NOVEMBER 7TH, 2016

GOL announces expansion of operating margin to 10% in 3Q16

SÃO PAULO, Nov. 6, 2016 /PRNewswire/ — GOL Linhas Aéreas Inteligentes S.A. (“GLAI”), (BM&FBOVESPA: GOLL4 and NYSE: GOL), (S&P: CCC, Fitch: CC and Moody’s: Caa3), Brazil’s largest air transportation and travel services group, with operation in passenger transportation, cargo transportation and coalition loyalty programs, announces today its consolidated results for the third quarter of 2016. All information is presented in accordance with International Financial Reporting Standards (IFRS) and in Brazilian Reais (R$), and all comparisons are with the third quarter of 2015 unless otherwise stated.

Quarter highlights

In 3Q16, GOL’s capacity in the domestic and international markets, measured by ASK, reduced by 4.3% and 21.4%, respectively, over the same period in 2015, producing an overall GOL system reduction of 6.7%.
In the same period, demand for the Company’s seats, measured by RPK, decreased by 2.9% in the domestic market and 21.1% in the international market. In the overall GOL system, the decrease was 5.3%.
In 3Q16, GOL’s total load factor increased by 1.2 percentage point over 3Q15, reaching 79.8%. The domestic market increase was 1.2 percentage point to 80.4%, while the international load factor climbed by 0.3 percentage points to 74.6%.
The Company recorded third-quarter net revenue of R$2.4 billion, 3.5% down in the annual comparison. Net revenue in the last twelve months was R$9.9 billion.
Ancillary and cargo revenues decreased by 1.5% over 3Q16 to R$302.1 million, representing 12.6% of total net revenue. In the last twelve months, ancillary and cargo revenues totaled R$1.2 billion.
Third-quarter CASK, excluding fuel expenses and non-recurring events, recorded a year-over-year decline of 2.1%.
Non-recurring gains from the anticipated return of aircraft under finance lease contracts were R$13.6 million in 3Q16.
The operating result (EBIT) was R$232.6 million in 3Q16, with a margin of 9.7%. EBITDA was R$333.4 million, with a margin of 13.9%, and EBITDAR was R$599.5 million, with a margin of 25.0%. The margin improvement was due to the capacity management, which drove an increase in yield, stronger currency and cost control.
Net income was R$65.9 million in the third quarter and R$1.1 billion year-to-date, versus respective losses of R$2.1 billion and R$3.2 billion in the same periods last year. EPS was R$0.19 in 3Q16 and R$3.26 in 9M16.
Financial leverage (adjusted gross debt/EBITDAR) ended the quarter at 7.2x, versus 8.4x at June 30, 2016.

For further information visit www.voegol.com.br/ir

Message from Management

GOL posted an operating margin of 9.7% in 3Q16, accompanied by an operating result (EBIT) of R$232.6 million, due to the rationalization of capacity, which reduced the number of seats available for sale by 20.1%, leading to a 1.5% increase in yield, and the strict control over costs, which fell by 12.6%. In the year through September, EBIT was R$498.3 million, with a margin of 6.9%, and net income reached R$1.1 billion, representing a margin of 15.7%.

Aiming to ensure a better flight experience for our customers, in August 2016 we launched the GOL Premium Lounge in Guarulhos International Airport in São Paulo. The new VIP lounge has modern and distinctive spaces specially designed to provide clients with increased ease and convenience. We will be inauguratin g two more lounges, in the Galeão Airport in Rio de Janeiro, by 1Q17.

On October 4, we undertook the first commercial flight in South America with internet on board on the Congonhas-Brasilia-Congonhas route. The Company’s entire fleet will be equipped with this service by October 2018.

We announced the expansion of our codeshare agreement with Copa Airlines and Aeromexico, as well as a new partnership with Emirates. As a result, passengers served by these companies will only have to check -in themselves and their baggage once and will be able to take advantage of an extensive route network. Customers will also benefit from being able to accumulate miles and redeem tickets through loyalty programs.

We deepened our activities with Smiles in order to provide more benefits and amenities to customers, exemplified by the expansion of miles accumulation to promotional fares. In addition, customers entitled to a category upgrade during the year and who accumulate more qualifying miles than necessary wi ll be entitled to carry the surplus forward to the following year, helping them maintain their category or possibly entitling them to a new upgrade.

We concluded our service to the Olympic Summer Games held in Rio de Janeiro in August and September with absolute success. All in all, we carried more than 7,200 athletes, 5,604 passengers with passengers with reduced mobility or special needs, and 49 delegations. The launch of the accessibility ramp, the improvements in our processes and procedures and the excellence of our service, as well as the high level of security in our operations represent the medals we won in the Games and which we will wear with great pride!

I would like to thank all the organizations and our Team of Eagles who played a vital role in helping us get through this period of rapid economic change. We are convinced we will arise from this arduous and complex process even stronger, more efficient and fully prepared for a new cycle in Brazil’s economy.

Paulo Sérgio Kakinoff
CEO of GOL Linhas Aéreas Inteligentes S.A.