GOL Records Net Revenue of R$1.8bn and Operating Income Grows by 89% in 3Q10

Operating Income totaled R$187.2mm in the quarter, with an EBIT margin of 10.5%, 3.8 percentage points up on the same period in 2009.

§“The Best of Dinheiro 2010” – “Best Company in the Transportation Service Sector”awarded by Istoé Dinheiro magazine; and

§“Capital Aberto Magazine Award” – “Best Company for Shareholders 2010”, in the R$5bn to R$15bn market cap category.

Management Comments

In 3Q10, the Company recorded demand growth of 23%, increased its operating income by 89% and reduced its main financial leverage indicators over the same period in 2009. These results reflect the Company’s three strategic expansion pillars, generating a sustainable virtuous cycle.

GOL believes that the low-cost, low-fare operational model is ideal for a country with Brazil’s characteristics.

Constantino de Oliveira Junior Founder and CEO of GOL Linhas Aéreas Inteligentes S.A.

Operating Performance

Yields and Demand

Even with growing demand in 3Q10, GOL’s yields reached 19.38 cents (R$), 2.4% up year-over-year, chiefly due to the Company’s focus on profitability. The 23.3% upturn in demand on its combined route network was still substantial, even though it led to a reduction in market share.

The 7.2% decline over 2Q10 was seasonal in nature, given that the third quarter has an increased share of leisure travelers who seek out low fares across the tourism industry. In the second quarter, on the other hand, business travelers make less use of forward bookings, thereby generating higher yields, albeit with normally the lowest load factors of the year. 

Supply and Load Factor

As a result, GOL’s domestic load factor totaled 71.1% in 3Q10, 3.5 p.p. above the 67.6% reported in 3Q09. In comparison to 2Q10, capacity increased 2.9% accompanied by 9.7 p.p. upturn in the load factor from the 61.4% recorded in the previous quarter.

GOL’s international route network supply grew by 25.8% from 3Q09 to 3Q10 due to: (i)  higher fleet utilization (12.7 block hours/day in 3Q10 versus 12.1 in 3Q09); (ii) an  increase in the average stage length; (iii) the new international routes between Brazil and the Caribbean; and (iv) the use of 767-300 aircraft on international charter flights. Compared to 2Q10, supply grew by 20.2%, mainly due to seasonality (the second quarter is traditionally the least favorable of the year).

As a result, GOL’s international load factor increased by 21.2 p.p. between 3Q09 (51.1%) and 3Q10 (72.2%). In comparison with 2Q10, the load factor increased by 13.2 p.p. from 59.1%.

 Sources: (1) Brazilian Central Bank (2) FGV (3) IBGE (4) Bloomberg

Net Revenue

Net revenue totaled R$1,788.9mm in 3Q10, 19.5% up on the R$1,496.7mm recorded in 3Q09, and 12.5% more than the R$1,590.9mm reported in 2Q10, as shown below:

Third-quarter passenger revenue came to R$1,601.1mm, 26.2% more than the R$1,268.5mm posted in the same period last year, fueled by the 23.3% increase in demand, in turn due to the improved economic scenario in the region where GOL operates, as well as the Company’s own competitive advantages, including: (i) dynamic fare management, benefiting leisure travelers, who can buy their tickets in advance; (ii) increased frequency between Brazil’s leading domestic airports; and (iii) the SMILES mileage program, which currently has more than 180 commercial partners and more than seven million members, given that most of its miles are converted into tickets.

Ancillary revenue (cargo, flight rebooking, excess baggage, on-board sales, etc) fell by 17.7% year-over-year, accounting for 10.5% of net revenue, mainly due to the non-recurring revenue amounting R$50mm related to the co-branded SMILES card agreement with Bradesco and Banco do Brasil recorded in 3Q09. If we ignore this last year’s non-recurring revenue, ancillary revenues increased by 5.4%, due to: (i) the 128.0% upturn in cargo revenue as a result of the country’s improved economic situation; and (ii) the 60.1% increase in revenue from the buy on board service. These factors were offset by the 12.1% and 29.0% decline in flight cancellation revenue and revenue from excess baggage, respectively.

Compared to 2Q10, ancillary revenues grew by 4.2%, chiefly due to the 10.4% growth in excess baggage revenue as a result of increased traffic volume in 3Q10. These factors were offset by the 5.8% and 2.1% fall in revenue from cargo and flight cancellations and rebooking, respectively.

Even with the 13.5% capacity increase between 3Q09 and 3Q10, RASK (revenue per available seat kilometer) grew by 5.3% due to the 2.4% upturn in yields and the 5.6 p.p. growth in the load factor, which rose from 14.65 cents (R$) in 3Q09 to 15.43 cents (R$) in 3Q10. In comparison with the 14.39 cents (R$) recorded in 2Q10, RASK increased by 7.2% due to the 10.1 p.p. period upturn in the load factor (offset by the 7.2% decline in yields).

Operating Costs and Expenses

Operating costs totaled R$1,601.7mm in the quarter, 14.6% up on 3Q09, chiefly due to: (i) higher expenses from engine maintenance as a result of the increase in aircraft utilization; (ii) the 11.8% increase in the WTI oil price, in turn pushing up variable costs (handling, aircraft cleaning and others); (iv) higher salaries, wages and benefits due to the need to hire more employees in order to keep pace with the Company’s demand increase; and (v) the upturn in depreciation and amortization expenses as a result of the changes to accounting practices in 1Q10. In comparison with 2Q10, operating costs climbed by 4.4%, mainly due to: (i) higher engine maintenance expenses due to the preparation of the fleet for the expected upturn in demand in the fourth quarter; (ii) advertising expenses from the Company’s new institutional campaign; (iii) increased operational volume, leading to an upturn in costs directly related to the Company’s operations (handling, aircraft cleaning and others); (iv) expenses from consulting and advisory services related to the implementation of the Shared Services Center and the new budget planning methodology for 2011 (zero base budget) and; (v) the 1.5% upturn in fuel expenses.

* CASK = operating costs and expenses divided by ASK, expressed in cents(R$)

Operating costs per ASK (CASK) amounted to R$13.81 cents (R$) in 3Q10, 0.9% up on the 13.68 cents (R$) recorded in 3Q09. As a result, there was some dilution of 3Q10 CASK in nominal terms, thanks to a combination of: (i) the 13.5% increase in capacity; (ii) the 8.3% rise in aircraft utilization; and (iii) the 2.7% extension of the average stage length in order to prepare GOL’s route network for the fourth quarter (the year’s peak season). In comparison with 2Q10, CASK dipped by 0.4%.

CASK excluding fuel expenses (CASK ex-fuel) stood at 8.81 cents (R$), 1.4% down on the 8.93 cents (R$) recorded in 3Q09, due to the same factors mentioned above, but offset by the 13.5% increase in capacity, which diluted fixed costs. In comparison with 2Q10, there was a 1.3% increase as a result of: (i) an aircraft utilization rate 2.8% lower, but compensated by an increase of 4.9% of seats for the largest number of operating aircraft in the quarter; and (ii) maintenance cost per ASK increased 69.8% over the previous quarter. If we ignore the increase in maintenance  costs per ASK, CASK ex-fuel, would fell by 7.2% compared to 3Q09 and 2.1% compared to 2Q10.

Aircraft fuel costs totaled R$580.1mm in the quarter, 19.5% up on 3Q09 due to: (i) the 11.8% growth in the cost of WTI jet fuel, partially offset by the 6.3% average depreciation of the Dollar against the Real; and (ii) higher fleet productivity (12.7 block hours/day in 3Q10 versus 12.1 in 3Q09), leading to an 11.0% upturn in the number of hours flown and a consequent increase in fuel costs (14.0% rise in consumption (liters) between the two periods).

In comparison with 2Q10, despite the 2.1% decline in the cost of WTI jet fuel, aircraft fuel costs moved up by 1.5% due to operational increase of 4.6% in flight hours and 2.4% in landing and takeoff. In per-ASK terms, there was a 5.3% increase in comparison to 3Q09 and a 3.3% decline over 2Q10.

Salaries, wages and benefits grew by 12.4% over 3Q09 to R$312.5mm, chiefly due to the 6% pay rise approved in December 2009 and the 5.6% expansion of the workforce, especially in the operational, airport and call center areas, in turn fueled by the need to keep pace with the growth in the Company's operations caused by the sustainable increase in demand in both the domestic and the international markets (respective growth of 17.7% and 78.0%).

In comparison with 2Q10, salaries, wages and benefits edged up by 0.3% due to an 4.5% increase in the number of hours flown and, consequently, the hourly compensation paid to flight crew, and the 2.5% expansion of the workforce in the operational area (pilots and co-pilots) in 6% to keep pace with the continuous growth in sector demand (+23.3% on the total route network). These effects were partially offset by the gradual decline in provisions for employee profit sharing based on the stock option plan, as mentioned in our 2Q10 release. In per-ASK terms, these costs fell by 1.0% and 4.4%, respectively, over 3Q09 and  2Q10.

Aircraft leasing costs totaled R$130.4mm, 14.4% down year-over-year, given that part of 2Q09 leasing expenses had been renegotiated with lessors and redistributed in 3Q09 (as disclosed in the 3Q09 release). In the year-over-year comparison, leasing expenses were offset by: (i) the average 6.3% depreciation of the Dollar against the Real between the two periods; (ii) the higher number of aircraft under financial leasing (35 in 3Q10, versus 28 in 3Q09); and (iii) the return of 11 B737-300s under operational leasing, which helped reduce quarterly expenses by approximately R$9million.

In comparison to 2Q10, leasing costs fell by 4.5%, chiefly due to the return of the above-mentioned B737-300s under operating leases (five aircraft were returned in the period, totaling 11 in 2010), and the 2.4% appreciation of the Real against the Dollar. In per-ASK terms, these costs declined by 24.6% over 3Q09 and 9.0% over 2Q10.

Aircraft insurance fell by 13.6% from R$13.3mm in 3Q09 to R$11.5mm in 3Q10, due to the interim reduction in the fleet from 124 to 121 aircraft and the 6.3% appreciation of the Real against the Dollar, given that these contracts are executed in foreign currency. In comparison with 2Q10, there was an increase of 1.8%, due to  more days in 3Q10 (92 days) comparing to 3Q09 (91 days) (considering that aircraft insurance cost appropriation is on daily basis). In per-ASK terms, these costs fell by 23.9% and 2.9%, respectively over 3Q09 and 2Q10.

Sales and marketing expenses fell by 10.9% from R$101.8mm in 3Q09 to R$90.7mm in 3Q10, due to the elimination of ticket sale commissions for travel agents as of February 2010.

Compared to 2Q10, these expenses moved up by 2.9% due to the R$17.0mm upturn in advertising expenses from the new institutional campaign and the R$1.3mm increase in commissions paid to credit card administrators due to the increase in direct sales to the detriment of travel agency sales. In per-ASK terms, these expenses fell by 19.4% over 3Q09 and climbed by 0.9% over 2Q10.

Landing fees totaled $83.7 million in 3Q10 and 7.8% above the R$ 77.6 million in 3Q09, due to an increase of 8.1% in the number of departures between the two periods and larger number of operations at international airports in South America (that have higher fees) with B767 aircraft (with higher unit cost compared to domestic flights with the model 737). This increase was partially offset by a decrease of 6.3% in the dollar between the periods. Compared to 2Q10, there was an increase of 8.4% for the same reasons cited above. For ASK, these rates declined by 5.0% compared with 3Q09 and up 3.3% versus 2Q10.

Aircraft and traffic servicing expenses totaled R$110.9mm, 10.1% up on the R$100.7mm recorded in 3Q09, due to the increase in operational volume (8.1% upturn in arrivals and departures), which pushed up the Company’s variable costs, such as delivery, dispatch and handling services, among others.

In comparison with 2Q10, these expenses grew by 9.3% for the same reasons (in the quarter-over-quarter comparison arrivals increased by 2.4%). Further upward pressure came from additional expenses from consulting and advisory services related to the implementation of the Company's new budget planning method (zero base budget) and the Shared Service Center, which began operations in October/2010 aiming to improve the quality and productivity of the Company’s operations. In per-ASK terms, these costs declined by 3.0% over 3Q09 and by 4.2% over 2Q10.  

Maintenance, materials and repairs came to R$134.0mm, 92.8% up on the R$69.5mm recorded in 3Q09, due to: (i) increased fleet utilization since 3Q09, resulting in engine maintenance expenses of R$45.0mm – this concentration is natural, given that GOL has been increasing fleet utilization since June 2009, anticipating the removals scheduled for 2011 and 2012. The increase in the number of engines restored is offset bu the dilution of fixed costs from the increase in utilization rate; and (ii) costs of approximately R$10mm from the use of wheel and brake repair materials for the same reasons. In per-ASK terms, these costs rose by 69.8% and 31.2% over 3Q10 and 2Q10 respectively. 

Depreciation and amortization expenses totaled R$63.3mm in 3Q10, 33.9% up on the R$47.2mm reported in 3Q09, due to: (i) the higher number of aircraft under financial leasing (35 in 3Q10, versus 28 in 3Q09); and (ii) the change in the Company’s estimate for the depreciation of maintenance costs for engines under financial leasing, which now have a 5-year depreciation period, whereas the remaining items continue to depreciate over 25 years (as discussed in the 1Q10 release.) In comparison with the R$80.4mm recorded in the previous quarter, these expenses fell by 21.3% due to the regularization of the R$12.8mm booked in 2Q10 and the end of software amortization. In per-ASK terms they rose by 17.9% over 3Q09 and fell by 25.0% over 2Q10.

Other operating expenses (mainly accommodation, direct passenger expenses crew travel and accommodation, equipment leasing and general and administrative expenses) totaled R$84.8mm in 3Q10, 11.8% up on 3Q09 due to increased traffic on the Company’s route network, which pushed up the number of overnight crew stops, and increased: (i) crew accommodation expenses by 17.0%; (ii) crew transportation expenses by 7.8%; (iii) Company travel expenses by 16.6%; and (iv) increase in direct passenger expenses by R$11mm due to the higher number of passengers transported between the periods (up by 23.3%). In comparison with 2Q10, there was a 46.1% upturn influenced by the benefits obtained from the automation of the Company’s internal controls systems and more efficient controls over general and administrative expenses (as stated in the release of 2Q10). In per-ASK terms, these expenses increased by 4.1% over 3Q09 and by 39.3% over 2Q10. 

Operating Result ^*

* EBITDA (earnings before interest, taxes, depreciation and amortization) and EBITDAR (earnings before interest, taxes, depreciation, amortization and rent) are non-GAAP measures and are presented as supplemental information because we believe they are useful indicators of our operating performance for our investors. We usually present EBITDAR, in addition to EBITDA, because aircraft leasing represents a significant operating expense of our business, and we believe the impact of this expense should be considered in addition to the impact of depreciation and amortization. However, neither figure should be considered in isolation, as a substitute for net income in accordance with IFRS and BRGAAP, or as a measure of a company’s profitability. In addition, our calculations may not be comparable to other similarly titled measures of other companies.

EBITDAR stood at R$380.9mm, with an EBITDAR margin of 21.3%, 1.3 p.p. above the 20.0% recorded in 3Q09 (on EBITDAR of R$298.7mm) and 4.1 p.p. above the 17.2% reported in 2Q10 (on EBITDAR of R$274.2mm) for the same reasons mentioned above. This quarter's EBITDAR was the highest for the period since the acquisition of VRG.

Hedge Result

The Company records derivative financial instruments in accordance with IAS 39 ― Financial Instruments: Recognition and Measurement.

*OCI (other comprehensive income) differs from net income and generally comprises unrealized gains or losses from a variety of sources, including unrealized pension costs and gains or losses from securities classified as available for sale, and derivative operations classified as cash flow hedges or net foreign investment hedges.

In the third quarter of 2010, the Company recognized a net loss from hedge operations of R$47.0mm (dealt with in more detail in the Financial Result section), with a negative cash impact of R$12.0mm in the same period.

Fuel: fuel consumption hedge transactions, which are effected through crude oil (WTI) derivative contracts, generated losses of R$10.0mm in the quarter.

Of this total, losses of R$1.0mm were considered ineffective (for hedge accounting purposes)  from contracts maturing in 3Q10 (accrual basis), and losses of R$9.0mm from contracts maturing in the future, but which were booked in advance under the financial result.

Foreign exchange: generated losses of R$34.7mm recognized as financial expenses. Of this total, losses of R$2.6mm were from contracts maturing in 3Q10, and losses of R$26.1mm were from contracts maturing in the future, but which were booked in advance. The Company also reported losses of R$6.0mm booked under financial expenses referring to a Dollar x CDI swap contracted to protect a debt against the exchange variation. Those operations were not designed for hedge accounting purposes.

Interest: net loss of R$2.4mm, of which gain of R$0.1mm were considered effective and booked under the financial result, and losses of R$2.5mm from non-hedge derivatives were booked as financial expenses.

* Weighted average among derivative strikes. Average for cap prices only.

** On 09/30/2010, the exchange rate was R$1.6942 / US$1.00.

GOL adopts a hedging policy in order to protect the Company against market fluctuations in fuel prices, exchange rates and interest rates that can substantially harm its operational competitiveness. In order to perform this task, the Company employs a financial risk policy committee, comprising certain members of the Board, an external consultant, and senior executives. The committee meets quarterly to monitor and sets 24-month targets on a rolling basis,. The committee can also meet extraordinarily if any of its members calls a meeting. Management builds its hedge position based on these decisions.

The vast majority of the financial instruments used for hedging purposes consist of WTI and Dollar call options, WTI collars and swaps, foreign exchange and CDI swaps, and fixed and floating interest rate swaps. 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 3Q10 net financial result was an expense of R$20.3mm versus revenue of R$58.5mm in 3Q09 and an expense of R$113.2mm in 2Q10.

Interest expenses totaled R$84.6mm, 11.5% up on 3Q09, chiefly due to: (i) higher interest expenses with the senior notes maturing in 2020, issued in July 2010; (ii) the larger number of aircraft classified under financial leasing (35 in 3Q10, versus 28 in 3Q09). In comparison to 2Q10, however, these expenses increased by 4.1%, chiefly due to: (i) the 1.2 p.p. upturn in the CDI interbank rate, to which the interest on the debentures is tied, and (ii) higher interest expenses with the issue of senior notes maturing in 2020, offset by the 6.0% appreciation of the Real (end of period), affecting interest payments on the foreign-currency debt, which closed 3Q10 at R$2,850.0mm.

The exchange variation generated revenue of R$90.5mm in 3Q10, mainly due to the impact of the 6.0% appreciation of the Dollar on the Company’s foreign-currency debt (79.1% of its total debt), versus revenue of R$163.5mm in 3Q09 due to the 8.9% appreciation of the Real against the Dollar. In 2Q10 there was a R$29.9mm expense due to the 1.2% depreciation of the Real.

Interest and investment income was positive by R$28.2mm in 3Q10, 27.5% up on the R$22.1mm recorded in 3Q09, and 9.5% more than the R$25.7mm reported in 2Q10, both increases being due to financial gains from investing the Company’s total cash, which is already equivalent to 26.3% of net revenue in the last twelve months (versus 24.7% in 2Q10 and 11.1% in 3Q09).

Other financial expenses totaled R$7.4mm versus expenses of R$0.2mm in 3Q09 and R$2.1mm in 2Q10. In both cases, the upturn was due to banking expenses and commissions related to the senior notes maturing in 2020, issued in July 2010.

Income Tax

Total 3Q10 income tax was an expense of R$56.9 million, versus an expense of R$79.7mm in 3Q09 and a benefit of R$4.0mm in 2Q10. The R$1.1mm benefit in the current income tax line in 3Q10 was basically due to the taxable income basis calculated in accordance with Law no. 6.404/76.

In comparison with 2Q10, the variation in the deferred income tax line was caused by temporary differences which generate a deferred income tax liabilities due to the impact of the exchange variation on financial leasing. In addition, 3Q09 was impacted by the increase in aircraft financial leasing operations and its exchange rate variation effects.

Net Result

GOL posted net income of R$110.0mm in 3Q10, versus net income of R$77.9mm in 3Q10 and a net loss of R$51.9mm in 2Q10, chiefly due to: (i) the 23.3% upturn in demand, which pushed up operating revenue thanks to more affordable fares, which made flying more attractive to the emerging middle class; (ii) the 2.4% appreciation of the Real against the Dollar in the quarter; and (iii) lower aircraft leasing costs due to the return of all the B737-300 aircraft under operational leasing.  

Liquidity and Indebtedness

Total cash (cash and investments) ended the quarter at R$ 1,767.7 million, an increase of 11.2% compared to 2Q10, and 166.7% compared to 3Q09. Cash now represents 5.2 times the obligations of the next 12 months, and are composed as follows: (i) cash balance of R$1,159.8 million; (ii) R$457.8 million in highly liquid investments; and (iii) R$150.0 million in restricted deposits released 24 hours after the 3Q10 close (on September 30) in response to regulatory issues during the liquidation process of the operations related to stretching the debt profile (as described in the "loans and financing" section).

In 3Q10, GOL recorded a cash balance equivalent to 26.3% of LTM net revenue, exceeding its initial target at least 25% of LTM net revenue in 2010. This level is in line with the Company’s continuous goal of reducing long-term liquidity risks by extending its financial commitments and consistently deleveraging its balance sheet through operational cash flow.

The 42.7% decline over the R$553.2mm recorded in 3Q09, was due to the larger number of discounted trade notes and the fact that 3Q09 usually has more forward bookings due to the third quarter’s more competitive price scenario.

 * The sum of loans and financings and the estimated total value of operational leasing contracts payable, pursuant to the financial statements.

On September 30, 2010, total loans and financings came to R$3,604.0mm. Long-term debt, excluding perpetual bonds that have no maturity date, had an average term of 7.6 years and an average rate of 12.1% for local-currency debt and 7% for dollar-denominated debt. Excluding the perpetual bonds, debt stood at R$3,301.3mm, 12.0% up on 2Q10, due to: (i) the 4^th debenture issue totaling R$600mm, the proceeds of which were used to finance working capital, pay suppliers and settle the outstanding balance of the 3rd debenture issue in the amount of R$378mm; and (ii) the US$300mm senior notes issue in July 2010, whose proceeds was used to settle working capital credit lines (Itaú BBA, Bradesco and Banco Pine) and other debt maturing within three years.

The total financial commitments, which total gross debt recorded on our balance sheet and projected payments for operational leasing contracts, in force between 2010 and 2021 (based on June 30), totaled R$ 5,906.4 million in the quarter, an increase of 0.8% compared to 2Q10, mainly due to the issuance of debentures and senior notes, partially offset by the settlement of the lines of working capital in 3Q10, and other debt maturing within the horizon of 3 years. In comparison with the 3Q09, there was an 3.8% increase due to the same factors described above.

At the end of 3Q10, aircraft acquisition financing totaled R$1,624.0mm, mainly composed of:

§    A credit line for the prepayment of aircraft acquisitions (PDP Facility II), whose outstanding balance closed 3Q10 at R$100.8mm and which will be used to prepay four of the seven aircraft due for delivery in 2010. These lines are already refinanced through a combination of lease-back operations and long-term bank loans with financial institutions, backed by the U.S. Ex-Im Bank.

§    Financial leasing operations, which totaled R$1,523.1mm, are financial expenses paid periodically to the aircraft lessors with the Company’s own operating cash flow or through long-term loans, also backed by the U.S. Ex-Im Bank. Compared to 2Q10, the number of aircraft classified as financial leasing remained the same and there was a reduction of 8.3% in total debt, due to period amortizations and the 6.0% reduction in the dollar exchange rate.

¹Financial commitments (gross debt + operational leasing contracts, in accordance with note 24 of the financial statements) less cash and cash equivalents and short-term financial investments

²Gross Debt + LTM operational leasing expenses x 7 

3Adjusted gross debt less cash and cash equivalents and short-term financial investments

³Price of R$25.95 per share.

* Some calculations may not match due to rounding up or down.

Fleet and Fleet Plan

The Company closed 3Q10 with an operational fleet of 112 aircraft and a total fleet of 121 aircraft, with an average age of 6.8 years. This quarter, GOL took delivery of two Boeing 737-800NG SFPs, replacing one Boeing 737-300 and two Boeing 737-800s.

(1) Total number of seats in 3Q10. (2) Includes regular route network aircraft (B737s) and charter flight aircraft (B767s). (3) Of the three B737-300s excluded from the operational fleet but still part of the total fleet, are grounded and in the final stages of devolution. (4) Of the six B767-300/200s, one is sub-leased to an American airline and another is wet-leased to a Brazilian airline for flights between Brazil and Angola. The remaining four B767-300/200s were reinstated in the operating fleet to meet growing demand for long-haul charter flights. The Company leases its entire fleet through a combination of financial and operational leases. Out of the total of 121 aircraft, 86 were under operational leases and 35 under financial leases. GOL also has purchase options on 29 aircraft when their leasing contracts terminate.

Continuing GOL’s strategy of fleet renewal and modernization, included in the growth plan, GOL signed an agreement to acquire up to 30 B737-800 NG with Boeing. With this, GOL will have 104 firm orders and 40 options, which advances for aircraft purchase will begin in 2012. The firm orders valued at approximately US$2.7 billion (R$4.6 billion) based on the aircraft list price are scheduled for delivery between 2014 and 2017. The new aircraft order just complete the current fleet plan of the Company's fleet by 2014 without increasing its current capacity.

* includes SFP aircraft (Short Field Performance)

* List prices

Capex

GOL invested R$146.8mm in 3Q09, 52% of which in the acquisition of aircraft for delivery between 2010 and 2012 (pre-delivery deposits); 42% in the purchase of parts; and 6% in bases, IT and the expansion of the maintenance center in Confins, Minas Gerais (construction of the third hangar). Year-to-date investments totaled R$387.3mm, 73% of which in pre-delivery deposits for aircraft acquisitions, 23% in parts purchases and 4% in bases, IT and the expansion of the maintenance center. Annual capex this year is estimated at R$450mm.

Ownership Breakdown

Summary: 2010 Guidance