.9% 19.34-5.7% Net RASK (cent. R$) 19.90 16.89 17.8% 21.52-7.5% CASK (cent. R$) 18.74 16.07 16.6% 20.24-7.4% CASK ex-fuel (cent. R$) 10.67 8.71 22.5% 12.57-15.1% Net Revenue 2,493.4 2,082.7 19.7% 2,728.2-8.6% Domestic Market 2,219.2 1,877.5 18.2% 2,494.6-11.0% International Market 274.2 205.2 33.6% 233.6 17.4% Operating Costs and Expenses (2,348,5) (1,981.5) 18.5% (2,565.4) -8.5% Operating Profit (EBIT) 144.4 101.2 42.8% 162.9-11.3% Operating Margin (EBIT) 5.8% 4.9% +0.9 p.p. 6.0% -0.2p.p. EBITDA 279.7 212.1 31.9% 343.4-18.5% EBITDA Margin 11.2% 10.2% +1.0 p.p. 12.6% -1.4p.p. EBITDAR 492.7 366.5 34.4% 551.9-10.7% EBITDAR Margin 19.8% 17.6% +2.2 p.p. 20.2% -0.5 p.p. Financial Results, Hedge and Exchange (193.8) (106.9) 81.2% (200.5) -3.4% Variation Net Profit (Loss) (96.1) (75.3) 27.7% (19.3) 398.1% Net Margin -3.9% -3.6% -0.3 p.p. -0.7% -3.2 p.p. 19
Increase on Fuel Prices in 8% and Real Depreciation in 18%, in a Scenario of 12% Capacity Reduction accumulated since 2012 Total CASK +16.6% +3.3% Average Cost of Fuel +8.3% +4.7% 16.07 18.74 17.59 18.18 2.42 2.62 2.33 2.44 1Q13 (1Q13) () 1Q13 (1Q13) () CASK Ex-fuel +22.5% +4.9% Average Exchange Rate +18.5% +11.9% 8.71 1Q13 10.67 10.22 (1Q13) 10.72 () 2.00 1Q13 2.37 2.01 (1Q13) 2.25 () 20
Main Items that Impacted Costs on vs 1Q13 Operating Expenses (R$ MM) Total Main Variations CASK CASK % Aircraft fuel and Lubricants 1,011.30 8.07 43.1% Fuel 103.9 0.83 4.4% Salaries. wages and benefits 347.3 2.77 14.8% INSS Provision write-down 1Q13 20.0 0.16 0.9% Collective pay rise 18.0 0.14 0.8% Profit sharing + Variable compensation 22.0 0.18 0.9% Total effect (Salaries. wages and benefits) 60.0 0.48 2.6% Aircraft rent 213 1.70 9.1% Sales and Marketing 161.2 1.29 6.9% Commission increase related to Sales 33.0 0.26 1.4% Loss on Sales 37.0 0.30 1.6% Total effect (Sales and Marketing) 70.0 0.56 3.0% Landing Fees 151.5 1.21 6.5% Aircraft and traffic servicing 165.8 1.32 7.1% New IT services 9.0 0.07 0.4% Services contracts adjustment 20.0 0.16 0.9% Total effect (Aircraft and traffic servicing) 29.0 0.23 1.3% Maintenance. materials and Repairs 75.5 0.60 3.2% Depreciation and Amortization 135.2 1.08 5.8% Other Operating Expenses 87.6 0.70 3.7% Total operating expenses 2,348.50 18.74 21
Cash and Debt Evolution of total cash position [R$ billion) Cash/Rec. Cash 19.6% 1.6 20.2% 1.6 34.1% 2.8 35.1% 2.9 34.0% 3.0 30.1% 2.8 4Q12 1Q13 2Q13 3Q13 4Q13 Amortization Profile - ex-leasing and ex-interest (R$ million) In R$ In US$ 3.325 1.223 115 75 40 734 671 63 273 17 256 730 255 475 1 1.067 1.067 405 405 2.102 2014 2015 2016 2017 2018 2019 After 2019 Perpetual Total 22
Dollar and Fuel Hedge Position Fuel Hedge 4Q13 Fixed Price Average Price per Barrel (USD) Notional Volume in Barrels ('000) 110 109 1.057 693 559 1-3M 109 109 4-6M 1.003 108 104 1.024 274 7-9M 108 104 250 351 10-12M Period Volume in Barrel (000) 1 to 3 months 700 4 to 6 months 598 7 to 9 months 151 Dollar Hedge Average Rate 2,43 2,37 2,44 2,37 2,42 4Q13 Notional Value in US$ million 150 304 169 166 87 1-3M 4-6M 7-9M 10-12M 23
Impact on Financial Results [R$ milhões] Exchange Variation +144 +133-61 -133 Hedge USD -47 +36-76 -56-96 Operating Results Exchange Net Financial Expenses Income Tax Subtotal Venezuela Exchange Interest Hedge Net Income (Loss) 24
Guidance 25
2014 Guidance 2014 Guidance From To Actual Jan-Mar14 Variation in Brazilian GDP 1.5% 2.0% - Annual RASK Variation Equal to or higher than 10% Annual Domestic Supply (ASK) Variation -3% -1% 2% Annual International Supply (ASK) Variation Up to + 8% 1% 18% Annual CASK Ex-fuel Variation Equal to or less than 10% 22% Average Exchange Rate (R$/US$) 2.50 2.40 2.37 Fuel Price (QAV)* 2.85 2.70 2.62 Operating Margin (EBIT) 3% 6% 5.8% GOL Reaffirms 2014 Guidance (*) Fuel price considers total fuel and lubricant expenses divided by estimated period consumption. 26
GOL Linhas Aéreas Inteligentes S.A. Investor Relations ri@golnaweb.com.br +55 11 2128 4700 www.voegol.com.br/ri 27