GOL: Investor Update

Overall Commentary

• GOL expects Earnings Per Share (EPS) and Earnings Per American Depositary Share (EPADS) for 1Q20 of approximately R$0.25¹ and US$0.10¹, respectively.
  
  
• EBITDA^2,3 margin for the first quarter is expected to be 44% to 46%, an increase in relation to the quarter ended in March 2019 (29.7%²).
  
  
• Passenger unit revenue (PRASK) for the first quarter is expected to be down approximately 1% year-over-year. GOL expects unit revenue (RASK) to be in line with 1Q19.
  
  
• Non-fuel unit costs (CASK ex-fuel) are expected to decrease by approximately 23%^2,3 compared to 1Q19, primarily due to increased productivity (aircraft utilization and operating efficiency), partially offset by increased depreciation from nine (net) additional aircraft in the fleet. Fuel unit costs (CASK fuel) are expected to increase by approximately 3% year-over-year, negatively impacted by a 3% increase in the average fuel price, partially offset by a 10% reduction in fuel consumption per flight hour primarily due to an increase in utilization of 737-700s during March 2020.
  
  
• GOL's financial leverage, as measured by the Net Debt⁴/LTM EBITDA ratio, was approximately 2.8x at the end of the March 2020 quarter. The Company amortized approximately R$490 million of debt in the quarter, and total liquidity was at R$4.3 billion, comprised of R$3.0 billion in cash and investments and R$1.3 billion in receivables. And including R$1.7 billion of prepaid expenses, maintenance reserves and security deposits, liquidity totaled around R$6 billion.

Preliminary and Unaudited Projections

Recent Developments and Considerations for the Next 90 Days

Recent Developments

The Covid-19 pandemic began affecting GOL's operations in mid-March 2020, and, therefore had a limited effect on first quarter performance. Due to the Covid-19 pandemic related shutdown in Brazil and to prepare for a reduction in demand and revenues, GOL took measures to preserve cash for the next 90 days through cost reductions, new payment terms, and rollovers. Below is a summary of the Company's main initiatives:

• Fixed cost reductions: (i) 50% reduction in payroll through several compensation and deferral initiatives (number of hours, extra hours, unpaid leave, unpaid vacation, suspension of profit sharing payments, tax deferrals and wage cuts of 35% for all employees and 40% for the top 30 executives); and (ii) grace period of six months and deferral of lease payments for the same period with aircraft lessors;
• Variable cost reductions from the 93% reduction in supply measured in ASK and: (i) deferral of all fuel payments to installments to be paid after September 30, 2020; (ii) suspension of navigation fees and public airports fees; (iii) suspension of all projects and investments for 180 days; (iv) extension of payment terms for engine maintenance by up to 90-180 days; (v) extension of Capex payment terms by up to 90-180 days; and (vi) elimination of PDPs for the next 12 months;
• Government support: taxes and fees suspended for 2Q20; and
• Financial costs and payments: (i) rollover of existing local bank short-term maturities with local banks and increased credit limits to maintain all existing working capital lines (increased to incorporate the depreciated Brazilian real); and (ii) extension of the quarter's R$156 million local debentures amortization to 2022 (all covenant waivers have been approved by debenture holders).

Considerations for the Next 90 Days

In support of the Brazilian Government's actions to prevent the spread of the Covid-19 virus, which since mid-March have included widespread flight bans and travel restrictions that closed most of Brazil's skies to air traffic, GOL reduced its flight offer to an essential network of 50 daily flights between the São Paulo International Airport in Guarulhos (GRU) and the 26 State capitals of Brazil and the city of Brasília. GOL continues to work with the Brazilian Government to maintain minimum flight links for emergency reasons, and to operate rescue and medical flights when requested to do so.

Due to this reduction in capacity, during the second half of March we removed 120 aircraft from operations. GOL expects to maintain the majority of its fleet on the ground during April and May. We therefore expect to record ineffectiveness on our fuel hedges as an exceptional item in our 1Q20 and 2Q20 financial results. We currently estimate that this will amount to an extraordinary financial expense of approximately R$80 million in 1Q20 and R$200 million in 2Q20.

GOL has a solid balance sheet and total liquidity was R$4.3 billion on March 31, 2020. Liquidity totaled around R$6 billion including R$1.7 billion of prepaid expenses, maintenance reserves and security deposits. Additionally, the Company owns approximately R$1.5 billion of assets unencumbered and debt free.

We are grateful to the Government of Brazil for its foresight and speed of response in recognizing Brazilian airlines' exposure to the Covid-19 pandemic, as our operations fall under the necessary Government restrictions to stop the pandemic. We further support the governmental actions to offset, at least partially, the impact of Covid-19 on the passenger transportation industry.

Given the continued uncertainty about the impact and duration of the Covid-19 pandemic, GOL is suspending its 2020 and 2021 guidance until the operating environment returns to normal. In the meantime, GOL will continue to focus on delivering cost savings, protecting jobs, working with the Brazilian Government, and preparing for the return to normal service in due course.