Raymond James 2009 Growth Airline Conference

Raymond James 2009 Growth Airline Conference
February 05, 2009
GOL Profile
49 domestic Brazil destinations(1)
10 international destinations(1)
Over 105 million passengers carried
High aircraft utilization
Low operating costs
68% compounded yearly net revenue growth(2)
Modern fleet
Leading brands:
(1)
(2)
At December 30, 2008.
From inception to December 31, 2007.
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
1
GOL: Latin America Low Cost Airline
 The same low cost fundamentals of 2001
ASKs
(bn)
 The largest low cost airline in Latin America
Destinations: 38
Fleet size:
27
45
42
55
65
66
111
59
104
E
Ticketless policy
70%+ sales through internet
Intensive use of technology
Mileage program
Standardized, modern fleet
High aircraft utilization
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
2
Brazilian Air Transport Trends & Economic Outlook
 Latin America region highest performance in 2008 (1)
GDP Growth
Forecast (%) (2)
2008F
Europe
ASK +3.8%
RPK +1.8%
North America
ASK +4.3%
RPK +2.9%
2009F
Middle East
ASK +8.6%
RPK +7.0%
Latin America
Africa
ASK -4.2%
RPK -4.0%
ASK +9.2%
RPK +10.2%
Asia / Pacific
ASK +1.2%
RPK -1.5%
Latin
America
European
Union
World
-1
 Stabilization of Domestic Service
• Improving Loads & Demand - Stimulating Low Fares
1
3
5
7
 Fleet Enhancements / Replacements
 High concentration of passengers in 11 airports
• Industry Consolidation + Moderate Growth
• More Focused Competition
(1) Source: IATA (2008 vs. 2007)
(2) Source: IMF (WEO Nov. 08)
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
3
Large Market Opportunity – Domestic Routes
Brazil (individuals):
• Population ~196mm
• Median Age ~28 yrs
• Labor Force ~100mm
• Homes with broad-band ~8mm
• Current air travelers ~12mm
• Addressable market ~25mm
Business
• Households: ~48mm
• Large Corporate: ~65%
• Travel exp.: ~R$14 bn / yr
• Med / small: ~35%
• Freq / travel: +4-5x / yr
~85% land
~15% air
• ~60% of total
Domestic RPK
60
Non-business
• ~40% of total
(1)
50
44.6
47.8
50.7
40.1
40
27.7
28.1
25.1
25.9
27.6
29.2
6% 2008E
Growth in
Domestic
RPK(1)
26.6
21.2
24.5
25.0
20.3
21.2
GOL
Others
18.6
20
07
20
06
20
04
20
03
20
02
20
01
20
00
0
9.2
6.3
4.8
3.1
1.3
13.5
20.3
21.5
20
09
E
26.4
21.9
20
08
20
10
28.2
20
05
30
33.7
(1) Source: Historical Data – ANAC; Projections – GOL
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
4
Highly Efficient Consolidated Network
 New consolidated network launched in Oct. 19, 2009
 Better slot utilization in CGH  No redundancy
Flights/day
(1)
(average round-trip)
Separate Consolidated
Network
Network
 CGH-SDU
42
 32
 GRU-SSA
7

4
 GIG-REC
6

5
 CGH-POA
10

9
 BSB-SSA
6

4
 GRU-FOR
4

2
 CGH-VIX
2

4
 CGH-CXJ
-

2
 GIG-BSB
9
 11
 CGH-LDB
-

1
 CGH-MGF
-

1
 CNF-CWB
794 flights per day
2

3
Panama City
Caracas
Bogota
Boa Vista
Macapá
Macapá
Manaus
São Luis
Belé
Belém
Santaré
Santarém
Imperatriz
Teresina
Juazeiro do Norte
Campina Grande
Palmas
Marabá
Marabá
Porto Velho
Lima
Petrolina
Rio Branco
Fortaleza
Natal
João Pessoa
Recife
Aracaju
Salvador
Brasí
Brasília
Cuiabá
Cuiabá
Ilhé
Ilhéus
Goiânia
Porto Seguro
Uberlandia
B. Horizonte
Santa Cruz
Pres. Prudente
Campo Grande
Campinas
Maringá
Maringá
Londrina
Assunç
Assunção
Foz do Iguaç
Iguaçu Curitiba
Joinville
Chapecó
Chapecó
Vitó
Vitória
Cabo Frio
Rio de Janeiro
São Paulo
Navegantes
Florianópolis
Caxias do Sul
Cordoba
Porto Alegre
Rosario
Santiago
Montevideo
Buenos Aires
Eliminate
redundancies
To create more
flights options
(1) CGH (Congonhas, SP); SDU (Santos Dumont, RJ); GRU (Guarulhos, SP); SSA (Salvador, BA); GIG (Galeão, RJ); REC (Recife, PE); POA (Porto Alegre, RS); BSB (Brasília,
DF); FOR (Fortaleza, CE); VIX (Vitória, ES); CXJ (Caxias do Sul, RS); LDB (Londrina, PR); MGF (Maringá, PR), CNF (Confins, MG), CWB (Curitiba, PR)
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
5
Ancillary Revenues
 Attracting all customer segments with different products
Brazilian Market Profile (2)
Business
Leisure
VFRs (1)
New Travelers

Demand Stimulation

Attract Business Travelers
Value-added Services

New travelers

Over 5 million customers
Up to 36 months installments

Valid for all GOL and VARIG flights
Express
Cargo
Over 1 million registered clients

2009: mileage use in partner flights
Over 550,000 active clients

Other revenue sources:
Increase sales to C&D segments

3% of GOL’s total sales
(1)
(2)
Visitors, friends and relatives
Source: GOL estimates
Cargo Transportation
• Credit card partnerships
• Mileage sale
• Strategic partnerships
Door to
Door
Package
Tracking
60
65
GOL
Market
Increase cargo revenues from
R$3.5/kg to R$9/kg in ~10% of the
volume in 2009
Business Travelers (2)
(as a % of total travelers)
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
6
Growing Interline Network
 Increase load factor (+2-3pp)
 No sales cost
 Sell tickets outside home market
 Frequent Flyer Program agreements targeted
for early 2009
 Code-share agreements targeted for 1H09
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
7
Maintaining Cost Advantage
 New, larger, fuel efficient SFP aircraft
 Fleet standardization
 Standard fleet of B737NGs
 Smaller spare parts inventory
 Phased maintenance reduces ground time
 Cost reduction in mechanics training
 Reduce fleet age
 Returning most of B737-300 aircraft in 2008
 Average fleet age of 5.5y by YE2009
 Lower fuel consumption
 Reduce maintenance expenses
 Expand in-house aircraft maintenance services
 Doubling capacity of GOL Aircraft Maintenance Center
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
8
Lowest Cost Provider in Brazil
 Maintaining Cost Advantages
GOL’s main cost advantages:
Standardized, young fleet
More flexible aircraft type
Integrated network
More efficient operations
Cost
Per ASK (1) (R$)
Competitor
(BRAZIL)
Cost
%
Per ASK (1,2) (R$) Difference
Fuel
6.51
More Efficient Fleet
7.08
Maintenance
0.86
Phased Maintenance
0.95
Aircraft Leasing and D&A
1.93
Smaller Aircraft
1.59
Personnel
2.47
Lower Personnel Costs
3.26
Sales & Marketing
1.36
Higher Internet Distribution
2.01
Landing Fees
0.83
Short-haul Network
0.89
Air Traffic Servicing
1.04
Efficient Ground Operations
1.27
Other
1.08
More Efficient Operations
1.51
Total
16.07
18.56
9.56
11.48
Total Ex-fuel
1) Consolidated. LTM 3Q08. USGAAP.
2) Stage-length adjusted from 1,106 km to 960km.
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
9
Disciplined Capacity Growth
mm ASKs
1Q08
2Q08
3Q08
4Q08
2009E
(1)
Domestic ASKs
8,072
q-t-q growth
y-o-y growth
0%
36%
8,382
4%
22%
7,998
-5%
16%
8,009
34,000
0%
6%
5%
5%
(1)
International ASKs
2,986
q-t-q growth
y-o-y growth
39%
182%
2,295
-23%
15%
1,913
-17%
-7%
1,452
6,500
-24%
-33%
-25%
-25%
(1)
Total ASKs
q-t-q growth
y-o-y growth
11,058
14%
58%
10,677
-3%
21%
9,911
-7%
11%
9,461
40,500
-5%
-3%
-1%
-1%
(1) Consolidated
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
10
Fleet Plan
 Fleet plan to facilitate profitable growth and reduce costs
 Order for 167 737-800NGs (32 delivered)
Average Fleet
Age (years)
10
9.0
111
28
104
108
11
40
6.8
31
18
25
115
40
11
38
121
40
127
9
40
8
2
7
7
16
5.5
20
52
35
5.4
64
6
5.6
85
74
5.5
5
9
2007A
767 – 300s
4
2008E
2009E
737 – 800 SFPs
2010E
737 – 800s
2011E
2012E
737 – 700s
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
737 – 300s
11
High Revenue Productivity and Low Costs
 High aircraft productivity results in industry-leading revenue per aircraft
Fuel Costs
Operating Revenue /
34.5
Aircraft (1)
Stage-Length Adjusted CASK
(US$ cents) (1) (2)
(US$MM)
Variable costs
Fixed costs
9.9
33.6
8.6
9.4
8.4
3.5
3.8
6.4
2.9
3.5
24.2
20.1
3.0
1.9
1.4
2.1
1.7
0.9
15.3
3.8
3.5
3.4
3.4
2.8
GOL has low fixed costs
(1) LTM September 30, 2008. Average exchange rates for relevant time periods used in conversion.
(2) Stage-lengths adjusted to 960km.
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
12
Risk Management
 Protect GOL from exchange variation, oil prices and interest rate fluctuations
 Subject to Risk Management Committee review
 Support for operations
 Policies establish exposure limits, hedge ratios and forbids transactions with leveraged
instruments
 SFAS 133 accounting
Policy
Summary
Short-term
(3-4mo.)
Medium-term
(5-8 mo.)
Long-term
triggers
Situation on Sep 30, 2008
volume/price
4Q08: 3% @ $108/barrel
WTI
~50 - 60%
~20%

1Q09: 0% @ 2Q09: 0% @ 4Q08: 46% @ 1.95
USD
~45 - 55%
~20%

1Q09: 25% @ 2.00
2Q09: 12% @ 2.00
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
13
Investment Plans and Financing
Capex (R$mm)
Net Cash Liquidity
2008-2010
R$mm
(R$mm in 3Q08)
R$ 1.5bn in
cash
deposited for
aircraft
R$ 1.3bn in
gross cash
liquidity
22%
Deposits with
Lessors
28%
Cash and cash
equivalents
Aircraft Acquisition
1,400
Pre-Delivery Payments
1,100
Other Investments (Hangar, IT, Spare Parts)
Total
3,300
Financing Sources (R$mm)
2008-2010
R$mm
Aircraft Loan
PDP Deposits
with Boeing
Receivables
6%
31%
Unused
Credit
Lines
13%
800
1,200
Cost
Term
~5% pa ~12 years
Pre-Delivery Payment Facilities
970
~5% pa
~2 years
Other Capex
350
~6% pa
~7 years
Own Resources
780
Total
3,300
Total: R$ 2.8bn
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
14
Historical Performance
 RPK (MM)
 ASK (MM)
 CASK ex-fuel (R$ MM) (1)
41,107
25,308
34,348
22,670
10.39
9.87
14,819
20,261
9,740
6,289
2004
9.36
9.25
13,246
8.92
8.70
8,844
2005
2006
2007
2008
2004
2005
 Net Revenues (R$ MM) (1)
2006
2007
2004
2008
2005
2006
2007
3Q07
 EBITDAR (R$ MM) (1)
4.938,3
3.802,0
1,063.3
2.669,1
1.960,9
1.303,5
2004
614.5
1788,3
2005
2006
2007
3Q07
359.6
3Q08
2004
345.5
2005
2006
2007
193.4
260.0
3Q07
3Q08
(1) USGAAP
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
15
3Q08
Taking Steps to Compete in Different Environment
 Fleet renewal
 Disciplined capacity growth
 Continued cost discipline
 Growth in Smiles loyalty program
 Synergy gain from merger
 Growth in cargo and ancillary revenues
This presentation is subject to copyright and may not be copied or used without GOL’s express consent
16
The material contained in this presentation about GOL is of the date of this presentation. No representation or warranty, expressed or
implied is made concerning, and no reliance should be placed on the accuracy, fairness, or completeness of this information. This
presentation contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results,
and those related to growth prospects of GOL. These are merely projections and, as such, are based exclusively on the expectations of
GOL’s management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such
forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the
performance of the Brazilian economy and the industry, among other factors and risks disclosed in GOL’s filed disclosure documents and
are, therefore, subject to change without prior notice.