GOL Reports Third Quarter 2021 Results

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• Brazil - Português

SÃO PAULO, Nov. 9, 2021 /PRNewswire/ -- GOL Linhas Aéreas Inteligentes S.A. ("GOL" or "Company") (NYSE: GOL and B3: GOLL4), Brazil's largest domestic airline, today announced its consolidated results for the third quarter of 2021 (3Q21), and outlined its continued initiatives in response to the demand recovery.

All information is presented in Brazilian reais (R$), according to both International Financial Reporting Standards (IFRS) and adjusted metrics, and is made available to enable comparability of this quarter with the same period last year. Such adjusted metrics exclude expenses related to the portion of the non-operating fleet that the Company grounded this quarter and are detailed in the table showing "operating expenses". Comparisons are made to the third quarter of 2021 (3Q21), unless otherwise specified.

During 3Q21 GOL achieved a number of significant milestones that position the Company to meet the return of demand for air travel in Brazil and internationally.

"We put a series of strategic initiatives in place this quarter that will strengthen our market position as the demand for travel continues to rise, the vaccination rate expands and international borders reopen," said Paulo Kakinoff, CEO. "We see growth in sales through to the end of the year and are confident that the trend will continue into 2022."

Continued recovery in demand: GOL's departures in the third quarter grew by 87.3%, reaching 53% of the pre-pandemic levels in 2019. This was enabled by a rising vaccination rate. In 3Q21, Brazil became 4^th among all countries with the most vaccines administered against Covid-19, with approximately 56% of the population fully vaccinated and over 74% having received the 1^st dose. At the end of October, Brazil was already in 3^rd place in terms of booster doses administered (+7 million) in the population.

In response to the growth in demand, GOL is expanding its network, re-starting regional destinations and serving new markets with high domestic tourism potential, including the new route from Congonhas (SP) to Bonito (MS) as of December.

"Our disciplined approach in the management of capacity will enable us to maintain high load factors in both our domestic and international routes," added Kakinoff. "At the same time, GOL's flexible fleet management model and  prudent cash flow management, combined with the dedication of our Team of Eagles, means we will nimbly adapt to market conditions as we need to."

Internationally, the United States, Uruguay, Chile, Argentina, Mexico and the Dominican Republic announced the reopening of their borders to Brazilians. Starting in November, GOL will resume flights to Montevideo, Cancun and Punta Cana, and flights to Buenos Aires, in December. Through the expanded partnership with Avianca, GOL now offers eight new international destinations in its network through and Interline Agreement: Aruba (AUA), Guatemala (GUA), Guayaquil (GYE), Quito (UIO), San José (SJO), San Juan (SJU), San Salvador (SAL) and Santo Domingo (SDQ).

Acceleration of the transition to a 737 MAX fleet: GOL accelerated its fleet transformation by signing agreements in 3Q21 for 28 additional Boeing 737 MAX 8 aircraft, replacing 23 B 737-800 NGs by the end of 2022. This will reduce the Company's unit costs by 8% in 2022. Under the agreements, the Company will end 2021 with 28 737 MAX-8 aircraft (20% of the total fleet). By the end of 2022, GOL expects to have 44 737 MAX-8 aircraft (32% of the total fleet). With current purchase commitments, the Company will meet its goal of a 75% 737 MAX fleet by 2030.

The 737 MAX is a key component of the Company's goal to reach carbon neutrality by 2050, as this model consumes 15% less fuel, produces 16% fewer carbon emissions, greater flight range and 40% less noise than the 737-800 NG aircraft.

Re-incorporation of Smiles: With the merger of Smiles into GLA concluded, several operational and financial synergies will be realized, as well as new revenue-generating opportunities that will become even more significant during the airline market's recovery for both business and leisure travelers.

"We are optimistic that the synergies from this corporate reorganization, and the subsequent benefits to our shareholders, will be realized in a relatively short period of time, as the Company has completed all the necessary integrations while preserving the agile and independent management of the loyalty program" said Andre Fehlauer, Smiles' President.

The conclusion of the Smiles re-incorporatation in September/21 enabled the Company to access more than R$500 million of liquidity from the operating cash generation and receivables of Smiles with growth in the volume of operations benefitting the loyalty program via accesss to the largest seat inventory for miles redemptions, also eliminating tax inefficiencies.

In the third quarter, the Company's frequent flyer program had sales of R$624.2 million, 38.6% up when compared to 3Q20. The redemption of miles was 29 billion, 73.6% more when compared to 3Q20. Revenue from the redemption of miles reached R$637.7 million, an increase of 65.8%  when compared to 3Q20.Deferred revenues were R$2.1 billion, an increase of 1.1% compared to the 3Q20.

Liability management: The Company demonstrated continued discipline this quarter with the sucessful completion of a US$150 million re-tap at 8.0% per year and a maturity in 2026. Moody's assigned the notes a rating of B2. Proceeds from the offering will be used for general corporate purposes, including capex and working capital.

In October, GOL refinanced its short-term bank debt in the amount of R$1.2 billion, via the extension of the 7^th Series of Debtentures and issuance of the new 8^th Series of Simple Non-Convertible Debentures. This refinancing enabled the Company to return to its lowest short-term debt since 2014 (approximately R$0.5 billion at the end of 3Q21).

The Company's liability management program has improved GOL's credit metrics and enabled management to focus on reducing costs and increase operational efficiencies. As a result of the balance sheet strengthening initiatives, Fitch recently increased GOL's credit rating to B-.

Richard Lark, CFO said: "Completing the financings could not have come at a better time. Our balance sheet is now in a stronger position in terms of its outstanding debts, versus our peers, which we see as a competitive advantage in the current market environment."

In addition, the Company amortized around R$518 million of debt in 3Q21. The average maturity of GOL's long-term debt, excluding aircraft leases and perpetual notes, is approximately 3.4 years, with the main obligations already addressed in GOL's cash flow. The next maturity date for GOL's outstanding debts is not until July/2024. The net debt ratio (excluding Exchangeable Notes and perpetual bonds) to adjusted LTM EBITDA was 9.7x on September 30, 2021, representing the lowest financial leverage among peers. Considering the amounts fundable from deposits and unencumbered assets, the Company's potential sources of liquidity resulted in approximately R$6.1 billion of accessible liquidity.

Summary of 3Q21 Results

• Revenue Passenger-Kilometers (RPK) increased 87.5% compared to the same period in 2020, totaling 5.9 billion (-46.6% vs. 3Q19);
• Available Seat Kilometers (ASK) increased 82.4% compared to 3Q20 (-45.7% vs. 3Q19);
• GOL transported 4.9 million Customers in the quarter, an increase of 91.7% versus 3Q20 (-48.5% vs. 3Q19);
• Net revenues totaled R$1.9 billion, an increase of 96.4% versus 3Q20 (-49.5% vs. 3Q19). Other revenues (mainly cargo and loyalty) amounted to R$147 million, equivalent to 8% of total revenues;
• Net Revenue per Available Seat Kilometer (RASK) was 26.71 cents (R$), an increase of 7.75% versus 3Q20. Net Passenger Revenue per Available Seat Kilometer (PRASK) was 24.28 cents (R$), an increase of 10.3% over 3Q20;
• The Cost per Available Seat Kilometer (CASK) was 36.64 cents (R$), 15.9% down from 3Q20. Costs strictly related to the flights operated (adjusted CASK) corresponded to 21.66 cents (R$), an increase of 6.3%.
• Adjusted EBIT totaled R$338.1 million, corresponding to a margin of 17.7, which shows the restoration of the operating margins necessary to support operational growth. Adjusted EBITDA reached R$464.7 million, with margin of 24.3%, reflecting GOL's successful sustainability efforts in balancing supply and demand;
• The net loss after minority interest was R$ 0,9 billion, excluding exchange and monetary variations, non- recurring net expenses, gains related to Exchangeable Notes and capped calls unrealized results;
• Average yield per passenger of 29.8 cents (R$), an increase of 7.3% over 3Q20, mainly due to the optimization of seat offer and further continuous improvements with the resumption of business clients in 4Q21;
• Average load factor of 81.5%, up by 2.2 p.p. over 3Q20, mainly due to prudent supply management, adding capacity based on demand indicators and GOL's proprietary tools of data analytics;
• Aircraft utilization of 10.2 hours/day, up by 52.2% over 3Q20, in line with the Company's strategy of adding capacity according to demand recovery;
• On-time departures of 96%, down by 1.0 p.p. versus 3Q20, according to Infraero and data provided by the main airports; and
• Operating cash generation of R$ 2 mm / day, including operating inflows and outflows, lease payments and working capital debt service. At the end of the quarter, including the financeable amounts of deposits and unencumbered assets, the Company's potential sources of liquidity were approximately R$6.1 billion of accessible liquidity.

MANAGEMENT VIDEOS WITH PRESENTATION & FULL EARNINGS RELEASE

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

3Q21 Conference Call: November 9, 2021, 10:00 a.m. (NY Time), Phone: +1 (412) 317-6382, Code: GOL, with webcast (https://webcastlite.mziq.com/cover.html?webcastId=c792290c-45c4-42a2-9e68-702067e4a3d9)

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.

SOURCE GOL Linhas Aéreas Inteligentes S.A.

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