GOL Records Operating Margin of 3.0% in 2013, 14.2 Percentage Points up on 2012

São Paulo, March 25, 2014 – GOL Linhas Aéreas Inteligentes S.A. (BM&FBOVESPA: GOLL4 and NYSE: GOL), (S&P: B, Fitch: B-, Moody’s: B3), the largest low-cost and low-fare airline in Latin America, announces today its consolidated results for the fourth quarter and full year of 2013. All the information herein is presented in accordance with International Financial Reporting Standards (IFRS), in Brazilian Reais (R$), and all comparisons are with the fourth quarter and full year of 2012, unless otherwise stated.

Highlights
The fourth-quarter operating profit (EBIT) came to R$162.9 million, with an operating margin of 6%, representing the Company’s highest level of operational profitability in the last 10 quarters. In the full year of 2013, EBIT totaled R$266.0 million with an operating margin of 3%, a 14.2 p.p. improvement over 2012.

Net revenue totaled R$2,728.2 million in 4Q13, a 29% or R$609 million increase over 4Q12, fueled by the 19% upturn in yields and the 5.1 percentage points increase in the total load factor, which came to 74.8%. Annual net revenue reached the highest historical level for the Company, R$8,956.2 million, R$853 million, or 11%, up on 2012.

RASK increased by 25% over 4Q12 to R$21.52 cents, and by 15% in the full year, reaching R$18.04 cents. PRASK came to R$19.34 cents in 4Q13, up by 27%, while annual PRASK climbed by 18%.

GOL reduced its annual operating costs by R$319 million, underlining its commitment to adjusting its cost structure to a challenging macroeconomic scenario. Despite the 11% depreciation of the Real against the average Dollar, record jet fuel prices, and the 7.4% decline in domestic supply, CASK increased by only 0.9% in the quarter and 0.7% in the year.

In 2013, EBITDAR recorded the Company’s highest historical level, totaling R$1.5 billion. The adjusted gross debt/last twelve months (LTM) EBITDAR ratio came to 6.9x, versus 37.6x in 4Q12. Annual net debt was reduced in R$1.1 billion.

In 4Q13 the Company incurred R$108 million in additional expenses that affected the costs indicator (CASK): the “Salaries, Wages and Benefits” line was impacted in the amount of R$51 million, in “Other Operating Expenses” the Company recognized R$22 million, in the “Sales and Marketing” line these expenses were R$14 million, in “Maintenance, aterials and Repair” the impact was close to R$11 million and, finally, in “Aircraft Traffic Servicing”, GOL recognized R$10 million.

4Q13 Earnings Release
GOL recorded a net loss of R$19.3 million in 4Q13, an improvement of R$428 million compared to 4Q12, leading to an annual net loss of R$724.6 million. Part of this result was due to the foreign exchange variation, which generated an expense of R$490 million in 2013.

GOL’s cash position closed the year at a historical record R$3 billion, corresponding to 34% of annual net revenue.

In 2013, the Company paid and pre-paid R$438 million in debt, in line with GOL’s focus on avoiding amortization pressure in the horizon of the next 2 years.
GOL was the airline with the highest rate of on time flights in the market in 2013. Focusing on operating efficiency, the Company achieved an index of 94% of flights on time, while remote check-in accounted for around 60% of total passengers at those airports most used by business customers in 4Q13.

SMILES S.A. reported net income of R$66.7 million in 4Q13, 6% up on the previous quarter, with a net margin of 35.6%. The client base totaled 9.7 million members, an 8% year-over-year increase.

Message from Management
In 2013, GOL recorded an operating margin (EBIT) of 3.0%, at the upper limit of its announced guidance in a very adverse macroeconomic scenario. The commitment to delivering a positive operating margin was successful thanks to the flexibility strategy and capacity management.

The Company dynamically reduced its supply in the domestic market by 7.4% in a background of low economic growth, with the 11% depreciation of the Real against the average Dollar and the jet fuel price 6% higher than in 2012. In February, the Company modified its network to maximize profitability by focusing more on business clients, preserving attractiveness in leisure fares.

For the second consecutive year, in 2013, GOL maintained its lead in terms of flights on time in the Brazilian market, with a ratio of 94% of flights without delay, considering consolidated data for all airports. In order to achieve this level of operational performance, GOL implemented the fast travel concept, which reduced boarding time, and took several measures to increase its efficiency; among these, the continuous streamlining of check-in, allowing all customers to anticipate and cancel their flights through GOL’s website, at the self-service totems or through smart phones. The rate of approximately 60% of remote check-in ratio, in 4Q13, is one of the indicators which reflects the result of these actions.

Additionally, the Company launched its new visual identity in airports, with a more functional and practical bilingual communication, and the new website, with a faster and easier purchasing process.

The Company increased to 30 the number of aircraft with sky interior and launched, in the year of 2013, the GOL+ on the Rio-São Paulo shuttle service, ensuring greater passenger comfort and an even better flying experience. In 2014, the Company will continue developing and improving its products and services and will expand the GOL+ product to 80% of its fleet until May, catering for 100% of domestic flights. This strategy is the result of the success of the product on the shuttle route, and is part of a process of standardization, efficiency gains and revenue generation.

Thanks to these and other measures, GOL was the airline that carried most business passengers in 2013, according to ABRACORP (the Brazilian Travel Agents’ Association). This evolution contributed for the 18% increase in PRASK, in turn fueling the R$853 million increase in annual revenue.

In regard to costs, the Company adjusted its structure by R$319 million in 2013, of which R$131 million in fuel and lubricant and R$188 million in other operating expenses, maintaining CASK flat over the year before.

In regard to manageable costs, it is worth noting that the workforce count is stable since the beginning of 2013, at the same time as the customer satisfaction index remained at 7.6 points (on a scale from 1 to 10).

Aiming to develop GOL’s Loyalty Program, in April 2013 SMILES S.A.’s initial public offering (IPO) was concluded. The entire proceeds of R$1.1 billion were used for the advanced purchase of GOL tickets. This operation reflects the confidence in the growth of the loyalty program market in Brazil in the coming years and helped strengthen the Company’s liquidity.

Cash position totaled R$3.0 billion at the end of 2013, equivalent to 34.0% of annual net revenue, the highest level in the Company’s history in nominal terms. With the R$1.3 billion upturn in EBITDAR, reaching the highest historical maximum of R$1.5 billion, and the amortization and prepayment of obligations totaling R$438 million in the year, financial leverage closed 2013 at 6.9x, versus 37.6x at the end of 2012.

In 2014 Brazil will host the World Cup and GOL will have a special role, being the proud official carrier of the Brazilian team. The Company has adopted measures to serve with excellence in the event. The supply and demand management through the request for 974 extra flights or with schedule alterations, specific staff training programs and the placement of professionals who are fluent in more than one language at the host cities’ airports are examples of actions especially developed for the event.

The 2014 economic scenario is proving to be even more challenging with fuel prices higher than in 2013 and the devaluation of the Real against the Dollar, maintaining pressure on costs. With this in mind, the Company announced a new organizational structure aimed at increasing revenue generating capacity, and has increased its focus on planning and controlling costs, a crucial factor in the execution of its short and long-term strategies.

The expansion of the code share with Delta provides greater connectivity for clients, offering them approximately 400 destinations served by both airlines in the world. In addition, the collaboration between both companies enables the exchange of knowledge, thereby improving products and services.

In continuity with the strategy of forming international partnerships, in February 2014, GOL announced the strengthening of its alliances through the strategic partnership with AirFrance-KLM, encompassing commercial cooperation, the expansion of the code share, joint sales activities and more benefits for clients of both companies through their loyalty programs, in the Brazilian and European markets. As part of the total investment of US$100 million, AirFrance-KLM will hold a stake of approximately 1.5% of capital stock, in GOL preferred shares. This agreement is subject to antitrust approval from CADE.

For 2014, the Company is projecting a -3% to -1% variation in domestic seat supply, and a growth of until 8% in the international market. This projection reiterates the consolidation of strategy, seeking margin expansion through revenue growth. The increase in profitability should be driven by yield management and supply flexibility together with the increase in the load factor, a trend already observed in recent months. The Company announces a growth projection of equal to or above 10% in RASK, and an increase of equal to or less than 10% in CASK ex-fuel. With this, GOL estimates an EBIT margin of between 3% and 6% in 2014.

GOL wishes to thank its Customers for their loyalty, its Team of Eagles for their commitment throughout the year, and its Shareholders for their confidence, all of which increasingly reinforces GOL’s vision of being the best company to fly with, work for and invest in.

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