17
GOL INTELLIGENT AIRLINES PUBLIC MEETING
GOL INTELLIGENT AIRLINES
PUBLIC MEETING
Disclaimer
This presentation has been prepared by Gol Linhas Aereas Inteligentes SA (together with its subsidiaries, “Gol” or the “Company”) for the exclusive use of the party to whom the Company delivers this presentation (such party, together with its subsidiaries and affiliates, the “Recipient”), contains proprietary and confidential information of the Company, and is not intended to be distributed to or reviewed by anyone other than the Recipient. The Recipient is not permitted to reproduce in whole or in part the information provided in this presentation or to disclose such information to any third party without the prior written consent of the Company. Although the Company believes the information is accurate in all material respects, the Company does not make any representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information contained in this presentation. Any estimates or projections contained in this presentation as to events that may occur in the future (including projections of future financial performance and forward-looking statements) are based upon the reasonable judgment of the Company.
Nothing in this presentation should be construed as either an offer to sell or a solicitation of an offer to buy any securities of Gol or any of its affiliates in any jurisdiction. In particular, securities may not be offered or sold (i) in the United States or to, or for the account or benefit of, U.S. persons, other than pursuant to an effective registration statement or in a transaction exempt from the registration requirements under the U.S. Securities Act of 1933, as amended, or (ii) in any other jurisdiction where registration or an exemption from registration is required, absent compliance with such requirements.
This presentation includes market and other information provided by various third-party sources, and is being delivered with the understanding that Recipient will conduct its own independent investigation of those matters that it deems appropriate without reliance on the Company or any materials set forth herein. While such information was obtained from sources considered reliable, the Company cannot guarantee the accuracy and truth of the same.
The information contained in this presentation has not been subject to any independent audit or review and may include certain forward-looking statements and projections provided by the Company. Any such statements and projections reflect various estimates and assumptions by the Company concerning anticipated results. No representations or warranties are made by the Company as to the accuracy of any such statements or projections. Whether or not any such forward-looking statements or projections are in fact achieved will depend upon future events, some of which are not within the control of the Company. Accordingly, actual results may vary from the projected results and such variations may be material. Statements contained herein describing documents and agreements are summaries only and such summaries are qualified in their entirety by such documents and agreements. As a result, Recipients should not rely on these forward-looking statements.
Nothing contained herein is, or shall be relied upon as, a promise or representation as to the past or future. The Company and its officers, directors, employees, professional advisors and agents, expressly disclaim any and all liability relating to or resulting from the use of this presentation. In addition, the information contained in this presentation is as of the date hereof, and the Company has no obligation to update such information, including in the event that such information becomes inaccurate.
This presentation has been prepared solely for informational purposes only. The Recipient should not construe the contents of this presentation as legal, tax, accounting or investment advice or a recommendation. The Recipient should consult its own counsel and tax and financial advisors as to legal and related matters concerning the matters described herein, and, by accepting this presentation, the Recipient confirms that it is not relying upon the information contained herein to make any decision. This presentation does not purport to be all-inclusive or to contain all of the information that the Recipient may require. Under no circumstances is this presentation or the information contained herein to be construed as a prospectus, offering memorandum, or advertisement, and neither any part of this presentation nor any information or statement contained herein shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Any decision to purchase securities in any offering of securities of Gol, its subsidiaries or their respective affiliates should be made solely on the basis of information contained in any offering document which may be published or distributed in connection with any such offering of securities.
The GOL Investment Thesis: Maximizing Returns
Largest Brazilian Airline, Hard-to-Replicate Network, Best Positioned for Long-Term Growth
1
World-Class Low Cost Flexible Operator, Premium Product
2
Highly Efficient Operating Model, Consistently Delivering Results
3
Attractive Entry Point with Significant Upsides 4
1
Unparalleled and Hard-to-Replicate Network Leading Market Position at Key Airports
GOL flights from Brasília, São Paulo and Rio de Janeiro
Other GOL flights
Rio
de
Jan
eir
o
Absolute Market Leadership
• 65% ASK share in the largest airport (the international airport)
– 2nd player has 17%
• 22 destinations from Rio de Janeiro - 2nd player offers only 14
São
Pau
lo More Convenience, Better Fit
• Largest number of destinations from both CGH and GRU
• Leadership in departures in peak times with 40% of share
• 52% ASK share in CGH
2
Source: DIIO, Nov/2018
Bra
silia
Best Schedule, Best Network
• 72% of seat capacity in peak times (2nd player has 16%)
• More than 50% of connecting traffic (strong barrier)
Different Strengths, Complementary Strategies
• Over 40% market share in top 5 domestic markets that represents 77% of Brazilian domestic traffic
• GOL has the highest Network Flexibility (in 2018 GOL’s domestic capacity was 24% higher in the high season, which represents a 17% variation in number of flights while the #2 player’s flexibility was only 7%)
1
GOL Leads where Passengers Want to Fly
Source: ANAC. (1) Ranking defined by total domestic traffic in 10M18. Top 10 airports include GRU, CGH, BSB, GIG, CNF, SDU, VCP, POA, REC and SSA.
Brazil’s largest markets are outperforming secondary terminals
GOL’s busiest domestic routes: high-traffic, high-yielding – with further room to grow
731 519 486 455
158 324
273 188
1.436
889
603
843 758
643
450 434 387 378
532 453 432 417 369
CGH - SDU CGH - POA CGH - BSB CGH - CNF GRU - POACGH - CWBCGH - REC CGH - SSA BSB - SDU GIG - POA VCP - CNF VCP - SDU VCP - POA VCP - CWB VCP - REC
GOL pax
Azul pax
Azul’s busiest domestic routes (‘000 pax in 10M18 – inbound and outbound)
(‘000 pax in 10M18 – inbound and outbound)
= Gol’s traffic in CGH-SDU
(YoY Growth in pax – inbound and outbound)
(20%)
(10%)
0%
10%
20%
30%
40%
VCP + Top 11-100
Top 10 Airports exVCP
(1)
(1)
3
(10%)
0%
10%
set/17 jan/18 mai/18 set/18
1
GOL Network Expansion, Diversification and Upgauging
(1) Source: SABRE. O-D (each way) (2) MIA, FLL, ORL and TPA
B737 MAX international network
& USD revenue markets
Strategic Partner Network
Range From GRU / GIG
Range From BSB / FOR
GOL Network
13 Codeshares and 80 Interlines for Global Distribution
26 34 40 91 91
235 249 267
326 811
1.197 1.747
0 500 1.000 1.500 2.000
Cuba
Equador
Panama
Paraguay
Bolivia
Peru
Colombia
Uruguay
Mexico
Chile
Florida
Argentina
Passengers per Year (000)1
2
(1) Source: SABRE. O-D (each way) (2) MIA, FLL, ORL and TPA
Traffic leveraged by GOL leadership in SAO, RIO, BSB and
FOR
Unlocking Demand
GOL’s new FOR hub allows more interline traffic and connectivity to Florida, Europe, the Caribbean and principal South and Central American cities
GOL’s 737Max drives increased international traffic and increases demand
GOL’s large BSB hub levers international expansion and network integration
Higher utilization and lower costs drive operating leverage
In addition to MIA, MCO, UIO and CUN, GOL can reach more than 15 new potential destinations with the MAX.
International Connectivity
4
1
GOL’s Cost Advantage
GOL’s cost advantages GOL’s competitive cost advantage
(Cask Ex-fuel, stage length adjusted in US$ cents / ASK) (CASK, stage length adjusted in US$ cents/ASK)
Max 8 would result in ~15% less fuel consumption (up to 5% increase in EBIT margin)
Lowest in Brazil and Region
4,0
5,0
6,0
7,0
8,0
9,0
10,0
11,0
12,0
13,0
1Q
14
2Q
14
3Q
14
4Q
14
1Q
15
3Q
15
3Q
15
4Q
15
1Q
16
2Q
16
3Q
16
4Q
16
1Q
17
2Q
17
3Q
17
4Q
17
1Q
18
2Q
18
3Q
18
Latin Comps (1)
Brazil Comps (2)
5
Source: Company filings (1) Copa, Latam Holdings and Avianca Holdings (2) Ocean Air (Avianca Brasil), Latam Brasil, and Azul Brasil (3Q 18 not provided to ANAC by Ocean Air and Latam Brasil)
- 2,00 4,00 6,00 8,00 10,00
ALASKA
JetBlue
Avianca H
LATAM
Southwest
Azul
WestJet
Copa
Allegiant
RyanAir
3Q17 4Q17 1Q18 2Q18 3Q18
2
GOL’s All B737 Fleet Lower cost and higher efficiency
Type # of planes Seats per plane (No. of planes)
Simplified fleet… … Enables GOL’s superior:
Scheduling efficiency
Maintenance efficiency
Operating efficiency
GOL has the highest service at the lowest cost
South America’s largest all-B737 fleet
GOL total fleet: 120 aircraft
737-700 fleet: 26 aircraft
737-800 fleet: 92 aircraft
737 MAX 8 fleet: 2 aircraft
133 Order for 737 MAX 8 (10 8s / 30 10s)
Flexibility
High utilization
6
B737 120 176
A320 Family 225 172
A350-900 6 348
B767-300 36 221-238
B777 10 379
B787 Family 24 247-313
Embraer E Jets 63 106-118
ATR 33 70
A320-Neo 17 174
A330 7 242-271
A320 Family 54 120-165
A330 6 252
Total: 120 (1) Average: 176
TAM:145/Total:301(1) Average: 176
Total: 120 (1) Average: 118
Total: 60(2) Average: 153
Latam
Azul
Avianca Brasil
(1) As of September 2018 (2) As of June 2018
2
591
2018
Service oriented, innovative platform …
GOL’s Best-in-Class Operations and Service
…ensures best-in-class passenger experience for high value customers
Driving Customer Loyalty in Brazil through High Value-added Products and Services
Selfie Check-in Most on time Departures Easy and Fast Flight Changes
Allows passengers to save time and check in from wherever they are
World’s first app to use facial recognition to allow customers to check in
93.2% of on-time departures
GOL Online
GOL’s Flexible ticket allows clients adapt their flight schedules
Flexible fares give clients freedom to change flights at no additional cost
+ +
98.5% flight completion
Only Brazilian airline with this technology
+
Functional Aircraft Services Best Customer Experience Loyalty Program + + Domestic Lounge brings home experience and
comfort to the airport Eco-Leather
Seats provide comfort during journeys
WiFi / Onboard Entertainment
Onboard sales / menu
GOL+ Conforto seats provide more leg room as well as priority boarding and check-in
Best network GOL + Conforto
The leading frequent flyer program in Brazil, with over 14mm members
Key differentiator, critical driver of customer loyalty
7
Most daily flights to main Brazilian destinations
1st
Source: Company and ANAC. (1) Includes flights from or destined to GRU, CGH, BSB, GIG or SDU. (2).As of September 2018.
(1)
2
Right-sized Operations
8 Source: Company filings, Company estimates 1. Average of last four quarters
Total Fleet (# of Aircraft) ASKs (Millions)
49,633 47,765
30,000
40,000
50,000
60,000
2013A LTM 2018
137
120
80
100
120
140
2013A LTM 2018
-(12.6)%
21
26
15
20
25
30
2013A LTM 2018
30
33
20
25
30
35
40
2013A LTM 2018
ASK / Month / Aircraft (Millions) RPK / Month / Aircraft (Millions)
-(3.8)%
10.1%
25.6%
1
GOL’s discipline and flexibility were essential to make the Company even more efficient and prepared for the growth of the coming years
3
GOL’s 737 MAX Advantages
Increases Capacity and Network Flexibility
Maintains fleet growth ~3% p. year (~GDP)
737-10 is largest and most efficient MAX (increased capacity in saturated/constrained airports)
737-10 has lower operating costs per seat
GOL’s 737 MAX Order
737 MAX Advantages Lower operating costs than A320neo
Lower fuel consumption than 737NG
Longer range to connect more markets
Improved aerodynamics and advanced technology winglets
Lighter weight (lower fuel use, maintenance costs, landing and navigation fees)
Less hangar time than A320 family: more reliable, less days out of service, less frequent checks, less man hours per check
New technology features
9
3
6
63
115
79
121
142
0
20
40
60
80
100
120
140
160
2018E 2023EMAX NG
Fleet Upgauging Drives Efficiency and Operating Leverage
10 Source: Company’s filings and estimates, Boeing.
The 737 MAX will be the backbone of GOL’s fleet, increasing average seat per aircraft and bringing incremental cost per seat to very low levels
167 169 168
174 178 179 180
181 184 185
187 189 189
2015A 2016A 2017A 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E
The MAX Effect: More Average Seats per Aircraft
737 NG (#) 737 MAX (#)
119 -
130 -
144 -
102 24
114 6
89 45
96 34
79 63
84 54
67 82
73 72
58 99
61 92
Total (#) 119 130 144 126 120 134 130 142 138 149 145 157 153
+13% increase in productivity (2017A – 2027E)
+29% increase in aircraft
+45% increase in capacity
-6% reduction in fuel consumption per flight hour (2018E – 2023E)
Fuel consumption per flight hour
12.5% increase in capacity solely as a function of seat per aircraft
3 When the transition to the MAX is complete, will increase productivity by ~24%
Total Fleet (# of Aircraft) ASK / Month / Aircraft (Billions)
17.4%
24.1%
1.1%
33
41
10
20
30
40
50
2018E 2023E
3.51 3.44
3.38
3.41 3.35 3.29
3.26 3.23
3.21
GOL has the Most Competitive Operations
11
Source: Company filings, ANAC Notes: (1) Financial figures include only for Brazilian operations as of June 2018 (YTD 6M) (2) Based on a BRLUSD foreign exchange rate of 0.250 as of 9/30/2018; Copa CASK based upon the average of each quarter YTD
GOL LATAM Brazil1 Azul Avianca Brazil
1 Copa
Domestic Market Share (2018) 35.9% 31.7% 19.1% 13.5% None
% of Domestic ASK 89.3% 50.4% 74.6% 76.1% None
Business Model LCC Legacy Hybrid Legacy Hybrid
Market Share on Top 5
Largest Brazilian Airports
• Sao Paulo(CGH+GRU): 39%
• Rio (SDU+GIG): 48%
• Brasilia: 35%
• Sao Paulo(CGH+GRU): 39%
• Rio (SDU+GIG): 25%
• Brasilia: 43%
• Sao Paulo(CGH+GRU): 7%
• Rio (SDU+GIG): 12%
• Brasilia: 5%
• Sao Paulo(CGH+GRU): 16%
• Rio (SDU+GIG): 15%
• Brasilia: 17%
• Sao Paulo(CGH+GRU): n.a.
• Rio (SDU+GIG): n.a.
• Brasilia: n.a.
Network Destinations 70 77 109 31 80
Alliances
• Delta and Air France KLM
• 13 Codeshares
• 80 Interlines
• One World
• United shares up to 8.0%
• 7 Codeshares
• 7 Interlines
• Star Alliance Member
• 9 Codeshares
• (+) 30 Interlines
• Star Alliance Member
Fleet• Single Fleet
• Boeing 737 Family
• Multiple Fleet
• Airbus Narrow-body Family
and A-350
• B–767, B-777
• Multiple Fleet
• A-320 Neo, A-330
• ATR-72, E190, E195
• Multiple Fleet
• Airbus Family and A-330
• Multiple Fleet
• Boeing and Embraer
YTD 9M EBIT Margin (%) 8.9% (2.3%) 7.8% 1.5% 13.6%
YTD 9M EBITDA Margin (%) 14.8% 0.3% 11.9% 2.9% 20.0%
CASK Ex-fuel (R$ Cents) 2 13.3 15.0 19.7 16.5 14.5
3
Capital Structure Improvements
Source: Company filings
Net Debt Before Adoption of IFRS 16
With the up-coming adoption of the IFRS16 standard, GOL will show a reduction in debt
(R$ in billions)
12
Net Debt After Adoption of IFRS 16
(R$ in billions)
$20.3
$13.3
$7.0
Adj. Enterprise Value7.3xEBITDAR3Q2018 LTM
Adj. Net Debt Current Equity Value
$11.1
Net Debt PostIFRS 16
US$2.2bn
4
$8.5
10,30
0,00
3,00
6,00
9,00
12,00
15,00
01/01/2016 01/05/2016 01/09/2016 01/01/2017 01/05/2017 01/09/2017 01/01/2018 01/05/2018 01/09/2018
Pri
ce in
US$
The repeated consistency of Gol results guaranteed a unique development in the company stock price, consistently surprising brokers expectations
August 16, 2016
“Constructive outlook and advancement of restructuring confirm that skies are clearing. GOL’s management introduced an EBIT margin range of 4%-6% in its outlook for 2016 at the same time that it reiterated its commitment to capacity cuts.”
“Better-than-expected Q3; lower costs were main positive GOL reported a solid set of Q3 results, mostly driven by cost reductions...“ November 07, 2016
“Better-than-expected op. results; EPS beat boosted by FX/tax credit.
November 8, 2017
“3Q18 First Blush - Better Than Expected Operating Results and Outlook (…) Looking ahead, the outlook is better than we would have anticipated”
November 1, 2018
April 04, 2017
“1Q17 preliminary results: good profitability; lower than- expected yields.“
“GOL reported decent non-audited 2Q18 main financials, slightly above our expectations…” July 5, 2018
GOL’s Strong Consistency in Delivering Results
GOL Stock Performance and High Results Consistency
Source: Research Reports 13
4
$1.8
$ -
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
MarketCapitalization
FleetTransformation
OperatingLeverage
CapitalStructure
IFRS 16Effects
ImpliedCapitalization
Attractive Entry Point
Source: FactSet as of 12/17/18 Note: Based on daily BRLUSD exchange rate
15
Market Capitalization Since IPO (USD billions)
$1.8
$ -
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0
Jul-04 Dec-05 May-07 Oct-08 Apr-10 Sep-11 Feb-13 Aug-14 Jan-16 Jun-17 Dec-18
Maximum market capitalization of $7.9bn on 4/25/06
GOL Initiatives (USD billions)
4
