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GOL announces 1Q16 results

May 12, 2016

GOL Linhas Aereas Inteligentes announced today its consolidated results for the first 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 first quarter of 2015 unless otherwise stated.

Quarter highlights

GOL's offer of ASK in the domestic and international markets reduced by 4.0% and 18.5%, respectively, resulting in an overall GOL system decrease of 5.9% in the first quarter of 2016 compared to the same period in 2015.

In the same period, demand for the Company's seats in the domestic market fell by 5.9%, and 12.0% in the international market. In the overall GOL system, the decrease was 6.6%.

In 1Q16, GOL's total load factor fell by 0.6 percentage points, reaching 77.5%. In the domestic market, the reduction was 1.6 percentage points, to 77.3%, and the load factor in the international market was 78.4%, an increase of 5.8 percentage points compared to the same period in 2015.

The Company's net revenue totaled R$2.7 billion in 1Q16, an increase of 8.3% in the annual comparison. Net revenue for the last twelve months was R$10 billion.

Ancillary and cargo revenues reached R$274.2 million in 1Q16, down 1.3%, and representing 10.1% of total net revenue. In the last twelve months, ancillary and cargo revenues totaled R$1.2 billion.
With the 36.0% devaluation of the Real against the US Dollar's average price in the period, year-over-year CASK, excluding fuel expenses and non-recurring event, registered an increase of 16.9% in the first quarter.

Recurring operating results (EBIT) in 1Q16 was R$224.6 million, with a margin of 8.3%. Excluding the non-recurring event, EBITDAR was R$663.2 million in the quarter, with a margin of 24.4%.

The non-recurring gain on the return of aircraft under finance lease contracts and on sale-leaseback transactions generated a profit of R$212.6 million.

The appreciation of the Brazilian Real against the US Dollar and the non-recurring event, were R$653.5 million and R$212.6 million, respectively. Excluding the exchange rate variations and the non-recurring event, GOL's net loss, before income taxes, was R$42.7 million. Net income for the first quarter of 2016 was R$757.1 million.
The Company ended the quarter with a cash position of R$1,815.1 million, down 21.1% versus December 31, 2015, representing 18.2% of the last twelve months (LTM) net revenue. Available cash was R$658.4 million (6.6% of LTM net revenue), excluding the amount held by Smiles and restricted cash.

Financial leverage (adjusted gross debt/EBITDAR) ended the quarter at 9.4x, compared to 7.3x recorded in the first quarter of 2015 ‚Äď this indicator was affected by the Real's 10.9% depreciation in the annual comparison.

In addition to the reduction in the number of departures previously announced, between 15% and 18% in the year, GOL launched a new and more efficient flight network in May 2016. This redesign generated additional departures from Congonhas to the North and Northeast regions and to the cities of Maring√°, Londrina and Presidente Prudente, as well as new routes from Northeast capitals to Buenos Aires. Eight destinations operated by GOL were also suspended.
The three main credit rating agencies revised GOL's credit ratings. Fitch changed the rating from 'CCC' to 'C', Moodys from 'Caa1' to 'Caa3' and Standard & Poors from 'CCC-' to 'CC'.

Early in May 2016, GOL announced a private exchange offer for up to all outstanding bonds issued by the Company in international capital markets, continuing the restructuring plan begun in 2015. Unsecured bonds held by investors, currently totaling US$781.4 million, may be exchanged for cash plus new secured bonds at a premium over their current market value.

GOL announces 1Q16 results

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