São Paulo, November 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 third quarter of 2012 (3Q12). 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 third quarter of 2011 and second quarter of 2012 (3Q11 and 2Q12). The results for the quarter include 100% of Webjet’s, since october 3, 2011.

­­­­­3Q12 HIGHLIGHTS

     Passenger revenue per available seat kilometer (PRASK) increased by 3.4% year over year, reflecting the strategy of reducing capacity and maximizing the aircraft load factor, which increased  by   2.4 p.p. over 3Q11.  

     GOL continued to implement its strategy of adjusting domestic supply, posting a reduction of 8.4% in the third quarter, considering the traffic data of both GOL and Webjet (pro-forma). The Company also achieved its goal of increasing the load factor, which reached 74.3% in the domestic market, the best period performance since 2006. Demand fell by 5.6%, also considering data from both GOL and Webjet (pro-forma).

     Salaries, Wages and Benefits per ASK per ASK fell by 2.4% year over year, as a result of the Company's efforts. This reduction contributed to the maintenance of a CASK excluding fuel expense at the same level of the previous year's nine months result.

     In July, GOL announced changes in its international route network, introducing new direct flights from São Paulo/Guarulhos to Montevidéu (Uruguay), Asunción (Paraguay) and Santa Cruz de La Sierra (Bolivia).  

     As a result of the successful experience in 3Q12 with flights which are not part of the regular route network and the focus on exploring markets that can be served by the Boeing 737NG fleet, in October GOL announced regular daily flights from Guarulhos to Orlando and from Rio de Janeiro/Galeão to Miami, with a stopover in Santo Domingo (Dominican Republic), where passengers can change aircraft depending on their final destination. Ticket sales for these flights began on October 26. This operation is in line with the Company’s low-cost business model and strategy of bringing  more benefits to its clients.

     In 3Q12, the Company returned another three Boeing 737-300 aircraft from Webjet’s fleet, totaling four to date. Webjet closed the quarter with seven 737-800s, which will ensure greater operational efficiency, especially in terms of fuel consumption and increased passenger comfort.

     On July 24, 2012, Edmar Prado Lopes Neto was elected at a Board of Directors meeting as the new Investor Relations Officer, assuming the duties as GOL’s Chief Financial Officer – CFO.

SMILES

     Smiles closed 3Q12 with approximately 8.9mn members, 10% up over 3Q11. The redemption of mileage points to fly with partner airlines (Delta, Air France, KLM and Qatar) posted a year to date increase of 53%, largely due to the new online platform for redeeming mileage points, as well as members’ improved perception of the program.

     In July, GOL announced the launch of a new flight to Miami exclusively for Smiles members. These flights, which were not part of the regular route network and operated on weekends only, began on July 7 and ended on August 4, totaling five in all. This initiative proved highly successful, with 100% of tickets sold.

     In October, Smiles announced the creation of an online platform (Smiles Shopping) through which clients can use their accumulated mileage points to acquire not only air tickets, but also around 300,000 new products and services from various partners. The new platform offers more benefits to all clients, increasing their options for using points to acquire products and services provided by Smiles partners.

     The SMILES shopping partners include, among other partners, Natura, Walmart, Pão de Açúcar, C&A, Editora Abril, Marisa, Chilli Beans, Kinoplex, Compra Fácil, Tok & Stok, AACD, Telha Norte, Games to Go, Bebê Store, Netshoes, Assaí and Polishop. The full list is available on the Smiles website.

     GOL is on-schedule with the transformation of the Smiles loyalty program into an independent business unit by the end of this year. The Company believes that segregating this unit will add value to its business as a whole. It also represents a future capitalization alternative, although the Company has not yet taken any decision regarding this option.

SUBSEQUENT EVENTS

     On October 10, 2012, the Brazilian Antitrust Authority (CADE) approved the acquisition of Webjet Linhas Aéreas S.A by VRG Linhas Aéreas S.A., a subsidiary of GOL Linhas Aéreas Inteligentes S.A., with no restrictions. As a result, the Company will adopt operational measures to increase efficiency and improve services. The slots of both companies in the airports where they operate were maintained. Approval was subject to the execution of a Term of Undertaking (TCD), which determined the achievement of certain operational efficiency levels, especially in relation to maintenance, and a minimum regularity index of 85% in the use of operational hours at Santos Dumont airport. Currently, GOL already fulfills the requirement of the National Civil Aviation Agency (ANAC) of a minimum regularity ratio of 80% at this airport. The acquisition of 100% of Webjet’s capital, announced on August 1, 2011, had already been approved by ANAC on October 3, 2011. In view of CADE’s decision, the Company will adopt measures to increase efficiency and improve its services. 

     On October 1, the Company announced an additional purchase order for 60 Boeing 737 MAX from the U.S. aircraft manufacturer Boeing, which will be delivered as of 2018. GOL will use the new aircraft to renew its fleet in the future. The decision is in line with its commitment to further improving its operational efficiency with a young and  modern fleet.  

MESSAGE FROM MANAGEMENT

        During the quarter, GOL posted a consolidated operating loss (EBIT) of R$200 million and a net loss of R$309 million due to a combination of factors, including an increase of 20% in fuel over the previous year, a new exchange rate level, increase in airport fees and slow pace of Brazilian economic growth. This scenario reflects a challenging moment for the domestic aviation industry.

In response to this scenario, GOL has strengthened its strategy of adjusting domestic capacity in order to maximize load factor. Searching for more efficiency, GOL's route network has been centralized on profitable routes, while the workforce is still being reviewed by the Company. The impact of these measures will be gradual. In 3Q12, the strategy to adjust capacity continued to present results and load factor increased by 2.4 percentage points year over year.  Also, was an increase of 3.4% in passenger revenue per available seat kilometer (PRASK). These figures underline GOL's efforts to adjust its operation to the current macroeconomic scenario.

Even with this challenging scenario, GOL maintained a Cash Position of R$1.9 billion (22.9% of LTM Net Revenues) and without pressure for refinancing on the short term.

Another important move was CADE’s approval for Webjet’s acquisition by VRG in October, as already expected by the Company. This decision will allow GOL to keep searching for addional operational efficiencies between the Companies throughout this challenging scenario for the airline industry. After the approval, sales of both companies have been incorporated in GOL's website. Both companies continue to seek for other measures of operational integration.

The period was also marked by some important initiatives to strengthen the national aviation industry in the short and long term. In the short term, the government approved an incentive measure for the sector by reducing the airlines’ taxes on their payroll, GOL’s second highest expense after fuel. The country’s leading airlines created the Brazilian Airline Association (ABEAR) to discuss questions of common interest with the government and the regulatory agencies, an initiative that has been adopted by many important sectors of the Brazilian economy.

GOL maintained its focus on the creation and development of an independent Smiles business unit, aiming to improve its management and explore an increasingly attractive market with enormous growth potential in the coming years. Several initiatives were implemented to strengthen the program, including flights to the United States exclusively for Smiles clients and the creation of Smiles Shopping, both of which were designed to add even more value to this business model. As a result of this positive experience,  GOL announced the beginning of regular flights fto Orlando, Miami and Santo Domingo.

The period also saw some important strategic decisions by the Company. In October, GOL announced an additional purchase order for 60 737 MAX aircraft from Boeing. The new aircraft, which will be delivered as of 2018, will allow GOL to continue offering the most up-to-date equipment to its passengers in South America, while further increasing the cost efficiency of its flights, since the 737 MAXs are even more fuel-efficient than the B737 NGs. GOL will be the first Company in South America, and one of the first in the world, to use the new aircraft.

Throughout the quarter, GOL strengthened its focus on the provision of air services. GOL and Webjet’s combined route network achieved a punctuality ratio of around 94% and remote check-in via the web, smartphone and kiosk accounted for around 55% of period boardings (also on the combined network), versus 35% in 3Q11. The on-board sales service (buy on board), which offers passengers more options without the need to increase fares, is already present on 50% of daily flights, around four times more than in the same period last year. The Boeing 737 NG fleet closed the quarter with an average age of 7.4 years, one of the youngest in the global aviation industry. The spirit of service is an integral part of GOL’s DNA.

The Company would like to take this opportunity to thank its employees for their unwavering dedication and motivation, attitudes that are making GOL increasingly the best company to fly with, work for and invest in.

Paulo Sérgio Kakinoff | CEO of GOL Linhas Aéreas Inteligentes S.A.  

AVIATION MARKET - INDUSTRY

Domestic aviation industry supply remained virtually flat over 3Q11, edging up by just 0.2%, while demand increased by 7.4%, due to the reduction of flights in GOL’s operational markets, a decision shared by all the key airlines, which was a response to the industry’s new cost level and the sluggish growth of Brazilian GDP. In September, domestic supply fell by 2.1% year over year, after eight consecutive years of growth. The last time supply dropped in September was in 2003.

The domestic load factor stood at 76.0%, versus 70.9% in 3Q11 (up by 5.1 p.p.). In the first nine months, domestic supply and demand moved up by 5.5% and 7.3%, respectively, over 9M11, confirming the industry’s trend towards more conservative supply additions and the creation of a more mature sector focused on recovering operating margins.

Data from the Brazilian Civil Aviation Agency (Anac); the 3Q11 operating figures were recalculated in accordance with the current DCA Manual.

AVIATION MARKET – PRO-FORMA CONSOLIDATED DATA (GOL + Webjet)

The information below refers to GOL and Webjet’s pro-forma route network, i.e. including Webjet’s traffic data in 3Q11. Pro-forma figures are used to ensure better comparisons of the Company’s route network trends.

     Data from the Brazilian Civil Aviation Agency (Anac); the 3Q11 operating figures were recalculated in accordance with the current DCA Manual.

DOMESTIC MARKET

Supply on GOL’s pro-forma domestic route network fell by 8.4% over 3Q11, chiefly due to the flight rationalization strategy adopted by the Company as of March 2012 as a result of the challenging macroeconomic scenario for the civil aviation sector in Brazil. In line with this strategy, supply (-8.4%) fell more than demand (-5.7%), leading to a 2.2 p.p. increase in the domestic load factor. In 2012, the Company expects its domestic supply to decline by between 2.0% and 4.5% over 2011. In the first nine months of 2012, GOL reduced its domestic supply by 1.6% year over year.

GOL’s domestic demand fell by 5.7%, chiefly due to the exceptionally modest recovery of Brazil’s economy in 3Q12, combined with the 8.4% period decline in ASK. 

INTERNATIONAL MARKET

International supply moved up by 7.0% over 3Q11, chiefly due to the restructuring of the international route network, which added new flights from Guarulhos to Montevideo (Uruguay), Asunción (Paraguay) and Santa Cruz de La Sierra (Bolivia). There was also an increase in the number of flights that are not part of the regular route network, including those to Miami and Orlando (USA), offered exclusively to Smiles members.

International demand moved up by 8.8%, also mainly due to the same reasons that impacted international supply.

DEMAND (RPK) and LOAD FACTOR

As a result of the above, the total load factor climbed by 2.0 p.p. to 73.8% (from 71.1% in 3Q11), the Company’s best figure since 2007.  

CONSOLIDATED OPERATING INDICATORS (GOL and Webjet)

The indicators below do not include Webjet in 3Q11 and 9M11.

   3Q11 and 9M11traffic figures were recalculated in accordance with the current DCA Manual.

CONSOLIDATED INCOME STATEMENT

NET REVENUE

Net revenue came to R$1,987.3mn in 3Q12, 7.8% up on the R$1,843.7mn reported in 3Q11, mainly due to the 7.7% period increase in total demand. Total net revenue per ASK (RASK) grew by 3.4%.  

    *3Q11 and 9M11 figures do not include Webjet.

     The 7.8% positive year over year variation in net passenger revenue was mainly a reflection of the 7.7% upturn in consolidated demand. In 3Q12, PRASK climbed by 3.4% as a result of the 2.4 p.p. increase in the load factor, while yield remained flat. The Company reinforces its efforts to increase PRASK by maximizing the load factor. For the seventh consecutive time in 2012, PRASK posted a month-on-month increase, according to September’s traffic release.

     Ancillary revenue came to R$227.3mn, 7.7% up on the R$211.1mn recorded in 3Q11, accounting for 11.4% of total net revenue (versus 11.5% in 3Q11). This increase was due to: (i) the 25.0% upturn in revenue from flight rebooking charges, no show, passenger services and ticket cancellations, chiefly due to the 11% upturn in passenger numbers, combined with the increase in fees for these services in the first half of 2012; (ii) an increase of approximately 300% in revenue from charter flights, due to the higher number of flights that are not part of the regular route network, including those to the U.S. that are restricted to Smiles members; and (iii) the 5.0% rise in excess baggage revenue. Consolidated ancillary revenue per ASK increased by 3.4% year over year.

CONSOLIDATED OPERATING COSTS AND EXPENSES

Total consolidated operating costs and expenses moved up by 14.0% over 3Q11 to R$2,188.0mn. Total CASK came to 16.85 cents (R$) in 3Q12, 9.4% up year over year. CASK ex-fuel stood at 9.63 cents (R$), up by 2.3%, mainly due to: (i) the 24.0% average depreciation of the real against the dollar, (ii) the lower dilution of fixed costs in the quarter due to the strategy of reducing domestic capacity; and (iii) higher landing fees following the increase in navigation assistance fees introduced by Infraero. The upturn in CASK ex-fuel was partially offset by the reduction of salaries, wages and benefits following the downsizing of GOL’s workforce this year.

*3Q11 and 9M11 figures do not include Webjet.

     Aircraft fuel costs per ASK totaled 7.21 cents (R$), 20.6% up on 3Q11, chiefly due to the fact that jet fuel prices remained high throughout the quarter, around 20% higher more than in the same period last year, but virtually flat in relation to 2Q12. There was also an increase of around 6.0% in fuel consumption between the periods. Fuel expenses accounted for around 43% of total consolidated expenses in 3Q12, versus 39% in 3Q11.

     Salaries, wages and benefits per ASK came to 2.88 cents (R$), 2.4% down on 3Q11. The reduction in this line was due to the Company’s decision to resize its workforce in order to maintain its disciplined business plan. GOL closed the quarter with 18,356 employees, 10.7% down on the 20,548 recorded at the end of 1Q12, when the flight rationalization strategy was first implemented.

     Aircraft leasing costs per ASK stood at 1.35 cents (R$), 55.2% up on 3Q11, due to the higher number of aircraft under operational leasing contracts (99 in 3Q12, versus 80 in 3Q11), combined with the 24% period depreciation of the real against the dollar, given that most aircraft leasing costs are dollar-pegged.

     Sales and marketing expenses per ASK totaled 0.82 cents (R$) in 3Q12, 9.1% down on 3Q11, due to the decline of approximately 10% in sales volume between the periods, in turn largely due to the competitive scenario at the beginning of 3Q11, which fueled sales in that quarter. In addition, there was an increase in the level of these expenses due to the  reclassification of expenses with the mileage points of international partners from the “others” line to this line (R$12 million on 9M11). This expense increased by around 75% year over year due to the strengthening of the partnerships and the implementation of the online platform for redeeming air tickets from partners through the Smiles website.

     Landing costs per ASK stood at 1.12 cents (R$), 40.1% up on 3Q11, due to: (i) the negative impact of the new fee calculation methodology introduced by Infraero (increase in landing and navigation assistance fees); (ii) the 4.2% reduction in the average stage length, pressuring the cost per ASK of this expense; (iii) the 10.8% increase in the number of departures; and (iv) the 24.0% average depreciation of the real against the dollar.

     Aircraft and traffic servicing expenses per ASK increased by 9.1% over 3Q11 to 1.04 cents (R$), due to: (i) the 4.2% reduction in the average stage length, pressuring the cost per ASK of this expense; (ii) the 10.8% increase in the number of arrivals and departures, which impacted expenses from handling, collection and forwarding, among others; and (iii) the 24.0% average depreciation of the real against the dollar.

     Maintenance, materials and repairs per ASK came to 0.65 cents (R$), 38.0% down on 3Q11, chiefly due to: (i) the lower number of engine removals for maintenance (four in 3Q12, versus nine in 3Q11); and (ii) the reduced cost of engine overhauls due to the agreement between GOL and Delta Techops. These costs were partially offset by the 24.0% average depreciation of the real against the dollar, given that most maintenance expenses are dollar-pegged.

     Depreciation and amortization per ASK increased by 28.2% over 3Q11 to 0.93 cents (R$), due to: (i) the upturn in the depreciation of estimated aircraft reconfiguration costs which will be incurred when the aircraft are returned, and costs from improvements related to major engine maintenance established in the contracts; (ii) the addition of six Boeing 737-300s from Webjet owned by the Company; and (iiii) the higher number of aircraft under financial leasing (45 in 3Q12, versus 44 in 3Q11).

Other operating expenses per ASK fell by 33.7% to 0.84 cents (R$), versus 1.27 cents in 3Q11, due to a non-recurring expense of R$50.0mn in 3Q11 due to system improvements and developments. Excluding this non-recurring item, other operating expenses per ASK moved up by close to 3.1%, due to: (i) the 10.8% increase in the number of arrivals, which impacted the variable expenses making up this line (crew travel, accommodation, daily expenses and others); and ii) the 24.0% average depreciation of the real against the dollar.

OPERATING RESULT

The 3Q12 consolidated operating result (EBIT) was a negative R$200.7mn, with a negative operating margin of 10.1%, versus the negative R$75.1mn and negative margin of 4.1% recorded in 3Q11. This result was mainly due to: (i) the upturn of around 20% in the per-liter jet fuel price; (ii) the weak recovery of the economy in 3Q12, which adversely affected demand for air travel in Brazil; (iii) the negative impact of the new fee calculation methodology introduced by Infraero; and (iii) the 24.0% average depreciation of the real against the dollar, given that around 55.0% of the Company’s costs are dollar-pegged.

In view of the challenging macroeconomic scenario, GOL is maintaining its strategy of adjusting domestic capacity and reducing costs, aiming at the gradual resumption of positive operating margins, and remains focused on strengthening its low-cost DNA. The slight 2.3% increase in CASK ex-fuel over 3Q11, and the fact that this figure remained flat over 9M11, despite the much more challenging scenario of lower cost dilution and the more expensive dollar, are confirmation of the Company’s efforts to further reinforce its low-cost business model.

   * 3Q11 and 9M11 figures do not include Webjet.

HEDGE RESULT

The Company uses hedge accounting to book its some derivative instruments. In 3Q12, the Company recognized net income from hedge operations of R$45.6mn. 

*OCI (Other Comprehensive Income) or Statement of Comprehensive Income is a transitional account where positive and negative fair value adjustments of future operations are booked, designated for effective cash flow. The purpose is to state income as close to the Company’s reality as possible. As the results from operations occur in their respective accrual periods, they are incorporated into the Company's income. GOL records the fair value of hedges due in future periods that aims to cash flow protection.

Of this total, R$1.8mn was recognized in the operating result and R$43.8mn in the financial result (for more details see the Financial Result section). 

        Fuel: fuel consumption hedge transactions, which are effected through derivative contracts related to crude oil and its by-products (WTI, Brent and heating oil), generated gains of R$48.9mn in the quarter. Of this total, R$11mn is from contracts maturing in 3Q12, and R$37.9mn from contracts maturing in the future.

        Foreign Exchange: foreign exchange hedge transactions designed to protect the Company’s cash flow generated losses of R$1.3mn, which were booked under the financial result. 

        Interest: swap transactions to protect cash flow from aircraft leasing against an increase in interest rates generated a net expense of R$1.9mn, which was booked under the financial result.

The table below shows the nominal value of derivatives contracted as a hedge against future expenses, the derivatives’ average contracted rate and the percentages of hedged fuel exposure on an accrual basis on September 30, 2012:

*Weighted average of derivative strike prices.

** On 9/30/2012, the exchange rate was R$2.0306 / US$1.00. 

All the financial instruments used for hedging purposes this quarter consisted of Brent and WTI call options, Libor interest rate swaps and dollar futures and options traded on the stock exchange. GOL focuses on simplified derivative structures, aiming to reduce its operating risks and ensure as much compliance as possible with the targets established in its annual budget.

NET FINANCIAL RESULT

The 3Q12 consolidated net financial result was an expense of R$77.7mn, 86.4% lower than the net expense of R$572.8mn recorded in 3Q11.

*3Q11and 9M11figures do not include Webjet.

          Interest expenses totaled R$112.5mn, 3.0% up on 3Q11, primarily due to: (i) the booking of interest from new funding operations since the end of 3Q11 totaling approximately R$450mn (working capital, Citibank, Finimp, Safra, Banco IBM and others); (ii) the 9.5% year over year reduction in the end-of-period US$/R$ exchange rate, which had an adverse impact on the Company’s dollar-denominated debt (70% of the total in 3Q12); and (iii) the addition of one aircraft under financial leasing to the fleet (45 in 3Q12, versus 44 in 3Q11). These expenses were partially offset by the settlement of loans and the reduction in the benchmark interest rate (SELIC), which had a positive impact on the Company’s real-denominated debt.

         The exchange variation generated an expense of R$6.3mn, 98.7% down on the R$476.4mn recorded in 3Q11. This expense was chiefly due to the 0.5% variation in the end-of-period exchange rate between 2Q12 and 3Q12. In regard to the R$476.4mn expense recorded in 3Q11, the variation was 19% over 2Q11. The depreciation of the real against the dollar has a negative impact on this line, given that most of the Company’s debt is foreign-currency-denominated (70% in 3Q12).

         Financial income totaled R$21.4mn in 3Q12, 45.7% down on the R$39.4mn recorded in 3Q11, mainly due to the lower volume of cash invested in the period and the reduction in the SELIC, given that most of the Company’s cash investments are pegged to the CDI interbank rate. 

         Other financial expenses moved up by 116.7% to R$24.1mn from R$11.1mn in 3Q11, chiefly due to a loss of R$11.1mn in escrow deposits related to the acquisition of Webjet.

INCOME TAX

Income tax represented an expense of R$31.0mn in 3Q12, versus a gain of R$131.4mn in 3Q11, mainly due to the reversal of provisions for income tax and social contribution on COFINS/PIS contingencies, as detailed in note 21 of the financial statements. The gain reported in 3Q11 was due to the positive impact on deferred taxes, as a result of the 19% end-of-period depreciation of the real against the dollar and the addition of three aircraft under financial leasing, which generated a temporary difference in taxable income.

* 3Q11 and 9M11 figures do not include Webjet.

NET INCOME (LOSS)

GOL posted a net loss of R$309.4mn, with a negative net margin of 15.6%, versus a net loss of R$516.5mn (negative net margin of 28.0%) in 3Q11. The 3Q12 loss was chiefly due to the period operating loss caused by the impact of the challenging macroeconomic scenario on the Brazilian civil aviation sector. This scenario reflects a combination of the following factors: (i) the year over year upturn of around 20% in jet fuel prices; (ii) the new level of the exchange rate; (iii) the sluggish growth of Brazil’s economy, which impacted demand in the sector; and (iv) the increase in Brazilian airport fees.

Since the end of March 2012, the Company has been working on adjusting its operating capacity to the new growth and cost situation in Brazil’s civil aviation sector. In 2012, the Company expects to reduce its domestic supply by between 2.0% and 4.5% over 2011 by focusing operations on the more profitable markets in its route network, becoming more dynamic and gradually resuming positive operating margins, despite the adverse scenario mentioned above.

CONSOLIDATED FINANCIAL INDICATORS

* 3Q11 and 9M11 do not include Webjet.

MACROECONOMIC INDICATORS

Source: (1) Brazilian Central Bank (2) FGV (3) IBGE (4) Bloomberg; operating data were recalculated in accordance with the current DCA Manual.

BALANCE SHEET

LIQUIDITY

Cash and cash equivalents (including short-term and long-term restricted cash and investments) ended the quarter at R$1,879.2mn, 14.1% down on 3Q11, chiefly due to the year-on-year decline in LTM cash generation, higher interest expenses and increased investments in fixed assets (CAPEX).

GOL maintained its strong cash position, with total cash representing approximately 22.9% of LTM net revenue. At the end of 3Q12, the Company’s total cash comprised of: (i) cash and cash equivalents of R$1,050.6mn; (ii) R$662.2mn in immediate liquidity financial assets; and (iii) R$166.4mn in short and long-term restricted cash. Total cash represented 3.1x obligations due in the next 12 months (versus 5.0x in 2Q11).

Short-term receivables mainly comprise ticket sales via credit card and accounts receivable from travel agencies and cargo transportation. At the end of 3Q12, these receivables totaled R$381.0mn, 16.7% more than the R$326.6mn reported in 3Q11, chiefly due to the incorporation of Webjet’s receivables balance of R$31.0mn into GOL’s consolidated balance sheet and the period upturn in sales volume.

INDEBTEDNESS

On September 30, 2012, the Company’s total loans and financings came to R$5,259.5mn, 11.3% up on 3Q11, mainly due to: (i) new funding operations since the end of 3Q11 totaling approximately R$450mn, including the liabilities incorporated from Webjet since its acquisition on October 3, 2011 (working capital, Citibank, Finimp, Safra, Banco IBM and others); (ii) the 9.5% end-of-period depreciation of the real against the dollar; and (iii) the addition of one aircraft under financial leasing to the Company’s total fleet (45 in 3Q12, versus 44 in 3Q11). In relation to 2Q12, there was an increase of 0.5%, largely due to the net effect of around R$25.0mn from period funding operations and the settlement of loans.

Excluding the perpetual bonds, the Company’s total debt closed the quarter with an average term of 6.5 years and an average rate of 11.5% for local-currency debt and 6.6% for dollar-denominated debt. GOL ended the quarter with a leverage ratio (adjusted gross debt/EBITDAR) of 17.7x, versus 9.2x in 3Q11 and 16.0x in 2Q12. This indicator considers the leverage methodology used by the market, adding operational leasing expenses in the last 12 months times seven (the average duration of a leasing contract) to the Company’s total debt.

The table below separates the Company’s total debt into financial debt and debt related to aircraft financing under financial leasing in GOL's balance sheet, as well as future financial obligations from operational leasing contracts that cannot be canceled and are booked under the operating result (off balance sheet). 

GOL ended 3Q12 with a net financial commitments/EBITDAR ratio (LTM) of 11.1x, versus 5.2x in 3Q11 and 10.0x in 2Q12, negatively impacted by the period decline in operating cash flow. The difference between this leverage methodology and that used by the market (adjusted gross debt /EBITDAR) is due to the fact that the average maturity of GOL’s operational leasing contracts is less than seven years (less than 4.5 years in 3Q12).

Total financial commitments, comprising gross debt recorded in the balance sheet and projected operational leasing payments between 2012 and 2024, came to around R$8.0bn in the quarter, 17.3% up on 3Q11 due to the inclusion of future leasing payments arising from Webjet’s fleet and the period depreciation of the real against the dollar. Total financial obligations indicate the real extent of the Company’s future obligations.  

The table below shows the amortization schedule of financial debt classified as long-term in the Company’s consolidated balance sheet, comprising long-term debt less aircraft financial leasing and interest.

The following table shows the main financial indicators used by the Company:

*Financial commitments (gross debt + operational leasing contracts, in accordance with note 27 to the interim financial statements) less cash and cash equivalents and short-term investments; **Gross debt + LTM operational leasing expenses x 7; ***Adjusted gross debt less cash and cash equivalents,  short-term financial investments and restricted cash. Certain variation calculations in this report may not match due to rounding.

FLEET

The Company closed the third quarter with a total operational fleet (excluding 3 Boeing 767s) of 127 B737-700 and 800 NG aircraft with an average age of 7.4 years, plus 20 B737-300s, with an average age of 21.0 years. In 3Q12, the Company took delivery of four aircraft under an operational leasing contract and returned four aircraft under operational leasing, including three of Webjet's 737-300s. By the end of the quarter, three B767s were grounded.

The Company leases its fleet through a combination of financial and operational leases. Out of the total of 150 aircraft, 99 were under operational leases, 45 were under financial leases, and six are owned by the Company. GOL has purchase options on 39 of the 45 aircraft when their leasing contracts terminate. In 2012, the Company expects a decline of between 2.0% and 4.5% in the two companies’ combined seat supply over 2011.

* List price of the aircraft

In addition to the above-mentioned obligations, the Company will pay R$1.8bn as advances on aircraft acquisitions in the above periods.

FUTURE FLEET PLAN

The following table shows the Company’s current situation and expectations regarding negotiations with the lessors of Webjet’s Boeing 737-300s and is therefore subject to possible alterations as these negotiations proceed.

(1)     Part of the total fleet, but not part of the operational fleet.

With the replacement of Boeing 737-300s by Boeing 737-800s, the Company will increase its average seating per aircraft, enhancing the flexibility of its operating capacity and improving aircraft efficiency in terms of fuel consumption.

CAPEX

GOL invested around R$126.3mn in 3Q12, 63% of which in the purchase of aircraft parts and in aircraft reconfigurations and improvements, 36% in the acquisition of aircraft for delivery between 2012 and 2014 (pre-delivery deposits), and around 1% in bases, IT and the expansion of the maintenance center in Confins, Minas Gerais (construction of the Wheel and Brake Workshop).  

2012 GUIDANCE

Due to the impact of the adverse macroeconomic scenario, GOL may revise its guidance on a quarterly basis to incorporate any developments in its operating and financial performance, as well as any changes in interest, FX, GDP and WTI and Brent oil price trends. The estimates below refer to GOL's and Webjet's consolidated figures. 

The Company’s quarterly figures reflect substantial and variable seasonality, jeopardizing comparisons with estimates for the entire fiscal year. The Company compares estimated with actual results after disclosing its financial statements for the full year. The results of these annual comparisons are available in Section 11 of the Company’s Reference Form.

CONSOLIDATED BALANCE SHEET

CONSOLIDATED INCOME STATEMENT