GOL Announces 2Q21 Results and Paves the Way for Sustainable Growth

Rhea-AI Summary

GOL Linhas Aéreas Inteligentes S.A. announced its 2Q21 results, showcasing a strong recovery in Brazilian air travel demand due to declining Covid-19 cases and an increased vaccination rate, with over a third of the population vaccinated by June 30, 2021. Key highlights include a 344% increase in Revenue Passenger-Kilometers (RPK) and a net revenue of R$1.0 billion, marking a 187% year-over-year growth. The company executed a capital increase of R$423 million and plans to enhance its flight network as business travel rebounds, indicating a positive outlook for the coming quarters.

Positive

• Revenue Passenger-Kilometers (RPK) increased 344% year-over-year.
• Net revenues totaled R$1.0 billion, an increase of 187% compared to 2Q20.
• GOL raised R$423 million in capital, enhancing liquidity and shareholder trust.
• Average load factor reached 85.1%, up by 7.0 percentage points from 2Q20.

Negative

• Net loss after minority interest was R$1.2 billion, indicating ongoing financial challenges.
• Cost per Available Seat Kilometer (CASK) remains high at R$42.47, despite a nominal decrease.

SÃO PAULO, July 29, 2021 /PRNewswire/ -- GOL Linhas Aéreas Inteligentes S.A. ("GOL" or "Company") (NYSE: GOL  and B3: GOLL4), Brazil's largest domestic airline, today announced its consolidated results for the second quarter of 2021 (2Q21), also outlining its continued initiatives in response to the Covid-19 pandemic.

All information is presented in Brazilian reais (R$), according to both International Financial Reporting Standards (IFRS) and adjusted metrics, and is made available to enable comparability of this quarter with the same period last year. Such adjusted metrics exclude expenses related to the portion of the non-operating fleet that GOL grounded this quarter and are detailed in the table showing "operating expenses". Comparisons are made to the second quarter of 2020 (2Q20), unless otherwise specified.

The 2Q21 was marked by three relevant themes:

First, the resilience of the Brazilian air travel market. Demand for travel in Brazil is recovering rapidly as a result of the consistent decline in Covid-19 cases and fatalities since June 24, 2021, with a reduction of more than 2% per day in new transmissions registered in the country, and a decline in cases across all Brazilian states. This promising trend is driven by the higher availability of vaccines in the second quarter; as of June 30, 2021, over one third of the Brazilian population had received at least one dose of a vaccine, and over 12% fully vaccinated. Further, the Brazilian government has guaranteed that 173 million shots will be delivered in the third quarter, an increase over the 143 million doses made available in the first half of 2021. That will be sufficient to vaccinate approximately 90% of all Brazilians over 12 years old.

"Brazilians are not hesitant about getting vaccinated. 92% of over 60s have already taken the first shot, and 59% are fully vaccinated," said Paulo Kakinoff, CEO. "We are confident that approximately 85% of over 30s in Brazil will be immunized at the end of the third quarter this year, a demographic group that currently represents over 98% of the severe cases of Covid-19 in Brazil. This progress on vaccinations is promising for the continued recovery of Brazil's economy and a ramp-up in travel demand as Brazilians feel safe to return to their normal routines."

Second, GOL's disciplined yield management led the Company, through a continuous and agile approach, to preserve the equilibrium between capacity and demand in the second quarter, keeping its load factors and yields high, as well as and minimizing cash burn. In conjunction with this prudent management of yields and cash flow, GOL was the only airline in South America to raise equity capital during the pandemic via a R$423 million capital increase, 63% anchored by its controlling shareholder, and a R$607 million equity issuance as part of the R$1.3 billion take-in of the minority interest of its loyalty program, Smiles. The commitment from the Company's controlling shareholder is a key differential to the business, driving a focus on sustained, long-term growth rather than unsustainable short-term movements.

Kakinoff continued: "Throughout the pandemic, we have executed a robust strategy to ensure liquidity, maintain the relationships with all of our main business partners, protect our Employees, preserve the Company's cost advantage, and minimize dilution to our shareholders. Those well-implemented initiatives position GOL advantageously to create significant shareholder value in the post-pandemic environment. In 2Q21, GOL systematically presented a market efficiency superior to its competitors, which reinforces our commitment to balancing the size of the seat supply with the predictive demand forecast."

Third, GOL's path to continuing its sustained growth. GOL has a unique set of advantages, comprising of the best network, a personalized product and Customer journey, a low-cost business model, the lowest financial leverage among its peers, and the commitment to create value for shareholders. These advantages will be essential for attracting business travelers, who usually account for 50% of demand for air travel in Brazil, when they return to the skies. While a small percentage of corporate Customers might prefer virtual meetings, the expansion of key sectors such as the oil & gas, infrastructure, agribusiness, services and real estate will make up a significant portion of Brazil's economic growth and business air travel post-pandemic. These industries require executives and employees to have a greater number of in-person interactions and site visits than other industries where it is easier to conduct business virtually. While overall market demand for air travel in July reached around almost 70% of the pre-pandemic levels, the business segment is only just now starting to recover.

"Based on our expectations for the vaccination roll-out in Brazil, we anticipate that business travel will show a sharp recovery as of 1Q22. When that happens, we will increase the GOL network to enable high frequencies in the São Paulo, Rio de Janeiro and Brasília markets, restoring those routes to pre-pandemic levels. GOL will also resume international flights to South American and U.S. destinations with disciplined capacity management and following the restrictions and compliance rules of each country. By the end of this year, we will resume flights to the Caribbean, with tickets for that destination already available to purchase on the Company's website. In July/21 we reached daily sales volumes of R$26 million, the highest figure since March 12, 2020, and second only to last year's Black Friday," Kakinoff concluded.

Summary of 2Q21 Results

• Revenue Passenger-Kilometers (RPK) increased 344% compared to the same period in 2020, totaling 3.4 billion (-63% vs. 2Q19);
• Available Seat Kilometers (ASK) increased 307% compared to 2Q20 (-65% vs. 2Q19);
• GOL transported 2.9 million Customers in the quarter, an increase of 366% versus 2Q20 (-64% vs. 2Q19);
• Net revenues totaled R$1.0 billion, an increase of 187% versus 2Q20 (-67% vs. 2Q19). Other revenues (mainly cargo and loyalty) amounted to R$141 million, equivalent to 13.7% of total revenues;
• Net Revenue per Available Seat Kilometer (RASK) was 25.50 cents (R$), 29.5% lower than in 2Q20. Net Passenger Revenue per Available Seat Kilometer (PRASK) was 22.01 cents (R$), a 10.5% reduction over 2Q20;
• The Cost per Available Seat Kilometer (CASK) was 42.47 cents (R$), 46% down from 2Q20 on nominal basis, and 45% lower excluding exchange variation between periods. Costs strictly related to the flights operated (adjusted CASK) corresponded to 21.94 cents (R$), down by 36% on nominal basis, and 34% lower excluding exchange variation;
• Adjusted EBIT totaled R$144 million, corresponding to a margin of 14%, which shows the restoration of the operating margins necessary to support operational growth. Adjusted EBITDA reached R$222 million, with margin of 22%, reflecting GOL's successful sustainability efforts in balancing supply and demand;
• The net loss after minority interest was R$1.2 billion, excluding exchange and monetary variations, non-recurring net expenses, gains related to Exchangeable Notes and capped calls unrealized results;
• Average yield per passenger of 25.86 cents (R$), down by 18% from 2Q20, mainly due to higher RPKs volume over 2Q20, a period with lower operations during its "essential network" phase at the beginning of the pandemic and as a consequence of the worsening of the second wave of Covid-19, which particularly impacted GOL's operations in April and May 2021;
• Average load factor of 85.1%, up by 7.0 p.p. over 2Q20, mainly due to prudent supply management, adding capacity based on demand indicators and GOL's proprietary data analytics;
• Aircraft utilization of 8.0 hours/day, up by 23.1% over 2Q20, in line with the Company's strategy of adding capacity according to demand recovery; and
• On-time departures of 96.3%, up by 0.2 p.p. versus 2Q20, according to Infraero and data provided by the main airports.

MANAGEMENT VIDEOS WITH PRESENTATION & FULL EARNINGS RELEASE
Access earnings release, management videos, presentation and complete financial statements at: www.voegol.com.br/ir

2Q21 Conference Call: July 29, 2021, 11:00 a.m. (NY Time), Phone: +1 (412) 317-6382, Code: GOL, with webcast (https://webcastlite.mziq.com/cover.html?webcastId=e761a9c3-ea18-42a9-ac3b-3d9a1ceceb06)

Investor Relations: ri@voegol.com.br, +55 (11) 2128-4700

About GOL Linhas Aéreas Inteligentes S.A. (www.voegol.com.br): Brazil's largest airline group with three main businesses: passenger transportation, cargo transportation and coalition loyalty program.

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SOURCE GOL Linhas Aéreas Inteligentes S.A.

FAQ

What were GOL's key financial results for 2Q21?

GOL reported a net revenue of R$1.0 billion for 2Q21, a 187% increase from 2Q20.

How did GOL's performance compare to pre-pandemic levels in 2Q21?

GOL's Revenue Passenger-Kilometers decreased by 63% compared to 2Q19.

What is the outlook for GOL regarding business travel recovery?

GOL anticipates a sharp recovery in business travel by 1Q22, as vaccination rates increase.

How much capital did GOL raise during the pandemic?

GOL raised R$423 million to improve liquidity during the pandemic.

What is GOL's average load factor in 2Q21?

GOL achieved an average load factor of 85.1% in 2Q21.