GOL Reached Recurring EBITDA of R$1.4 billion and Recurring Earnings per Diluted Share of R$0.44 in 1Q20

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SÃO PAULO, May 4, 2020 /PRNewswire/ -- GOL Linhas Aéreas Inteligentes S.A. ("GOL" or "Company") (NYSE: GOL and B3: GOLL4), Brazil's largest domestic airline, today announces its consolidated results for the first quarter of 2020 (1Q20). All information is presented in Brazilian Reais (R$), in accordance with international accounting standards (IFRS), and comparisons are with the first quarter 2019 (1Q19), unless stated otherwise. The financial information for the three-month period ended March 30, 2020 has not been audited or subject to limited review by GOL's independent auditors.

Summary of 1Q20 Results

As a result of the COVID-19 pandemic, the quarter – which was on target for record results until mid-March – deteriorated rapidly due to the unprecedented situation in the industry. On March 16, GOL began reducing its capacity by 50 to 60% in the domestic market, and by 90 to 95% in the international market. This was a prudent decision that reflected the change in Customer demand, and followed the actions taken by many other airlines in several countries.

On March 24, in support of actions taken by the Brazilian Government to prevent the spread of COVID-19, which since mid-March has included restrictions on much of Brazilian air traffic, the Company readjusted its network from 800 flights per day to 50 daily essential flights between the São Paulo International Airport, in Guarulhos, and all 26 state capitals and Brasília. The Company continues to work in close coordination with the Brazilian government to provide an essential network for emergency travel, the transport of medical personnel, organs for transplant, medical equipment and passenger repatriations, when requested.

GOL expects to maintain this current network configuration during May, when it will increase flight frequencies and gradually increase coverage to other cities, such as Foz de Iguaçu and Navegantes, and reinitiate operations to the Congonhas Airport, in São Paulo and the Santos Dumont Airport, in Rio de Janeiro.

The Company also took measures to preserve cash through cost reductions, new payment terms and rollovers. These measures, coupled with a significant devaluation of the real against the dollar, explains most of the anomalies in this 1Q20 report.

Here are the highlights of GOL's 1Q20 results:

• Revenue Passenger Kilometer (RPK) decreased 6.4% totaling R$9.9 billion, while Available Seat Kilometer (ASK) reduced 4.4% quarter-over-quarter. GOL transported 8.3 million Customers, a decrease of 6.7% against 1Q19;
• Net revenue was R$3.1 billion, a decrease of 2.0% compared to same quarter last year. Cargo and other revenues increased 16.4% to R$206.4 million;
• As a percentage of net revenue, GOL's operating costs and expenses decreased approximately 17 p.p. to 67.4%, from 84.2% against 1Q19;
• Recurring EBITDA and operating income (EBIT) reached R$1.4 billion and R$938 million, respectively. Recurring EBITDA margin and operating (EBIT) margin were 45.7% and 29.8%, an increase of 16.1 p.p. and 12.8 p.p. quarter-over-quarter, respectively;
• Net income after minority interest was R$173 million. Earnings per diluted share were R$0.44 and Earnings per diluted ADS were US$0.20.
• GOL recorded solid operating cash flow generation (R$1.1 billion), with a 35.6% operating cash flow margin, an improvement of 27.7 p.p. quarter-over-quarter; and
• The Company amortized R$1.2 billion of principal and interest of debt and lease obligations in the quarter, including the early amortization of R$426.6 million of Senior Notes. The total liquidity was R$4.2 billion, of which R$3.0 billion cash and short-term investments and R$1.2 billion of receivables.

Strong operating indicators: Responsible and rational capacity management in relation to Client demand, allied with efficient yield management, allowed the Company to achieve the following indicators:

(i)  Average yield per passenger of 29.57 cents (R$), a decrease of 3.6%;

(ii)  On-time Departures of 92.6%, an increase of 5.5 p.p., according to Infraero and data from major airports;

(iii)  Average load factor of 79.8%, a reduction 1.7 p.p.; and

(iv)  Average aircraft utilization of 12.1 hours/day, a decrease of 5.5%.

Impacted revenue: GOL carried 8.3 million Customers in the quarter, with 7.8 million in the domestic market (-7.1%) and 0.5 million in the international market (-15.8%). Net Revenue per Available Seat Kilometer (RASK) was 25.26 cents (R$), an increase of 2.6%. Net Passenger Revenue per Available Seat Kilometer (PRASK) was 23.60 cents (R$), an increase of 1.4%.

Controlled costs: GOL has the lowest unit costs in Latin America, which enables a better balance of fixed costs during this pandemic period. The Cost per Available Seat Kilometer (CASK), excluding non-recurring expenses decreased by 13.3%, from 20.44 cents (R$) in 1Q19 to 17.73 cents (R$) in 1Q20. This was mainly a consequence of the gain from sale and leaseback operations, offset by increases in depreciation costs due to the net addition of nine (9) aircraft to the fleet, and by the increase in maintenance and repair material expenses denominated in U.S. Dollars.

Healthy margins: Due to strong cost control, and efficient capacity and yield management, the Company achieved operating profits for the 15th consecutive quarter. The recurring EBIT margin was 29.8%. Recurring operating income (EBIT) was R$937.9 million, R$391.7 million higher than in 1Q19. Recurring EBITDA margin was 45.7%. Recurring EBITDA was 1.4 billion, a R$488 million increase quarter-over-quarter.

Oil hedging was an exceptional item: Considering the reduction in its capacity, GOL expects to consume a lower volume of fuel liters than expected over the next two quarters. The Company recorded the expected ineffectiveness of its fuel price hedging in 2Q20-3Q20 as an exceptional item of R$292 million in its financial result for 1Q20.

Liquidity strengthening: GOL reported operating cash flow generation of approximately R$1.1 billion in the quarter. Total liquidity was R$4.2 billion, maintaining the same level registered at December 31, 2019, due to prudent cash flow management and rapid cost containment from the decrease in sales since Mid-March. Also in March, the Company concluded the sale and leaseback operations for 11 Boeing 737 NG aircraft, reducing its net debt by R$619.2 million, as a result of a R$148.7 million decrease in debt and a R$448.5 million increase in cash liquidity. Part of the proceeds were used to fund the early redemption of the Senior Notes due in 2022 in the amount of R$426.6 million, at nominal rates of approximately 9.0%, maintaining our responsible discipline of deleveraging our balance sheet and our commitment to long-term creditors. In the 1Q20, the Company paid R$1.2 billion in principal debt and leasing payments. Net debt (excluding perpetual notes and Exchangeable Senior Notes) to LTM EBITDA was 2.4x as of March 31, 2020.

MANAGEMENT VIDEOS WITH PRESENTATION & FULL EARNINGS RELEASE

Access earnings release, management videos, presentation and complete financial statements at: www.voegol.com.br/ri

1Q20 Conference Call: May 04, 2020, 11:00 a.m. (US EDT), Phone: +1 (412) 317-6382, Code: GOL, with webcast

About GOL Linhas Aéreas Inteligentes S.A. (www.voegol.com.br): Brazil's largest airline group with three main businesses: passenger transportation, cargo transportation and coalition loyalty program.

Investor Relations: [email protected], +55 (11) 2128-4700

SOURCE GOL Linhas Aéreas Inteligentes S.A.