6-K 1 golpr4q19_6k.htm FORM 6-K golpr4q19_6k.htm - Generated by SEC Publisher for SEC Filing

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


 

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER 
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE

SECURITIES EXCHANGE ACT OF 1934

 

For the month of February 2020

(Commission File No. 001-32221)


 

 

GOL LINHAS AÉREAS INTELIGENTES S.A.

(Exact name of registrant as specified in its charter)

 

GOL INTELLIGENT AIRLINES INC.

(Translation of registrant’s name into English)

 


 

 

Praça Comandante Linneu Gomes, Portaria 3, Prédio 24
Jd. Aeroporto 
04630-000 São Paulo, São Paulo
Federative Republic of Brazil

(Address of registrant’s principal executive offices)


 

 

Indicate by check mark whether the registrant files or will file 
annual reports under cover Form 20-F or Form 40-F. 

Form 20-F ___X___ Form 40-F ______

Indicate by check mark whether the registrant by furnishing the 
information contained in this Form is also thereby furnishing the 
information to the Commission pursuant to Rule 12g3-2(b) under 
the Securities Exchange Act of 1934. 

Yes ______ No ___X___

 

 


 
 


 
 

 


Conference call connection information

 

 4Q19 Earnings Calls            Thursday, February 20, 2020

 

 Live Webcast                      Access at www.voegol.com.br/ir

 

In English

In Portuguese

10:00 a.m. (US EST)

12:00 p.m. (Brasília)

1:30 p.m. (Brasília)

11:30 a.m. (US EST)

Phone: +1 (412) 317-6382

Phone: +55 (11) 3181-8565

Code: GOL

Code: GOL

Replay: +1 (412) 317-0088

Replay: +55 (11) 3193-1012

Code: 10138690

Code: 2000720#

 

 

 

 

 

 

1

 

      GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

 

GOL Airlines’ Net Revenue Grows By Over 18% In 4Q19

Brazil’s largest domestic airline reports record net revenue of R$3.8 billion;

recurring EBITDA margin was 38.5% (+22.2 p.p.); recurring earnings per diluted share of R$0.88

 

February 20, 2020 – São Paulo - GOL Linhas Aéreas Inteligentes S.A. (“GOL” or “Company”) (NYSE: GOL and B3: GOLL4), Brazil’s largest domestic airline, today announces its consolidated results for the fourth quarter of 2019 (4Q19). Net revenue was R$3.8 billion, the highest quarterly revenue ever recorded by the Company, and an increase of 18.8% compared to 4Q18. In 4Q19, recurring earnings per diluted share were R$0.88 and recurring earnings per diluted ADS were US$0.43. 

 

“Our record revenues this quarter rounds out what has been an outstanding year in GOL’s history,” said the Company’s CEO, Paulo Kakinoff. “It’s testament to our team delivering exceptional customer experience, combined with GOL’s low-cost operating model and sophisticated fleet management, that are powering our growth, in both domestic and international markets.” 

 

All information is presented in Brazilian Reais (R$), in accordance with international accounting standards (IFRS), and comparisons are with the fourth quarter 2018, unless stated otherwise.

 

Summary

·        In 4Q19, recurring earnings per diluted share were R$0.88 and recurring earnings per diluted ADS were US$0.43.  GOL’s 2020 EPS e EPADS guidance is R$2.65-R$3.15 and US$1.25-US$1.50, respectively.

·        Recurring pre-tax margin, was 14.5% in 4Q19, an increase of 20.7 p.p. quarter-over-quarter. In 2019, recurring pre-tax margin was 8.3%, a growth of 10.3 p.p. year-over-year. GOL's 2020 pre-tax margin guidance is approximately 13%.

·        Recurring EBITDA margin was 38.5% in 4Q19, an increase of 22.2 p.p. quarter-over-quarter. In 2019, recurring EBITDA margin was 31.5%, a growth of 11.5 p.p. year-over-year. GOL’s 2020 EBITDA margin guidance is approximately 30%.

·        Net revenue was R$3.8 billion in 4Q19, the highest ever recorded by the Company, an increase of 18.8% compared to 4Q18. In 2019, net revenue reached R$13.9 billion, an increase of 21.5% compared to 2018. GOL's net revenue guidance for 2020 is approximately R$15.4 billion.

·        Revenue Passenger Kilometer (RPK) increased 5.5% totaling 10.8 billion in 4Q19, driven by an 8.0% growth in the number of transported passengers, while Available Seat Kilometer (ASK) growth was 6.0%.

·        GOL transported approximately 9.7 million customers during 4Q19, an increase of 8.0% over the same period last year, with a 38% market share in the Brazilian domestic market (source: ANAC). 38% of passengers in the corporate segment, according to ABRACORP data, travelled on GOL.

·        The Company returned R$800.0 million of cash to capital partners in the fourth quarter, mainly comprised of R$617.1 million of debt repayments, R$50.2 million of interest on own capital and R$102.4 million of share repurchases.

Strong operating indicators: Revenue per Passenger Kilometer (RPK) increased 5.5% totaling R$10.8 billion in 4Q19, driven by an 8.0% growth in the number of transported passengers, while Available Seal Kilometer (ASK) growth was 6.0%. Strong passenger demand and dynamic revenue management enabled GOL to manage the increase in unit operating costs, achieving the following indicators:

(i)           Average yield per passenger of 33.17 cents (R$), an increase of 13.8% compared to 4Q18;

(ii)         Average load factor of 81.5%, a reduction 0.4 p.p. quarter-over-quarter;

(iii)       Average aircraft utilization of 12.2 hours/day, an increase of 6.1% quarter-over-quarter; and

(iv)       Flight completion of 99.2% in 4Q19, an increase of 0.6 p.p., according to Infraero and data from major airports.

Record revenues: Net revenue was R$3.8 billion in 4Q19, the highest for a quarter ever recorded by the Company, and an increase of 18.8% over 4Q18. GOL carried 9.7 million customers in the quarter, with 9.2 million in the domestic market (+9.5% over 4Q18) and 0.5 million in the international market. Net Revenue per Available Seat Kilometer (RASK) was 28.69 cents (R$) in 4Q19, an increase of 12.1% over 4Q18. Net Passenger Revenue per Available Seat Kilometer (PRASK) was 27.04 cents (R$) in 4Q19, an increase of 13.3% over 4Q18.

 

 

 

 

2

 

           GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Controlled costs: GOL has the lowest unit costs in its markets. Unit costs based on Cost per Available Seat Kilometer (CASK), excluding non-recurring expenses, decreased by 12.8%, from 24.19 cents (R$) in 4Q18 to 21.10 cents (R$), partially impacted by 17% decrease in the average fuel price and a 2% reduction in fuel consumption per flight hour. Fuel costs per ASK decreased 15.6%, mainly due to a reduction of fuel taxes. CASK ex-fuel, excluding non-recurring expenses, increased by 11.1% primarily due to increased productivity (operating efficiency, aircraft utilization and increase in ASKs), and a reduction in aircraft maintenance expenses due to a decrease in aircraft returns in the 4Q19, partially offset by:

(i)        A 32.6% increase in depreciation due to the addition of 16 aircraft in the fleet and a reduction in the depreciable life of capitalized engine maintenance and large components; and

(ii)         A 23.8% growth in personnel expenses, mainly due to an increase in the federal payroll tax rate to 20%, and the hiring and training of 819 new employees due to the expansion of operations, new routes and new bases.

Healthy margins: Due to strong cost control, capacity, and yield management, the Company achieved operating profits for the 14th consecutive quarter. 4Q19 demand enabled GOL to achieve a recurring EBIT margin of 26.5%, the highest achieved by the Company since 2004. Recurring operating income (EBIT) was R$1,006.3 million in the quarter and R$2,645.0 million in 2019; R$830.0 million and R$1,601.1 million higher than in 4Q18 and 2018, respectively. Recurring EBITDA margin was 38.5% in the period, an increase of 22.2 p.p. quarter-over-quarter.

Balance sheet strengthening: GOL reported operating cash flow generation of approximately R$1.0 billion in the quarter. Total liquidity was R$4.3 billion, R$238.4 million higher in comparison to September 30, 2019 and R$1.3 billion higher than December 31, 2018. In 4Q19, the Company repaid R$617.1 million in principal debt and leasing payments, R$50.2 million of interest on own capital and repurchased R$102.4 million of shares. The net exchange and monetary variation gains in the quarter totaled R$372.4 million. Net debt (excluding perpetual bonds and Exchangeable Senior Notes) to LTM EBITDA was 2.4x as of December 31, 2019.

Guidance: GOL’s 2020 and 2021 guidance is on page 14 of this document.

1Q20 Outlook

Based on current cost trends, GOL estimates first quarter 2020 recurring CASK ex-fuel to increase by approximately 4% to 6%, year-over-year. The Company has hedged approximately 90% of its fuel consumption for 1Q20 and 68% for 2020.  Currently, passenger booking and revenue trends remain healthy, and the Company expects first quarter 2020 RASK to increase between approximately 4% and 6%, compared to the first quarter of 2019.

Management’s Comments on Results

In 2019, GOL accomplished a number of significant milestones in its business strategy to be The First Airline for Everyone and to grow its network both internationally and domestically.

“Be The First Airline For Everyone”

Strong customer demand, especially in the corporate segment, combined with our capacity discipline enabled us to deliver excellent operating results in 4Q19. We’d like to particularly thank the dedication and engagement of the Team of Eagles who, amid challenging market conditions, met the demands of our customers in Brazil and abroad in a fast and safe manner.

We transported almost 10 million passengers in 4Q19, a growth of 8.0% over the same period last year.

This year, we also achieved a Black Friday sales record with more than 450,000 tickets sold, which corresponds to more than R$120 million in just one day, and a total sale in the promotional period of more than R$250 million. That represents an increase of more than 50% in sales compared to Black Friday of 2018.

“The excellent sales numbers in the fourth quarter underline our purpose of being The First Airline For Everyone, by providing the best customer experience in terms of products and services, with the lowest cost in the market”, said GOL CEO, Paulo Kakinoff.

Our Net Promoter Score (NPS) was 35 in the quarter and is indicative of the winning combination of our best-in-market product and our highly engaged customer service team. For the third consecutive year, we won the Top of Mind award from Datafolha São Paulo Institute as the most remembered and preferred airline by Brazilians. We also won, for the sixth time, the Companies of the Decade award by Consumidor Moderno, being the only airline among the winning companies.

“These acknowledgments are the result of the continuous innovation across our products and services, and they reflect the close relationship we maintain with our customers in their daily lives,” added Kakinoff.

Growth of the GOL Network

In the quarter, we expanded our reach in regional markets in Brazil, adding three more destinations. In addition, we enhanced our partnerships with two regional carriers that added 22 new destinations for GOL customers.

GOL is the largest regional carrier in Brazil, as measured by ASKs. The new regional destinations have strengthened our overall network, increased connectivity, and reduced our exposure to highly competitive markets. These destinations also generate even more feeder traffic from customers connecting to our international hubs in Guarulhos, Rio de Janeiro, Brasília and Fortaleza.

3

 

      GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

We continued our long-term term growth strategy in international markets in the quarter. We began regular flights between São Paulo and Lima, Peru. In the period, we also launched weekly flights between Manaus and Orlando and seasonal flights between Porto Alegre and Punta del Este. In addition, we renewed our strategic partnership with Air France-KLM for another five years, through which we have already jointly carried more than 1 million customers. Our partnership currently covers over 99% of the demand between Brazil and Europe, and one in four Air France-KLM passengers choose to make connections with GOL flights

At the end of December, GOL also celebrated 15 years of operating in Argentina, where we have transported over 12 million passengers on 77 weekly flights.

We seek to continue our growth in domestic and international markets.

In February 2020, we announced a new codeshare with American Airlines. The flights will operate from GOL’s hubs in São Paulo (GRU), Rio de Janeiro (GIG), Brasília (BSB) and Fortaleza (FOR), and will add to GOL’s existing regular flights to Miami and Orlando.  Also, we signed a new codeshare with Avianca Holdings that includes 60 domestic Brazil GOL destinations and 16 GOL international destinations, in 11 countries, and 26 domestic Colombia Avianca destinations and another 50 in America and Europe.    

“By strengthening these partnerships, we reiterate our expansion plan in both domestic and international markets and consolidate our purpose of being The First Airline For Everyone. Our codeshare with Air France-KLM covers more than 18 countries, including 66 cities in Europe and more than 30 cities in Brazil. In addition, our recently announced codeshare with American Airlines will offer more daily flights between South America and the U.S. than any other airline partnership. It will double the number of seats we offer in this market, enabling GOL’s customers to travel seamlessly to more than 30 destinations in the U.S,” added Kakinoff.

Agile Fleet Management

Despite the temporary grounding of the 737 MAX aircraft, the flexibility of our fleet plan enabled us to serve all of our markets with a high utilization rate of our aircraft, which reached 12.2 hours in the quarter. GOL’s route network is based on a high connectivity with the main markets. This sophisticated model has enabled us to create greater capillarity for corporate routes and to reduce the average stage length. When combined with the intensive use of data analytics and a focus on the personalization of our services, this has best positioned GOL to capture economic growth. Based on Boeing’s latest forecast, we believe that the regulatory agencies will approve the return of MAX aircraft at the beginning of the second half of 2020.

At the beginning of the fourth quarter, 14 aircraft went under unplanned maintenance on pickle forks, in compliance with FAA Airworthiness Directive. Maintenance was 100% completed at the end of December when the aircraft returned to the fleet, thanks to the prompt response of GOL Aerotech.

In November 2019, GOL Aerotech was formally launched; a new business unit that leverages GOL’s aircraft maintenance expertise to provide aircraft and components maintenance, repairs, and overhauls to third-party airlines. This generates a new source of revenue and reduces our costs for the Company. With 760 employees and over 600,000 hours of availability per year, GOL Aerotech is qualified by ANAC, FAA and EASA to perform maintenance services for four Boeing models: the 737 Classic, the 737 Next Generation, the 737 MAX, and the 767 family. Aviation Capital Group (ACG) and Dubai Aerospace are among our first customers. In 2020, we expect revenues of R$140 million from GOL Aerotech.

Effective Balance Sheet Management

Despite several operational challenges, such as the temporary grounding of the MAX and the unplanned maintenance on the pickle fork, GOL posted outstanding results. We registered record revenues and high margins, with operating cash flow generation around R$1.0 billion in the quarter. Through this, we implemented a R$102.4 million share repurchase program and improved our credit profile.

Quarterly net revenue increased 18.8% year-over-year, with a record of R$3.8 billion in the 4Q19. Currently, trends in revenue and passenger bookings remain strong, and the Company expects the first quarter RASK to increase by 4% to 6%, compared to 1Q19.

GOL remains the lowest unit cost leader in South America for the 19th consecutive year. Recurring CASK in 2019 increased 1.9% over the previous year, to R$21.97. Based on current trends, the Company estimates that the recurring CASK in the first quarter of 2020 will increase approximately 0% to 2%, year-over-year. The Company has a high level of fuel hedging protection in place, with around 90% hedged in the first quarter of 2020 and 68% hedged in 2020.

“We are working hard to further increase GOL's competitiveness through fuel hedging," said Richard Lark, GOL’s CFO.

In 4Q19, recurring earnings per diluted share were R$0.88 and recurring earnings per diluted ADS were US$0.43. Operating activities generated R$1.0 billion in cash in the quarter. From the net cash flow generation of R$637.3 million in 4Q19, we repaid R$617.1 million in debt, paid R$50.2 million of interest on own capital, and repurchased R$102.4 million of shares. Before share repurchases and interest on own capital, free cash flow to equity was R$219.2 million. On December 31, 2019, total liquidity was R$4.3 billion, R$1.3 billion higher than on December 31, 2018.

“We continue to strengthen the Company's equilibrium through disciplined working capital management and capital structure optimization,” added Lark.

In February 2020, GOL signed sale and leaseback agreements for 11 Boeing 737 Next Generation (NG) aircraft. The transaction will reduce GOL’s net debt by approximately R$500 million, comprised of a R$130 million reduction in finance lease debt and a R$370 million increase in cash liquidity. The Company plans to use a portion of these proceeds to call the outstanding amount of its 8.875% Senior Notes due in 2022. The asset management income and reduction in interest expense will contribute over R$420 million to the Company’s 2020 earnings and improve GOL’s credit ratios by reducing the net debt/EBITDA ratio by 0.2x and increase the EBITDA/net interest expense ratio by 0.5x.

4

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

The results obtained in GOL’s aircraft disposals demonstrate the consistent market value of the Boeing 737 aircraft and the continuous creation of value for all GOL shareholders. Making GOL The First Airline For Everyone is what drives our best-in-Brazil aviation team. “We are, and will continue to be, an even stronger Company,” said Lark.

Operating and Financial Indicators

 

Traffic Data – GOL (in Millions)

4Q19

4Q18

% Var.

2019

2018

% Var.

RPK GOL – Total

10,806

10,244

5.5%

41,863

38,424

9.0%

 RPK GOL – Domestic

9,630

9,037

6.6%

36,391

34,266

6.2%

 RPK GOL – International

1,176

1,207

-2.6%

5,472

4,158

31.6%

ASK GOL – Total

13,257

12,506

6.0%

51,065

48,058

6.3%

 ASK GOL – Domestic

11,667

10,901

7.0%

43,897

42,428

3.5%

 ASK GOL – International

1,590

1,605

-0.9%

7,168

5,630

27.3%

GOL Load Factor – Total

81.5%

81.9%

-0.4 p.p.

82.0%

80.0%

2.0 p.p.

 GOL Load Factor – Domestic

82.5%

82.9%

-0.4 p.p.

82.9%

80.8%

2.1 p.p.

 GOL Load Factor – International

74.0%

75.2%

-1.2 p.p.

76.3%

73.9%

2.4 p.p.

Operating Data

4Q19

4Q18

% Var.

2019

2018

% Var.

Revenue Passengers - Pax on Board ('000)

9,660

8,944

8.0%

36,445

33,446

9.0%

Aircraft Utilization (Block Hours/Day)

12.2

11.5

6.1%

12.3

11.8

4.2%

Departures

68,228

63,431

7.6%

259,377

250,040

3.7%

Total Seats (‘000)

12,142

11,079

9.6%

45,574

42,968

6.1%

Average Stage Length (km)

1,089

1,108

-1.7%

1,114

1,098

1.5%

Fuel Consumption (mm liters)

382

365

4.7%

1,475

1,403

5.1%

Full-time Employees (at Period End)

16,113

15,294

5.4%

16,113

15,294

5.4%

Average Operating Fleet(6)

117

116

0.9%

113

112

0.9%

On-time Departures

86.2%

87.5%

-1.3 p.p.

89.0%

91.8%

-2.8 p.p.

Flight Completion

99.2%

98.6%

0.6 p.p.

98.1%

98.5%

0.4 p.p.

Passenger Complaints (per 1,000 pax)

0.88

1.31

-32.8%

1.12

1.75

-36.0%

Lost Baggage (per 1,000 pax)

2.08

2.19

-5.0%

2.09

2.03

3.0%

Financial Data

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Net YIELD (R$ cents)

33.17

29.14

13.8%

31.24

27.67

12.9%

Net PRASK (R$ cents)

27.04

23.87

13.3%

25.61

22.13

15.7%

Net RASK (R$ cents)

28.69

25.59

12.1%

27.15

23.75

14.3%

CASK (R$ cents)(5)

21.10

24.19

-12.8%

21.97

21.57

1.9%

CASK Ex-Fuel (R$ cents)(5)

13.49

15.17

-11.1%

14.05

12.95

8.5%

Breakeven Load Factor(5)

60.0%

77.4%

-17.4 p.p.

66.3%

72.6%

-6.3 p.p.

Average Exchange Rate(2)

4.1158

3.8084

8.1%

3.9461

3.6558

7.9%

End of Period Exchange Rate(2)

4.0307

3.8748

4.0%

4.0307

3.8748

4.0%

WTI (Average per Barrel. US$)(3)

56.87

59.34

-4.2%

57.04

64.90

-12.1%

Price per Liter Fuel (R$)(4)

2.71

3.28

-17.4%

2.79

2.91

-4.1%

Gulf Coast Jet Fuel (Average per Liter, US$)(3)

0.49

0.52

-5.8%

0.50

0.47

6.4%

 

(1) Amounts restated in accordance with IFRS 16. (2) Source: Brazilian Central Bank; (3) Source: Bloomberg; (4) Fuel expenses excluding hedge results and PIS/COFINS credits/liters consumed; (5) Excluding non-recurring expenses. (6) Average operating fleet excluding aircraft in sub-leasing and MRO. Certain calculations may not match with the financial statements due to rounding.

 

Domestic market

GOL’s domestic supply increased by 7.0%, and demand increased by 6.6% in comparison to 4Q18. As a result, the Company’s load factor reached 82.5%. GOL transported 9.2 million passengers in the quarter, an increase of 9.5% compared with the same period in 2018. In 2019, GOL’s domestic supply increased by 3.5%, and demand increased by 6.2% year-over-year. The Company is the leader in transporting passengers in the Brazilian market.

International market

GOL’s international supply decreased by 0.9%, and international demand decreased by 2.6% in 4Q19 compared to 4Q18. The Company’s load factor in 4Q19 was 74.0%, a decrease of 1.2 p.p. During the quarter, the Company transported 0.5 million passengers in the international market, the same as in 4Q18. In 2019, GOL’s international supply increased by 27.3%, and demand increased by 31.6% year-over-year.

Volume of Departures and Total Seats

The total volume of GOL departures was 68,228, an increase of 7.6% over 4Q18. The total number of seats available to the market was 12.1 million in the fourth quarter of 2019, increase of 9.6% quarter-over-quarter.

 

5

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

PRASK, Yield and RASK

Net PRASK increased by 13.3% in the quarter when compared to 4Q18, reaching 27.04 cents (R$), driven by a growth in net passenger revenue of 20.1% in the quarter. GOL’s net RASK was 28.69 cents (R$) in 4Q19, an increase of 12.1% over 4Q18. Net yield increased by 13.8% over 4Q18, reaching 33.17 cents (R$).

Income Statement

 

Income Statement in IFRS (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Net Operating Revenues

3,803.3

3,200.9

18.8%

13,864.7

11,411.4

21.5%

  Passenger

3,584.5

2,985.2

20.1%

13,077.7

10,633.5

23.0%

  Cargo and Other

218.8

215.7

1.4%

787.0

777.9

1.2%

Operating Costs and Expenses

(3,108.5)

(2,392.5)

29.9%

(11,732.0)

(9,482.8)

23.7%

  Salaries, Wages and Benefits

(647.2)

(522.7)

23.8%

(2,361.3)

(1,903.8)

24.0%

    Salaries, Wages and Benefits - Operations

(455.2)

(310.9)

46.4%

(1,671.6)

(1,215.3)

37.5%

    Salaries, Wages and Benefits – Other

(192.0)

(211.8)

-9.3%

(689.7)

(688.5)

0.2%

  Aircraft Fuel

(1,009.3)

(1,127.5)

-10.5%

(4,047.3)

(3,867.6)

4.6%

    Taxes on Aircraft Fuel

(102.5)

(164.5)

-37.7%

(523.3)

(577.1)

-9.3%

    Aircraft Fuel (Ex-Taxes)

(906.8)

(962.1)

-5.7%

(3,524.0)

(3,289.6)

7.1%

  Landing Fees

(155.1)

(201.2)

-22.9%

(759.8)

(743.3)

2.2%

  Passenger Costs

(136.4)

(128.1)

6.5%

(578.7)

(474.1)

22.1%

  Services Provided

(183.3)

(174.2)

5.2%

(707.4)

(613.7)

15.3%

  Sales and Marketing

(174.8)

(153.8)

13.7%

(670.4)

(582.1)

15.2%

  Maintenance Materials and Repairs

(156.9)

(281.6)

-44.3%

(569.2)

(570.3)

-0.2%

  Depreciation and Amortization

(458.6)

(345.8)

32.6%

(1,728.0)

(1,234.6)

40.0%

  Other

(186.9)

542.4

NM

(309.9)

506.7

NM

Equity Income

-

-

NM

0.1

0.4

-75.0%

Operating Result (EBIT)

694.8

808.4

-14.1%

2,132.7

1,929.0

10.6%

Operating Margin

18.3%

25.3%

-7.0 p.p.

15.4%

16.9%

-1.5 p.p.

Financial Results

(134.0)

19.3

12.2%

(1,743.8)

(2,970.5)

-41.3%

Interest on Loans

(335.3)

(307.0)

9.2%

(1,266.8)

(1,116.8)

13.4%

Gains (Losses) From Financial Investments

22.1

26.1

-15.3%

113.9

127.2

-10.5%

Exchange and Monetary Variations(2)

372.4

394.0

-5.5%

(180.2)

(1,694.7)

-89.4%

Derivatives Results, Net

43.5

(32.4)

NM

(2.1)

(7.7)

-72.7%

Exchangeable and Capped Calls Results

(87.5)

-

NM

(169.0)

-

NM

Other Revenues (Expenses), Net

(149.2)

(61.4)

143.0%

(239.6)

(278.5)

-14.0%

Income (Loss) Before Income Taxes

560.8

827.7

-32.2%

388.9

(1,041.5)

-137.3%

Pre-tax Margin

14.7%

25.9%

-11.2p.p.

2.8%

-9.1%

11.9 p.p.

Income Tax

(124.5)

(74.5)

67.1%

(209.6)

(297.1)

-29.5%

  Current Income Tax

(53.4)

(44.6)

19.7%

(178.6)

(52.1)

242.8%

  Deferred Income Tax

(71.1)

(29.9)

137.8%

(31.0)

(245.0)

-87.3%

Net Income (Loss) before Minority Interest

436.3

753.2

-42.1%

179.3

(1,338.6)

-113.4%

Minority Interest

84.4

77.9

8.3%

296.6

305.6

-2.9%

Net Income (Loss) after Minority Interest

351.9

675.3

-47.9%

(117.3)

(1,644.2)

-92.9%

Net Margin(3)

9.2%

21.1%

-11.9 p.p.

-0.8%

-14.4%

13.6 p.p.

Earnings Per Share (EPS) in R$

0.99

1.93

-48.7%

(0.33)

(4.70)

-93.0%

  Weighted Average Shares Outstanding MM(5)

355.7

349.9

1.7%

355.7

349.9

1.7%

Earnings Per ADS Equivalent in US$

0.48

1.01

-52.5%

(0.17)

(2.57)

-93.4%

  Weighted Average ADSs Outstanding MM(5)

177.8

174.9

1.7%

177.8

174.9

1.7%

Earnings Per Diluted Share (EPS) in R$

0.90

-

NM

(0.30)

-

NM

  Weighted Average Diluted Shares Outstanding MM(6)

391.0

-

NM

392.0

-

NM

Earnings Per Diluted ADS Equivalent in US$

0.44

-

NM

(0.15)

-

NM

  Weighted Average Diluted ADSs Outstanding MM(6)

195.5

-

NM

196.0

-

NM

 

 

 

 

 

 

 

Recurring (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Net Income (Loss) Before Minority

436.3

753.2

-42.1%

179,3

(1,338.6)

NM

Expenses (Revenues), Non-Recurring, Net

(311.5)

632.1

NM

(512.3)

885.1

NM

Net Income (Loss) Before Minority(3)

747,6

121,0

NM

691,6

(2.223,7)

NM

EBITDA(4)

1,464.9

522.1

180.5%

4,373.0

2,278.5

91.9%

EBITDA Margin(4)

38.5%

16.3%

22.2 p.p.

31.5%

20.0%

11.5 p.p.

EBIT(4)

1,006.3

176.3

NM

2,645.0

1,043.9

153.4%

EBIT Margin(4)

26.5%

5.5%

21.0 p.p.

19.1%

9.1%

10.0 p.p.

Pre-tax Income(3)(4)

553.3

(198.5)

NM

1,154.2

(232.1)

NM

Pre-tax Margin(3)(4)

14.5%

-6.2%

20.7 p.p.

8.3%

-2.0%

10.3 p.p.

Net Income After Minority(3)(4)

344.7

(350.8)

NM

648.0

(834.6)

NM

Net Margin After Minority (3)(4)

9.1%

-11.0%

20.1 p.p.

4.7%

-7.3%

12.0 p.p.

Earnings Per Diluted Share (EPS) in R$(3)(4)(6)

0.88

-

NM

1.65

-

NM

Earnings Per Diluted ADS Equivalent in US$(3)(4)(6)

0.43

-

NM

0.84

-

NM

 

(1) Amounts restated in accordance with IFRS 16. (2) The difference with the amount disclosed in the statements of operations in the financial statements of the year ended December 31, 2019 is the Exchangeable and Capped Calls results. (3) Excluding unrealized ESN / Capped Calls mark-to-market gains and losses and exchange rate gains and losses on debt. (4) Excluding non-recurring net expenses (revenues). (5) Excluding effects of stock options and warrants related to the Exchangeable. (6) Including effects of stock options and warrants related to the Exchangeable.

 

 

6

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Net revenue

 

Quarterly net revenue was R$3.8 billion, an increase of 18.8% when compared to 4Q18, mainly due to a 20.1% increase in passenger revenues and a 4.9% increase in cargo revenues, partially offset by a 4.0% decrease in loyalty program revenues, in comparison to 4Q18. In 2019, net revenue reached R$13.9 billion, an increase of 21.5% compared to 2018.

 

GOL carried approximately 9.7 million customers in the quarter (+8.0%), with 9.2 million in the domestic market (+9.5%) and 0.5 million in the international market (+0.3%). Net Passenger Revenue per Available Seat-Kilometer (PRASK) reached 27.04 cents (R$), an increase of 13.3%. Load factor decreased 0.4 p.p., and yield in the quarter increased 13.8% compared to the same period of 2018. 

 

Operating expenses

 

Total recurring CASK decreased by 12.8%, from 24.19 cents (R$) in 4Q18 to 21.10 cents (R$), primarily due to increased productivity (operating efficiency, aircraft utilization and increase in ASKs), partially offset by increases in depreciation and personnel. Fuel costs per ASK decreased 15.6%, mainly due to reductions in fuel taxes, partially offset by consumption of an additional 7.3 million liters due to the MAX delays. 

 

CASK ex-fuel, excluding non-recurring expenses, decreased by 11.1% in line with what was explained above, which reflects a better productivity (operational efficiency, use of aircraft and increase in ASK), partially offset by 32.6% higher depreciation. This was due to the addition of 16 aircraft in the fleet and a reduction in the depreciable life of capitalized engine maintenance and large components; a 23.8% increase on personnel expenses, mainly due to the increase in the federal payroll tax rate to 20%; and the hiring and training of 819 new employees due to the expansion of operations, new routes and new bases. Fuel costs per ASK decreased 15.6%, mainly due to reductions in fuel taxes.

 

Breakeven load factor (excluding non-recurring expenses) reduced by 17.4 p.p., reaching 60.0% versus 77.4% in 4Q18, due to passenger net revenue growth in the quarter. The breakdown of the Company’s operating costs and expenses is presented as follows:

 

Operating Costs and Expenses (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Salaries, Wages and Benefits

(647.2)

(522.7)

23.8%

(2,361.3)

(1,903.8)

24.0%

   Salaries, Wages and Benefits - Operations

(455.2)

(310.9)

46.4%

(1,671.6)

(1,215.3)

37.5%

   Salaries, Wages and Benefits – Other

(192.0)

(211.8)

-9.3%

(689.7)

(688.5)

0.2%

 Aircraft Fuel

(1,009.3)

(1,127.5)

-10.5%

(4,047.3)

(3,867.6)

4.6%

   Taxes on Aircraft Fuel

(102.5)

(164.5)

-37.7%

(523.3)

(577.1)

-9.3%

   Aircraft Fuel (Ex-Taxes)

(906.8)

(962.1)

-5.7%

(3,524.0)

(3,289.6)

7.1%

 Landing Fees

(155.1)

(201.2)

-22.9%

(759.8)

(743.3)

2.2%

Passenger Costs

(136.4)

(128.1)

6.5%

(578.7)

(474.1)

22.1%

Services Provided

(183.3)

(174.2)

5.2%

(707.4)

(613.7)

15.3%

 Sales and Marketing

(174.8)

(153.8)

13.7%

(670.4)

(582.1)

15.2%

Maintenance Materials and Repairs

(156.9)

(281.6)

-44.3%

(569.2)

(570.3)

-0.2%

Depreciation and Amortization

(458.6)

(345.8)

32.6%

(1,728.0)

(1,234.6)

40.0%

Other

(186.9)

542.4

NM

(309.9)

506.7

NM

Total Operating Expenses

(3,108.5)

(2,392.5)

29.9%

(11,732.0)

(9,482.8)

23.7%

Operating Expenses Ex-Fuel

(2,099.2)

(1,265.0)

65.9%

(7,684.7)

(5,615.2)

36.9%

Non-Recurring Expenses

(311.5)

632.1

NM

(512.3)

885.1

NM

Operating Costs and Expenses per ASK (R$ cents)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Salaries, Wages and Benefits

(4.88)

(4.18)

16.7%

(4.62)

(3.96)

16.7%

   Salaries, Wages and Benefits - Operations

(3.43)

(2.49)

37.8%

(3.27)

(2.53)

29.2%

   Salaries, Wages and Benefits – Other

(1.45)

(1.69)

-14.2%

(1.35)

(1.43)

-5.6%

 Aircraft Fuel

(7.61)

(9.02)

-15.6%

(7.93)

(8.05)

-1.5%

   Taxes on Aircraft Fuel

(0.77)

(1.32)

-41.7%

(1.02)

(1.20)

-15.0%

   Aircraft Fuel (Ex-Taxes)

(6.84)

(7.69)

-11.1%

(6.90)

(6.85)

0.7%

 Landing Fees

(1.17)

(1.61)

-27.3%

(1.49)

(1.55)

-3.9%

Passenger Costs

(1.03)

(1.02)

1.0%

(1.13)

(0.99)

14.1%

Services Provided

(1.38)

(1.39)

-0.7%

(1.39)

(1.27)

9.4%

 Sales and Marketing

(1.32)

(1.23)

7.3%

(1.31)

(1.21)

8.3%

Maintenance Materials and Repairs

(1.18)

(2.25)

-47.6%

(1.11)

(1.19)

-6.7%

Depreciation and Amortization

(3.46)

(2.77)

24.9%

(3.38)

(2.57)

31.5%

Other

(1.41)

4.34

NM

(0.61)

1.04

NM

CASK

(23.45)

(19.13)

22.6%

(22.97)

(19.73)

16.4%

CASK(2)

(21.10)

(24.19)

-12.8%

(21.97)

(21.57)

1.9%

CASK Ex-Fuel(2)

(13.49)

(15.17)

-11.1%

(14.05)

(12.95)

8.5%

 (1) Amounts restated in accordance with IFRS 16.  (2) Excluding non-recurring results, net.

 

7

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

 

Salaries, wages and benefits per ASK: increased 16.7%, mainly due to an increase in the federal payroll taxes rate from 0% to 20%, a 3.5% COLA, an increase on payments per hour due the higher volume of operating hours in 7.5% during 4Q19, and the hiring of 819 new employees for expansion of operations, routes and bases.

 

Aircraft fuel per ASK: reduced 15.6% primarily due to a decrease in the average fuel price per liter of 17.4%, this primarily due to the reduction of 4.7 p.p. in GOL’s average ICMS tax rate on jet fuel to 9.9% in 4Q19 from an average rate of 14.6% in 4Q18, and a 34.6% decrease in the ex-refinery price due to a 4.2% reduction in the USD oil price per barrel, partially offset by a 8.1% USD appreciation (average rate).

Landing fees per ASK: decreased 27.3% primarily due to the reduction of PIS and COFINS taxes.

Expenses with passengers by ASK: increased 1.0% principally due to an increase ramp and handling costs.

Services provided by ASK: reduced 0.7% principally due to a reduction in consulting expenses.

Sales and marketing per ASK: increased 7.3% primarily due to a 14.5% increase in sales commissions from the increase in net revenue.

Maintenance materials and repairs per ASK(1): decreased 47.6% mainly related to fewer NG aircraft redeliveries, partially offset by advanced scheduled maintenance on two aircraft to support high-season demand. 

Depreciation and amortization per ASK: increased 24.9% mainly due to the incorporation of 16 aircraft into the operational fleet and a reduction in the depreciation term for capitalized engine maintenance.

Other expenses per ASK: increased mainly due to the aircraft sales on 4Q18 of R$634.7 million, non-recurring in 2019.

(1) Scheduled maintenance is treated as recurring and un-scheduled maintenance related to the MAX delays is considered non-recurring.

Operating results               

 

Operating income (EBIT) for the quarter was R$1,006.3 million, an increase of R$830.0 million when compared to the same period of 2018. In 2019, operating income reached R$2,645.0 million, an increase of 153% compared to 2018. Operating margin was 26.5%, an increase of 21.0 p.p. over 4Q18. On a per available seat-kilometer basis, recurring EBIT was 7.59 cents (R$) in 4Q19, an increase of 6.19 cents (R$) compared to 4Q18.

 

EBITDA totaled R$1.5 billion in the period, an increase of 180.5% over 4Q18. EBITDA per available seat-kilometer was 11.05 cents (R$), an increase of 6.88 cents (R$) when compared to the same period last year.

 

EBIT and EBITDA reconciliation (R$ MM, unaudited)*

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Net Income (Loss)(2)

747.6

121.0

NM

691.6

(2,223.7)

NM

(-) Income Taxes 

124.5

74.5

67.1%

209.6

297.1

-29.5%

(-) Net Financial Result

134.0

(19.3)

NM

1,743.8

2,970.5

-41.3%

EBIT(2)

1,006.3

176.3

NM

2,645.0

1,043.9

153.4%

EBIT Margin(2)

26.5%

5.5%

21.0 p.p.

19.1%

9.1%

10.0 p.p.

(-) Depreciation and Amortization

458.6

345.8

32.6%

1,728.0

1,234.6

40.0%

EBITDA(2)

1,464.9

522.1

180.5%

4,373.0

2,278.5

91.9%

EBITDA Margin(2)

38.5%

16.3%

22.2 p.p.

31.5%

20.0%

11.5 p.p.

EBITDA Calculation (R$ cents/ASK, unaudited)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Net Revenues

28.69

25.59

12.1%

27.15

23.75

14.3%

Operating Expenses(2)

(21.10)

(24.19)

-12.8%

(21.97)

(21.57)

1.9%

EBIT(2)

7.59

1.40

NM

5.18

2.18

137.6%

Depreciation and Amortization

(3.46)

(2.77)

24.9%

(3.38)

(2.57)

31.5%

EBITDA(2)

11.05

4.17

165.0%

8.56

4.75

80.2%

 (1) Amounts restated in accordance with IFRS 16. (2) Excluding non-recurring expenses. * In accordance with CVM Instruction 527, the Company presents the reconciliation of EBIT and EBITDA, whereby: EBIT = net income (loss) (+) income tax and social contribution (+) net financial result; and EBITDA = net income (loss) (+) income tax and social contributions (+) net financial result (+) depreciation and amortization. Some report values ​​may differ from the financial statements due to rounding.

 

Financial Results

Net financial expense was R$134.0 million, an increase of R$153.3 million compared to 4Q18. The variation is mainly due to issuance in March 2019 of Exchangeable Senior Notes. Net results on derivatives were R$75.9 million higher than 4Q18. The exchange and monetary variations resulted in gains of R$21.6 million lower compared to 4Q18.

Interest on loans: increased 9.2%, from R$307.0 million to R$335.3 million, mainly due to an average total debt approximately R$1.0 billion higher than the previous period and the average BRL exchange rate devaluation of 8.1%, partially offset by a reduction in the average interest rate from 6.9% to 5.9%.

 

8

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Gains from financial investments: reduced R$4.0 million, mainly due to lower yields on investments in fixed income securities and investment funds.

Net exchange and monetary variation: totaled gains of R$372.4 million in 4Q19, a decrease of 5.5% compared to 4Q18. In 3Q19, the Company adopted hedge accounting corresponding to 50 lease agreements with a total volume de R$928.0 million. The total amount in 4Q19 of exchange variation expenses registered in other comprehensive income in shareholders' equity related to the hedge accounting corresponded to R$125.7 million, partially offset by the depreciation of the Brazilian Real vs. U.S. Dollar (end of the period) of R$3.1% in the quarter, from R$4.16 per U.S. Dollar as of September 30, 2019 to R$4.03 per U.S. Dollar as of December 31, 2019.

ESN and capped calls results: registered expenses of R$87.5 million, comprised of R$34.0 million of interest expense, R$110.5 million of unrealized losses on the mark-to-market of the convertible, partially offset by R$18.4 million of unrealized gains on the mark-to-market on the exchange features and capped calls.

Net result of derivatives: was a R$43.5 million gain in 4Q19, in comparison to R$32.4 million loss in 4Q18, mainly due oil price hedging operations.

Other financial expenses: totaled R$149.2 million of expenses in 4Q19, in comparison to R$61.4 million of expenses in 4Q18.

 

Hedge results

The Company uses hedge accounting for some of its derivative instruments. In 4Q19, GOL registered a net gain of R$31.8 million from hedge operations, of which R$10.5 million were losses recorded in operating income and R$42.3 million were gains recorded in financial income.

Fuel: fuel hedge operations made through derivative contracts tied to WTI resulted in a loss in operating results of R$9.1 million and a gain of R$43.6 million in the financial result in this quarter.

Interest: swap operations to protect the cash flow of future contracted leases, the installments of which are exposed to the volatility of the Libor rate until receiving aircraft, resulted in losses of R$2.1 million in 4Q19.

Exchange rate: the Company recognized R$0.6 million on exchange rate hedge losses in 4Q19.

 

Income taxes

Income taxes in the quarter represented a loss of R$124.5 million, compared to an income tax expense of R$74.5 million in 4Q18. The Company, GLA and Smiles have net operating loss carryforwards, comprised of accumulated income tax losses and negative basis of social contribution, their use is limited to 30% of the annual taxable income, without limitation period, in the amounts of R$159.6, R$5,017.2 million and R$8.3 million, respectively, and such amounts are not recorded in the Company's balance sheet.

Loyalty Program - Smiles Fidelidade S.A.

Revenues in 4Q19 reduced 9.2% to R$253.2 million. The operating income in 4Q19 increased 13.2% to R$226.8 million, mainly due to the reduction in operating expenses resulting from revenue from tax credits on expenses considered essential to the operation recognized of the last 5 years in the amount of R$50.1 million, previously classified as administrative expenses, resulting in operating margin of 89.6%. Net income in 4Q19 was R$179.5 million (+9.1% compared to 4Q18).

Financial information (R$ MM, unaudited)

4Q19

4Q18

% Var.

2019

2018

% Var.

Net Revenues

253.2

278.9

-9.2%

1,051.1

987.4

6.5%

Operating Income

226.8

200.4

13.2%

765.8

742.0

3.2%

Operating Margin

89.6%

71.9%

17.7 p.p.

72.9%

75.1%

-2.2 p.p.

Net Income

179.5

164.6

9.1%

626.7

645.8

-3.0%

Net Margin

70.9%

59.0%

11.9 p.p.

59.6%

65.4%

-5.8 p.p.

 

 

9

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

Net Income and Earnings per Share

In 4Q19, the Company reported net income after minority interest of R$344.7 million (excluding exchange and monetary variations of R$372.4 million gains, non-recurring expenses of R$311.5 and a loss of R$53.7 million related to Exchangeable Notes and capped calls unrealized results), compared to net losses of R$350.8(1) million (excluding non-recurring gains of R$632.1 and exchange and monetary variations gains of R$394.0 million) during 4Q18, an increase of R$695.5 million.  Net margin in 4Q19 was 9.1%, a growth of 20.1 p.p. year-over-year. In 2019, net income after minority interest was R$648.0 million (excluding exchange and monetary losses of R$180.2 million, non-recurring expenses of R$512.3 and a loss of R$72.8 million related to Exchangeable and capped calls unrealized results), compared to net loss  of R$834.6(1) million in 2018. Net margin in 2019 was 4.7%, a growth of 12.0 p.p. year-over-year.

Net Result (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Net Income (Loss) Before Minority Interest

436.3

753.2

-42.1%

179.3

(1.338.6)

NM

(-) Minority Interest

84.4

77.9

8.3%

296.6

305.6

-2.9%

Net Income (Loss) After Minority Interest

351.9

675.3

-47.9%

(117.3)

(1.644.2)

-92.9%

(-) ESN And Capped Calls Unrealized Results

53.7

-

NM

72.8

-

NM

(-) Exchange Variations, Net (2)

(372.4)

(394.0)

-5.5%

180.2

1.694.7

-89.4%

(-) Non-Recurring Expenses and Revenues, net

311.5

(632.1)

NM

512.3

(885.1)

NM

Net Income (Loss)

344.7

(350.8)

NM

648.0

(834.6)

NM

EPS And EPADS (unaudited)

4Q19

4Q18(1)

% Var.

2019

2018(1)

% Var.

Weighted Average Shares Outstanding (3)

355.7

349.9

1.7%

355.7

349.9

1.7%

Weighted Average Shares ADS Outstanding (4)

177.8

174.9

1.7%

177.8

174.9

1.7%

Net Income (Loss) Per Share in R$

0.99

1.93

-48.7%

(0.33)

(4.70)

-93.0%

Net Income (Loss) Per ADS in US$

0.48

1.01

-52.5%

(0.17)

(2.57)

-93.4%

Earnings (Loss) Per Share in R$(5)

0.97

(1.00)

NM

1.82

(2.39)

NM

Earnings (Loss) Per ADS in US$(5)

0.47

(0.53)

NM

0.92

(1.31)

NM

 

Earnings Per Diluted Share and Diluted ADS (unaudited)

4Q19

4Q18(6)

% Var.

2019

2018(6)

% Var.

Weighted Average Shares Outstanding (3)

391.0

-

NM

392.0

-

NM

Weighted Average Shares ADS Outstanding (4)

195.5

-

NM

196.0

-

NM

Earnings (Loss) Per Diluted Share in R$ (5)

0.88

-

NM

1.65

-

NM

Earnings (Loss) Per Diluted ADS in US$ (5)

0.43

-

NM

0.84

-

NM

 

(1)  Amounts restated in accordance with IFRS 16. (2) The difference between the amount presented and the amount disclosed in the financial statements for the year ended in 12/31/2019 is allocated to the ESN and capped calls results. (3) Considers the ratio of 35 common shares per preferred share. Total number of diluted shares considered in calculation was 391.0 million in 4Q19, including the dilution from ESNs conversion into shares.  (4) Considers the ratio of 2 preferred shares per ADS. (5)  Earnings per diluted share excludes results of (i) exchange variation, net; (ii) Exchangeable and capped calls; and (iii) non-recurring expenses. (6) Not applicable, there is no provision for dilution of impairment in international accounting standards (IFRS).

 

Earnings per diluted share were R$0.88 in 4Q19.

Earnings per diluted share were R$1.65 in 2019.

Earnings per diluted ADS were US$0.43 in 4Q19.

Earnings per diluted ADS were US$0.84 in 2019.

 

10

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Cash Flow

As of December 31, 2019, total liquidity (cash and cash equivalents, cash investments, restricted cash, and accounts receivable) totaled R$4.3 billion, an increase of R$238.4 million when compared to September 30, 2019 and R$1.3 billion higher than December 31, 2018.

Operating activities generated R$962.3 million in 4Q19, a decrease of 10.2% when compared to 4Q18, mainly due to lower derivative results, higher consumer claims, more aircraft returns and higher income tax expenses in comparison with 4Q18.

Investment activities consumed a net R$325.0 million in the quarter, mainly due to capitalized engine maintenance of aircraft.  Net cash flow was R$637.3 million in the quarter.

Financing activities in 4Q19 consumed R$398.9 million, mainly due to the payment of R$223.1 million of financial debt, R$394.0 million of lease debt in the quarter, R$102.4 million of share repurchases, and R$50.2 million of payments of interest on own capital, partially compensated by R$325.5 million of financings. Before stock repurchases and interest on own capital, cash flow to equity was R$219.2 million.

Consolidated Cash Flow Summary (R$ MM, unaudited)

4Q19

4Q18(2)

% Var.

3Q19

% Var.

Net Income (Loss) For The Period

436.1

753.2

-42.1%

(171.1)

NM

Adjustment of Non-Cash Items

426.8

546.8

-21.9%

1,450.7

-70.6%

Net Income After Adjusting Non-Cash Items

862.9

1,300.0

-33.6%

1,279.6

-32.6%

Net Cash Provided to Operating Activities

962.3

1,071.6

-10.2%

1,075.7

-10.5%

Net Cash Provided to (Used In) Investment Activities

(325.0)

(484.8)

-33.0%

(264.7)

22.8%

Net Cash Flow

637.3

586.8

8.6%

811.0

-21.4%

Net Cash Used In Financing Activities

(398.9)

(615.2)

-35.2%

(441.3)

-9.6%

Net Increase (Decrease) in Cash, Equivalents and Accounts Receivable(1)

238.4

(28.4)

NM

369.7

-35.5%

Total Liquidity at The Beginning of Period

4,034.6

3,008.4

34.1%

3,664.9

10.1%

Accounts Receivable Beginning of Period

1,178.0

1,055.8

11.6%

1,282.3

-8.1%

Accounts Receivable End of Period

1,229.5

853.3

44.1%

1,178.0

4.4%

Total Liquidity at The End of Period

4,273.0

2,980.0

43.4%

4,034.6

5.9%

 

 (1) Includes cash, cash equivalents, short-term investments, restricted cash and accounts receivable. (2) Amounts restated in accordance with IFRS 16.

 

11

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Liquidity and Indebtedness

 

GOL increased its liquidity and reduced its cost of debt during 4Q19. As of December 31, 2019, the Company had total liquidity of R$4.3 billion, an increase of R$1.3 billion compared to December 31, 2018.

 

The Company registered total loans and financings as of December 31, 2019 of R$14.5 billion (including leases), a decrease of 0.4% versus 3Q19. During the quarter, the Company effected R$659.7 million of total debt service, including R$223.1 million of principal payments and R$36.9 million of interest payments on loans and financing, R$394.0 million of principal payments and R$5.7 million of interest payments related to lease obligations.

 

The net debt (excluding perpetual bonds and Exchangeable Notes) to EBITDA LTM ratio was 2.4x as of December 31, 2019, compared to 2.5x at September 30, 2019, in a quarter where the US dollar appreciated against the Real by 4.0%.  Including the perpetual bonds and Exchangeable Notes, the ratio of net debt to LTM EBITDA as 3.0x at December 31, 2019. The average maturity of the Company's long-term debt in 4Q19, including aircraft leases and financings and perpetual bond is 3.5 years. GOL’s average interest rate on local-currency debt reduced to 5.3%, and its average interest rate on U.S. Dollar-dominated debt, including aircraft leases and financings and perpetual bonds, reduced to 5.9%.

 

Liquidity (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

3Q19

% Var.

Cash, Cash Equivalents and Restricted Cash

3,043.5

2,126.7

43.1%

2,856.6

6.5%

Short-Term Accounts Receivable

1,229.5

853.3

44.1%

1,178.0

4.4%

Total Liquidity

4,273.0

2,980.0

43.4%

4,034.6

5.9%

Total Liquidity as % of LTM Net Revenues

30.8%

26.1%

4.7 p.p.

30.4%

0.4 p.p.

Indebtedness (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

3Q19

% Var.

Loans and Financings

1,229.5

713.6

72.3%

1,247.8

-1.5%

Aircraft Financing

1,322.4

1,459.6

-9.4%

1,234.6

7.1%

Aircraft Rent

6,052.8

6,283.0

-3.7%

6,218.1

-2.7%

Debt Issuance

3,528.1

3,745.0

-5.8%

3,567.9

-1.1%

Exchangeable Notes

1,783.0

-

N.M.

1,680.8

6.1%

Perpetual Notes

546.8

525.6

4.0%

564.9

-3.2%

Total Loans and financings

14,462.6

12,726.8

13.6%

14,514.1

-0.4%

Short-term debt

3,947.7

2,208.2

78.8%

3,811.3

3.6%

   Short-term Debt in US$

907.6

495.3

83.2%

845.4

7.4%

   Short-term Debt in BRL

289.4

289.0

0.1%

290.9

-0.5%

Long-term debt

10,514.9

10,518.7

0.0%

10,702.8

-1.8%

   Long-term Debt in US$

2,536.9

2,565.5

-1.1%

2,501.4

1.4%

   Long-term Debt in BRL

289.3

578.0

-49.9%

285.9

1.2%

Debt and Leverage(2) (R$ MM, unaudited)

4Q19

4Q18(1)

% Var.

3Q19

% Var.

Gross Debt

12,132.8

12,201.2

-0.6%

12,268.4

-1.1%

(-) Total Cash

3,043.5

2,126.7

43.1%

2,856.6

6.5%

Net Debt

9,089.4

10,074.5

-9.8%

9,411.8

-3.4%

% of debt in Foreign Currency

96.0%

93.2%

2.8 p.p.

96.0%

0.0 p.p.

% of debt in Short-Term

27.3%

16.4%

10.9 p.p.

26.3%

1.0 p.p.

% of debt in Long-Term

72.7%

83.6%

-10.9 p.p.

73.7%

-1.0 p.p.

LTM EBITDA(3)

3,860.7

3,163.6

22.0%

3,861.7

0.0%

Net Debt / LTM EBITDA

2.4x

3.2x

-0.8x

2.5x

-0.1x

Gross Debt  / LTM EBITDA

3,1x

3,9x

-0,8x

3,2x

-0,1x

(1)          The results have been restated based on IFRS 16. (2) Excluding Perpetual and Exchangeable Notes. (3) Excluding non-recurring results.

12

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

 

Financial Debt Amortization Schedule - 4Q19 (R$ MM)

 

 

 

Fleet

At the end of 4Q19, GOL's total fleet was 137 Boeing 737 aircraft, comprised of 130 NGs and 7 MAXs (the latter non-operational). At the end of 4Q18, GOL's total operating fleet was 121 aircraft, of which 6 were MAX aircraft. During the quarter, GOL entered a leasing contracts for 13 additional aircraft, of which 12 were 737-800 NG aircraft and 1 was a 737-700 NG aircraft. The average age of the Company's fleet was 9.9 years at the end of 4Q19.

Total Fleet at the End of Period

4Q19

4Q18

Var.

3Q19

Var.

B737s

137

121

+16

125

+12

B737-7 NG

24

24

0

24

0

B737-8 NG

106

91

+15

94

+12

B737-8 MAX

7

6

+1

7

0

 

As of December 31, 2019, the Company had 129 firm orders for the acquisition of Boeing 737 MAX aircraft, of which 99 were orders for 737 MAX-8 and 30 orders were for 737 MAX-10.

Fleet Plan

2019

2020E

2021E

>2022E

Total

Operating Fleet at the End of the Year

137

140

 

 

 

Aircraft Commitments (R$ MM)*

-

-

7,113.8

58,666.1

65,779.9

 (*) Considers aircraft list price.

In February 2020, GOL signed sale and leaseback agreements on 11 Boeing 737 Next Generation (NG) aircraft. GOL’s aircraft transactions demonstrate the consistent market value of Boeing 737 aircraft and the continuous value creation for all of GOL's shareholders.

 

13

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

Outlook

The Company’s guidance highlights key metrics which impact financial results and drive long-term shareholder value. GOL provides forward-looking information that is focused on the main metrics the Company uses to measure business performance. These indicators are useful for investors and analysts who project GOL’s results.

Financial Outlook (Consolidated, IFRS)

2020E

  2021E

Previous

Revised

 

Preliminary

Total fleet (average)

134 to 139

135 to 139

 

 

137 to 141

Total operational fleet (average)

127

125

130

ASKs, System (% change)

7 to 9

7 to 9

7 to 9

- Domestic

6 to 9

6 to 9

6 to 9

- International

15 to 20

7 to 10

15 to 20

Seats, System (% change)

6 to 8

8 to 10

6 to 8

Departures, System (% change)

6 to 8

7 to 9

8 to 10

Net revenues (R$ billion)

~15.5

~15.4

~17.0

EBITDA margin (%)

~30

~30

~31

EBIT margin (%)

~19

~19

~20

Pre-tax margin(1) (%)

~13

~13

~13

Effective income tax rate (%)

~15

~15

~15

Minority interest (R$ MM)

~311

~250

~270

Net Debt / EBITDA(3) (x)

~2.0x

~2.0x

~1.9x

Fully-diluted shares out. (2) (mm)

391

391

391

EPS, fully diluted(1) (R$)

2.80 to 3.30

2.65 to 3.15

4.00 to 4.70

Fully-diluted ADS out. (2)  (mm)

195.5

195.5

195.5

EPADS, fully diluted(1)  (US$)

1.40 to 1.65

1.25 to 1.50

1.90 to 2.30

         

 

(1) Excluding currency gains and losses and Unrealized gains/losses on Exchangeable Notes. (2) Assumes stock option exercises and conversion of the Exchangeable Notes. (3) Excluding Perpetual and Exchangeable Notes.

 

 

 

 

14

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Environmental, Social and Governance (“ESG”) Information

 

GOL seeks to be a world leader in making aviation more sustainable.

 

The Company manages greenhouse gas emissions (“GHGs”) through fuel efficiency and network management. Since 2016, the Company is in the ICO2 Index, has voluntarily adhered to the Carbon Pricing Leadership Coalition (CPLC), a global initiative to adequately price carbon to mitigate climate change and decarbonize the economy, and Below50, which puts together entities that undertake to use renewable fuel that reduce GHG emissions by 50% or more, if compared to equivalent fossil fuel.

 

And by providing ESG data to investors, GOL aims to encourage the airline industry as a whole to become more sustainable, green and transparent. GOL reports relevant ESG information to investors in accordance with the Sustainability Accounting Standards Board (“SASB”) standard for the airline industry (TR0201).

 

The Company is actively looking to increase its sustainability through the adoption of new aviation technologies that reduce fuel consumption and GHG emissions. As part of that strategy, the Company operates a standardized fleet and is transitioning to 737 MAX-8s, which consume 15% less fuel than the 737-800 NG aircraft. Estimates are that the 737 MAX will return to service in the second half of 2020, based on the latest guidance from Boeing, and that the MAX will be GOL's future aircraft that will carry Customers with maximum safety and fuel efficiency.

 

Environmental

2019

2018

2017

2016

Fuel

 

 

 

 

   Total Fuel Consumed (GJ x 1,000)

51,492

48,935

45,891

46,331

   % Fuel Renewable

0

0

0

0

   Total Fuel Consumed (liters x 1,000 /ASK)

28.9

29.2

29.5

30.0

  Gross global Scope 1 emissions

 

 

 

 

    Greenhouse gas (GHG) emissions (tons CO2)

3,743,873

3,394,307

3,316,590

3,348,291

    Greenhouse gas (GHG) emissions/flight hour (tons CO2)

8.7

8.3

8.1  

7.9

    Greenhouse gas (GHG) eliminated (tons CO2)

92,221

70,606  

138,910

36,820

    Greenhouse gas (GHG) compensated (tons CO2)

0

0

0

0

 Fleet

 

 

 

 

   Average Age of Fleet

9.9

9.5

9.2

8.0

Social

2019

2018

2017

2016

Labor Relations

 

 

 

 

  Employee Gender (% Male/Female)

55/45

55/45

55/45

55/45

  Age: Under 30 years (%)

26

29

26

27

     Between 30 and 50 years (%)

62

60

63

63

     Over 50 years (%)

12

11

11

10

Active Workforce Under Collective-Bargaining Agreements (%)

100

100

100

100

Number and Duration Of Strikes And Lockout (# days)

-

-

-

-

Customer & Company behavior

 

 

 

 

  Customer Satisfaction Index (SMS score)

8.28

8.39

8.33

8.24

  On-time Departures (%)

88.98

91.82

94.61

94.77

  Flight Completion (%)

98.10

98.49

98.50

94.20

  Lost Baggage (per 1,000 pax)

2.09

2.03

2.06

2.23

Safety

 

 

 

 

 Number of Fatalities

-

-

-

-

 Number of Governmental Enforcement Actions and Aviation Safety

-

-

-

-

Governance

2019

2018

2017

2016

Management

 

 

 

 

 Independent Directors (%)

50

44

44

44

 Participation of Woman in Leadership Positions (%)

33

38

37

35

Committees and Policies

 

 

 

 

 Number of Committees: All With Independent Members Included

 

5

5

5

 Compliance Policy (on IR Website)

ü

ü

ü

ü

 Disclosure of Information and Securities Trading Policy (IR website)

ü

ü

ü

ü

Shareholder Meetings

 

 

 

 

 Representation of Voting Capital at the Shareholders Meetings (%)

100

100

100

100

 

 

15

 

          GOL Linhas Aéreas Inteligentes S.A.

 


 
 

Earnings Report

Fourth Quarter 2019

   

 

Recently adopted accounting standards – IFRS 16              

 

In January 2016, the International Accounting Standards Board ("IASB") issued the accounting pronouncement "IFRS 16 - Leases" adopted in Brazil under CPC 06 (R2). The new standard came into effect for annual periods beginning on January 1, 2019.

 

For reference, find below the Company’s quarterly periods income statement for the year of 2018, in accordance with IFRS 16:

 

Statements of operations (R$ MM, unaudited)

1Q18

2Q18

3Q18

4Q18

2018

ASK

12,421.0

10,672.7

12,458.2

12,506.0

48,057.9

Net operating revenues

2,964.3

2,353.8

2,892.4

3,200.9

11,411.4

  Passenger

2,798.9

2,146.2

2,703.2

2,985.2

10,633.5

  Cargo and other

165.4

207.6

189.2

215.7

777.9

PRASK

22.5

20.1

21.7

23.9

22.1

RASK

23.9

22.1

23.2

25.6

23.7

Operating costs and expenses

(2,361.3)

(2,181.1)

(2,547.9)

(2,392.5)

(9,482.8)

  Salaries

(483.7)

(410.7)

(486.7)

(522.7)

(1,903.8)

  Aircraft fuel

(884.2)