GOL Adapts its Fixed-Cost Structure to a New Growth Reality during 2Q12

São Paulo, August 13, 2012 – GOL Linhas Aéreas Inteligentes S.A. “GLAI”, (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 results for the second quarter of 2012 (2Q12). All the information herein is presented in accordance with International Financial Reporting Standards (IFRS) and in Brazilian Reais (R$), and all comparisons are with the second quarter of 2011 and first quarter of 2012 (2Q11 and 1Q12). The results are consolidated and have included 100% of Webjet‘s results since October 3rd, 2011.

2Q12 HIGHLIGHTS
In 2Q12, the Company began rationalizing domestic flights, leading to the discontinuation of approximately 130 daily flights operated by GOL and Webjet. Profitability was the main factor for determining the cuts, with longer routes and night flights being most affected. As a consequence of this strategic move, consolidated passenger revenue per available seat kilometer (PRASK) increased by 5.7% year-on-year.

In April, the Company announced an organizational restructuring to adjust costs and the route network to the new macroeconomic environment, which resulted in 1,500 lay-offs. These measures are in line with the Company’s strategic goals in regard to high safety standards, customer service excellency, intelligent process execution and operating efficiency and simplicity.

In April, the Company received authorization from the National Civil Aviation Agency (ANAC) to provide conventional and electrostatic painting, weighing and recalibration services for other airlines in GOL’s Maintenance Center at Confins, Belo Horizonte. It represents one more ancillary revenue source.

In May, GOL was the first Brazilian airline to use the RNP-AR (Required Navigation Performance) approach system, which reduces noise, shortens flight times, saves fuel and, consequently, diminishes polluting emissions. RNP allows aircraft to make the best use of airspace due to more precise trajectories, without depending on ground-based radio navigation signals. This precision permits landing in weather conditions that would normally obligate aircraft to divert to other airports or cause airlines to cancel flights before departure. This is one more measure designed to increase operating efficiency.

WEBJET
In 2Q12, Webjet recorded a load factor of 73.5%, very close to the 2Q11 figure of 73.9%. The operating performance of Webjet’s route network was chiefly due to reduced route overlap between GOL and Webjet, in accordance with the Preservation of Transaction Reversibility Agreement (APRO) entered into by VRG, Webjet and the Brazilian Antitrust Authority (CADE).

In 2Q12, the Company returned the first of 15 Boeing 737-300 aircraft earmarked for devolution this year. In August, another three 737-300s were returned, totaling four so far. The replacement of Webjet’s fleet with younger, more modern and more fuel-efficient aircraft has increased the Company’s flexibility in regard to adjusting the route network, allowing both companies to adapt their capacity to the low economic activity and the unfavorable macroeconomic environment .

GOL and Webjet were once again benchmarks for service provision quality in 2Q12. Webjet continued to record the industry’s highest punctuality indices, reaching the significant mark of 94.1% in the period, while GOL recorded the second highest ratio of 90.1%. Both airlines are continuing with their joint effort to instill best practices.

Webjet also headed the operational efficiency rankings, with 82% of its passengers checking in remotely. GOL’s ratio was around 45%.

The acquisition of Webjet is still awaiting approval by CADE, the Brazilian Anti-trust Authority.

SMILES
In May, SMILES announced the launch of a new flight to Miami exclusively for its clients. The new operation, which is not part of the regular route network, began on July 7th and will last until mid-August. It proved so successful that 100% of seats were sold. The new product offered to SMILES members is just one of a series of Company initiatives designed to strengthen and consolidate the loyalty program.

In June, GOL and Qatar Airways announced the Frequent Flyer agreement, an extension of the existing codeshare agreement between the two companies. The partnership allows participants in GOL’s SMILES and Qatar’s Privilege Club loyalty programs to accumulate miles on all flights operated by the two groups. They will also be able to redeem tickets shortly. GOL also maintains codeshare and Frequent Flyer agreements with Delta Airlines, Air France, KLM and American Airlines.

SMILES announced the launch of an unprecedented product for the domestic market: Miles Purchase. Through the program’s website, participants can purchase from 1,000 up to 40,000 miles and exchange them for airline tickets. Previously, this was only possible via the transfer of credit card points by purchasing products from partner companies or through the program’s promotions. With this new product, miles are credited immediately after payment is made by credit card. This is yet another SMILES product aimed at strengthening perception of the brand in this business segment.

SMILES closed 2Q12 with 8.7 million members, around 12% up than it was on 2Q11. During the quarter, SMILES recorded a substantial 53% upturn in the number of miles redeemed for use on its global partners’ international route networks, chiefly due to the creation of an online mile redemption platform with these partners at the beginning of 2012. This initiative helped further improve customers’ perception of greater mile redemption facility.

In May, The Wall Street Journal published the findings of a airline websites survey conducted annually by the travel consultancy IdeaWorks Co to determine the effectiveness of mileage programs in terms of seat availability at the time of mile redemptions, the lack of such seats being the cause of persistent customer complaints. A total of 23 airline sites were checked between June and October 2011 and SMILES was ranked third overall and best in Brazil, with a 97.1% availability-on-redemption ratio.

GOLremainsfocusedonbuildinganexclusivebusinessunittomonitorandmanageSmiles. Thestrengtheningof the program will allow GOL to tap into a new market and expand its revenue base. Like the aviation market itself, growth of the mileage market is directly correlated with the expansion of Brazil’s emerging middle class and the continuing growth of credit, factors which the Company has already incorporated into its business model.

SUBSEQUENT EVENTS
In July, Paulo Kakinoff was appointed as GOL’s new CEO. Constantino de Oliveira Junior became Chairman of the Board of Directors and will play a strategic role in deciding GOL’s direction going forward.

Paulo Kakinoff took up office as GOL’s Chief Executive Officer on July 2, 2012, after serving as an independent member of the Company’s Board of Directors since January 2010. Previously, he was CEO of Audi Brasil, having worked in the auto industry for 18 years as Sales & Marketing Officer at Volkswagen do Brasil and Head of South America at the Volkswagen Group’s headquarters in Germany. At GOL, in addition to his position as CEO, he is a member of the People Management & Corporate Governance Committee, Risk Committee, and Financial Policy Committee. He holds a bachelor’s degree in Business Administration from Mackenzie University.

On July 17, 2012, the economist and engineer Leonardo Pereira, GOL’s Vice-President of Finance & Strategy and Investor Relations Officer, was appointed President of the Brazilian Securities and Exchange Commission (CVM) by Finance Minister Guido Mantega, is being subject to approval by the Brazilian Federal Senate. As a result, he resigned as Investor Relations Officer on July 24, 2012. A Board of Directors meeting on the same date elected Edmar Prado Lopes Neto as Investor Relations Officer, adding this responsibility to his current duties as Financial Officer. Mr. Pereira will continue as the Company’s Vice-President of Finance & Strategy until the Senate procedures have been concluded.

Edmar Lopes joined the Company in 2011 as Capital Markets Officer. He holds a degree in Civil Engineering from the Federal University of Rio de Janeiro (UFRJ) and worked for 13 years at Organizações Globo, having served as Treasury Officer of Net Serviços de Comunicação from 2005 to 2011 and as Planning Manager of the Roberto Marinho Foundation from 1998 to 2005. He has worked for several national and multinational firms and has more than 25 years of experience in the financial area.

Leonardo Pereira’s appointment confirms GOL’s strategy of maintain and improve a high standard of corporate governance in the national and international capital markets. The internal election of Edmar Lopes as Investor Relations Officer will ensure the continuity of the work begun by Leonardo Pereira.

The Board of Directors’ Meeting held on August 13, 2012, ratified the capital increase proposed on December 21, 2011. All in all, 8,326,782 shares from a total of 13,445,235 were subscribed, resulting in a partial capital increase of R$183.2mn. The remaining 5,118,453 unsubscribed shares will be canceled in accordance with the original proposal.

MESSAGE FROM MANAGEMENT
The Company’s second-quarter results reflect the unfavorable macroeconomic scenario for the civil aviation sector. High fuel costs, depreciation of the real against the dollar, which has a direct impact on 55% of the Company’s operating expenses, and higher costs with Brazilian aviation fees, all had a substantial effect on GOL’s results as well as on the domestic air transport industry as a whole. Accordingly, the Company revises in this quarter earnings release its financial guidance for 2012, but maintains its ex-fuel cost estimate stable despite this scenario.

In response to this scenario, GOL resized its route network, cutting around 130 loss-making flights, and streamlined its operational structure, workforce and fixed costs. The positive results of these measures should become apparent mainly on the second half of 2012. In addition, a joint operation with Webjet, a highly efficient airline operationally and with the same DNA as GOL, constitute an opportunity for further developing even more a competitive advantage conferred by the Company’s costs. In 2Q12, R$25 million in operational synergies between the two airlines were identified, especially regarding costs with aircraft maintenance, fuel and improvements to the sales channel through an interline agreement between the two firms. All in all, the Company has captured operational synergy gains of around R$48 million since joint operations began.

GOL continues to prioritize safe passenger transportation through its young and modern fleet, in addition to being a benchmark for aircraft maintenance. It also remains focused on providing excellent service, thereby ensuring a pleasant flying experience and the satisfaction of its customers. In 2Q12, Webjet and GOL further enhanced this feeling of satisfaction by coming as first and second, respectively, in the domestic industry punctuality rankings for the second consecutive quarter. Convenience is another Company priority. Around five million of Webjet’s and GOL’s passengers enjoyed the convenience of remote check-in during the quarter.
The Company also maintained a solid financial and cash position, enabling it to overcome a challenging macroeconomic scenario, having closed 2Q12 with total cash of around R$1.9 billion.

The quarter’s internal changes were designed to ensure the continuity and development of a sustainable long-term strategy. The downsizing of the route network will ensure that GOL adapts to the new domestic market growth parameters and the structural adjustments will lead to a simpler and more streamlined operation. Management remains confident in opportunities in Brazil’s aviation market, one of the most under-penetrated in the world, and believes in the resilience and sustainable growth of national economy for the coming years.

GOL wishes to thank its Team of Eagles for their hard work, motivation and commitment to helping GOL remain the best company to travel with, work for and invest in.