GOL Breaks Record in Demand and Registers Adjusted Net Income of R$110.5mm in 1Q11

São Paulo, May 10, 2011 – GOL Linhas Aéreas Inteligentes S.A. (Bovespa: GOLL4 and NYSE: GOL), (S&P/Fitch: BB-/BB-, Moody`s: Ba3), the largest low-cost and low-fare airline in Latin America, announces today its results for the first quarter of 2011 (1Q11).

As disclosed previously, in the first quarter GOL recognized certain one-off entries with no cash impact totaling R$ 120 million. The Company implemented a new revenue accounting and ticket control system which led to alterations in the balance of the Company’s advance ticket sales. In order to permit an adequate analysis of the quarterly results, as well as comparisons with previous quarters, all the following financial information is presented on an adjusted basis and does not include the one-off entries detailed on page 20. All comparisons are with the first quarter of 2010 (1Q10) and the fourth quarter of 2010 (4Q10).

Highlights
1Q11 Adjusted Net Income, calculated as indicated above, amounted to R$110.5mm in the quarter, with a net margin of 5.8%. The one-off entries with non-cash effect of approximately R$120mm when included, result in a Net Income of R$31.9mm, with a net margin of 1.7%.

The increase in 1Q11 Adjusted Net Income in the amount of R$110.5mm, compared to the R$23.9mm and margin of 1.4% reported in 1Q10 was due to higher gains of foreign exchange rate variation between the periods. The operating result was consistent with the fact that revenue and costs recorded similar upturns. In 4Q10, net income was R$132.2million, with a margin of 7.1%.

Adjusted Net Revenue totaled to R$1,895.7mm, 9.6% more than the R$1,729.8mm recorded in 1Q10 and 1.4% up on the R$1,869.8mm posted in 4Q10. The improvement was fueled by the 9.7% and 3.3% upturn in demand, in turn driven by the 18.5% and 11.6% increases compared to 1Q10 and 4Q10, respectively, in ancillary revenues and the competitive fare policy, which generated the Company’s best ever first- quarter load factor (73.5%, versus 70.9% in 1Q10 and 71.1% in 4Q10).

Adjusted Operating Income (EBIT) came to R$193.1mm, with a margin of 10.2%, 0.9 p.p. down year-on-year and 3.8 p.p. less than in 4Q10. This result was chiefly due to the increase in the aircraft fuel and salaries, wages and benefits costs. This increase was partially offset by gains in operational efficiency due to the high aircraft utilization rate (13.3 block hours in 1Q11 versus 13.0 block hours in 1Q10 and 4Q10).

First-quarter Adjusted EBITDAR stood at R$411.5million, with a margin of 21.7%, being 1.6% above the latter’s R$405.0mm in nominal terms posted in 1Q10, but 1.7 p.p. down on the 23.4% margin for the same period, due to the 9,6% upturn in the 1Q11 net revenue. In comparison with the R$475.0mm and margin of 25.4% reported in 4Q10, EBITDAR fell by 13.4% and the EBITDAR margin by 3.7 p.p. mainly due to the 26.3% decrease in operating result and 3.8 p.p. in EBIT margin between the periods.

GOL ended the quarter with a leverage ratio (adjusted gross debt / adjusted EBITDAR) of 4.8x, versus 5.8x in 1Q10 and 5.0x in 4Q10. The adjusted net debt / adjusted EBITDAR ratio was 3.6x, compared to 4.6x in 1Q10 and 3.7x in 4Q10, in line with the Company’s focus on reducing its financial leverage ratio.

GOL continues to meet its target of maintaining a cash balance of at least 25% of LTM net revenue, closing the quarter with cash, cash equivalents and investments of R$1,847.1mm, 23.5% up on 1Q10 and 6.6% down on 4Q10, mainly due to the payment of pre-delivery deposits related to the acquisition of B737-800 NG aircraft from Boeing, as mentioned in the 3Q10 earnings release.

In January 2011, GOL signed a new code-share agreement with Qatar Airways, the flag carrier of the state of Qatar, which operates direct flights between Doha (the country’s capital) and São Paulo, representing an additional sales channel for GOL and expanding its network. The agreement also will permit the accumulation of mileage on all flights operated by both airlines. As a result, the “GOL Alliance” now includes six major international players: American Airlines, AirFrance/KLM, Delta Air Lines, Iberia, AeroMexico and Qatar Airways.

GOLLOG, GOL’s cargo division, continued to do exceptionally well in 1Q11, completing 10 years of regular operations in January, with almost 100 units and coverage of more than 2,000 municipalities. Cargo revenue has been making an increasing contribution to ancillary revenues and climbed by 17.5% over 1Q10, while its share of net revenue stood at 4.0% in the quarter, versus 3.0% in 1Q10. GOLLOG’s end-of-2011 target is to reach 144 units and coverage of up to 3,000 municipalities.

In February 2011, GOL entered into a strategic MRO (maintenance, repairs and overhaul) agreement with Delta TechOps, the maintenance division of Delta Air Lines, which will provide overhaul services for around 50 percent of the Company’s CFM 56-7 engines, parts and component maintenance for the fleet of B737NGs, and consulting services related to maintenance workflow planning, materials and facility optimization and tooling support. Under the agreement, Delta TechOps will also assist GOL with its efforts to secure FAA (Federal Aviation Administration) certification. Additionally, GOL will assist Delta with certain line maintenance services for Delta aircraft with extended ground time in Brazil.

In March 2011, GOL launched a new low cost sales channel as part of its strategy of encouraging the use of air transport by Brazil’s emerging middle class. The Company opened three new kiosks, christened “VOE GOL”, in the Itaquera, Sé and Luz subway stations, as well as a new store in the Shopping Mais mall in Santo Amaro, all in the city of São Paulo. Positioned in strategic locations in the stations, the new points of sale will be run by GOL employees who have been specially trained to meet the profile of the typical subway user. Members of the public will not only be able to buy tickets at the kiosks, they will also be able to alter or cancel their reservations and clear up any doubts they may have about air travel.

At the end of the quarter, GOL consolidated its low-cost positioning by announcing two important initiatives aimed at reducing costs and generating administrative and operating synergies in 2011 as: (i) the conclusion of negotiations for the early return of two of the Company’s six remaining B767s, which were used for long-haul charter flights until the end of March 2011. This will reduce operating expenses by around R$20mm p.a. as of the second half of the year; and (ii) the completion of a series of projects begun in 2010 to improve operations, that will reduce the Company’s annual costs and expenses by approximately R$45mm.

In April 2011, GOL announced dividend payments of R$50.9mm (R$0.19 per share) on 2010 net income of R$214.2mm, net of the legal reserve. The table below summarizes the main payment details, which are also available on GOL’s investor relations website, www.voegol.com.br/ir.