golfs2018_6ka.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K/A
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of April, 2019
(Commission File No. 001-32221) ,
 

 
GOL LINHAS AÉREAS INTELIGENTES S.A.
(Exact name of registrant as specified in its charter)
 
GOL INTELLIGENT AIRLINES INC.
(Translation of Registrant's name into English)
 


 
Praça Comandante Linneu Gomes, Portaria 3, Prédio 24
Jd. Aeroporto 
04630-000 São Paulo, São Paulo
Federative Republic of Brazil
(Address of Regristrant's principal executive offices)

 


Indicate by check mark whether the registrant files or will file
annual reports under cover Form 20-F or Form 40-F.

Form 20-F ___X___ Form 40-F ______

Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under
the Securities Exchange Act of 1934.

Yes ______ No ___X___

If "Yes" is marked, indicated below the file number assigned to the
registrant in connection with Rule 12g3-2(b):

 

(Free translation into English from original previously issued in Portuguese)

 

 

 

Individual and consolidated

Financial Statements

 

GOL Linhas Aéreas Inteligentes S.A.

December 31, 2018

with review report of independent auditors

 


 

Gol Linhas Aéreas Inteligentes S.A.

 

Individual and consolidated financial statements

December 31, 2018

 

 

Contents

 

Management report  01 
Comments on business projection trends  09
Report of the Statutory Audit Committee (CAE)  10
Fiscal Council’s Report  12
Declaration of the officers on the financial statements  13
Statement of Executive officers on the independent auditors’ review report on the financial statements  14
Independent Auditors’ report on the individual and consolidated financial statements  15
 
 
Statements of financial position  21
Statements of operations  23
Statements of comprehensive income  24
Statements of changes in equity  25
Statements of cash flows  27
Statements of value added  29
Notes to the financial statements  30

 


 

Management report

 

On January 15, 2019, GOL completed 18 years of operation and, since its foundation, the Company has transported over 450 million passengers on over 3.8 million flights to destinations in Brazil, Latin America, the Caribbean and the U.S. During these 18 years GOL has constantly evolved and achieved significant results, consolidating itself as Brazil’s main domestic airline, becoming the leader in the corporate segment and in the domestic market, with a market share of 36%. The pioneers solutions brought by the Company have simplified the process of air travel. We continue to work and innovate even more to offer the best service, with low cost and completely focused on our Client’s satisfaction. Today the Company already offers Wi-Fi on board in 90% of the fleet, and plans to offer Wi-Fi on all our aircraft by April 2019. GOL will be the first airline in the world with high speed internet on board all flights .

 

The arrival of the MAX 8 aircraft into our standardized fleet improves our competitive advantage with the lowest cost structure and highest operational efficiency in the Brazilian airline market. GOL continues its focus on modernization by replacing NGs for MAX 8 aircraft. In addition to providing us lower operating expenses, such as approximately 15% reduction in fuel consumption per ASK, this new technology of the MAX 8 also extends the reach of our network, allowing us to serve new destinations. The renewal plan will allow GOL to finish 2019 and 2020 with 24 and 34 MAX aircraft in its fleet, while maintaining discipline in capacity management.

 

In line with the international expansion strategy towards new markets, during the last quarter of 2018 GOL started nonstop flights from Brasília and Fortaleza to Miami and Orlando, and additionally, opened regular operations from São Paulo to Quito, Ecuador, being the only airline to operate this route without stops. In the year of 2019, direct flights from Brasília to Cancun, Mexico, will be launched, as well as the new routes from Vitória to Buenos Aires, both in the first semester. GOL will also start regular operations from Recife to Santiago in Chile during the second half of this year. The MAX 8 will allow for the continuous international expansion of the network, with less overlap in relation to other airlines.

 

GOL is the only airline that offers flights from Congonhas (Metro São Paulo’s downtown Airport) to the markets with the highest demand in the U.S. and Latin America, utilizing an efficient capacity and flight management system intelligently connecting the Company’s network and offering the best flight experience and comfort to Clients.

 

The Company has followed a disciplined strategy of deleveraging its balance sheet and improving its liquidity profile, through the amortization of short and long-term debt using funds from operating cash flow and new issues. We finalized a series of liability management initiatives throughout 2018: the repurchase of bonds maturing in 2018, 2020, 2021, 2023 and 2028, and the amortization of debentures. In 2019, we remain focused on the deleveraging and on February 1, we concluded a tender offer for the acquisition of our Senior Notes due 2022. The participation in the tender offer of holders representing around 15% of the 2022 Notes showed that the market is very comfortable with GOL’s risk, as well as has a very positive perception regarding the Company's future developments.

 

In 2018 the Real once again depreciated against the US Dollar and the average prices of Jet Fuel increased in comparison to the previous year, which led to significant cost pressures. Despite this challenging scenario, GOL posted results consistent with guidance. In 4Q18, we achieved the tenth consecutive quarter with positive operating results and the highest operating margin since 2006: operating income of R$672.4 million and EBIT margin of 21.0%. GOL is hedged for approximately 59% of its fuel consumption for the remainder of 2019, at an average cost of US$60.5. This quarter’s solid result reflects GOL’s success in managing its business portfolio through the cycle.

 

 

1


 

For 2019, Brazil’s GDP is expected to grow 2.5% (according to the Central Bank FOCUS Report), while industry demand is estimated to grow between 6% and 7% (according to ABEAR). In addition, the Company, by accelerating the incorporation of new MAX 8 aircraft, is structured and prepared to serve additional demand.

 

 

2


 

Operating and Financial Indicators

 

Traffic data – GOL (in millions)

4Q18

4Q17

% Var.

2018

2017

% Var.

 RPK GOL – Total

10,244

9,896

3.5%

38,423

37,231

3.2%

  RPK GOL – Domestic

9,037

8,879

1.8%

34,266

33,250

3.1%

  RPK GOL – International

1,207

1,017

18.7%

4,158

3,981

4.4%

 ASK GOL – Total

12,506

12,214

2.4%

48,058

46,695

2.9%

  ASK GOL – Domestic

10,901

10,863

0.4%

42,428

41,463

2.3%

  ASK GOL – International

1,605

1,351

18.8%

5,630

5,232

7.6%

 GOL Load Factor – Total

81.9%

81.0%

0.9 p.p

80.0%

79.7%

0.3 p.p

  GOL Load Factor – Domestic

82.9%

81.7%

1.2 p.p

80.8%

80.2%

0.6 p.p

  GOL Load Factor – International

75.2%

75.3%

-0.1 p.p

73.9%

76.1%

-2.2 p.p

Operating data

4Q18

4Q17

% Var.

2018

2017

% Var.

Average Fare (R$)

334

313

6.7%

318

294

8.1%

Revenue Passengers - Pax on board ('000)

8,944

8,652

3.4%

33,446

32,507

2.9%

Aircraft Utilization (block hours/day)

11.5

12.4

-7.0%

11.8

12.1

-2.5%

Departures

63,431

64,910

-2.3%

250,040

250,654

-0.2%

Total Seats (‘000)

11,079

10,872

1.9%

42,968

41,953

2.4%

Average Stage Length (km)

1,108

1,103

0.4%

1,098

1,094

0.3%

Fuel Consumption (mm liters)

365

364

0.4%

1,403

1,379

1.8%

Full-time Employees (at period end)

15,294

14,532

5.2%

15,294

14,532

5.2%

Average Operating Fleet6

116

111

5.1%

112

109

2.7%

On-time Departures

87.5%

92.5%

-5.0 p.p

91.8%

94.7%

-2.9 p.p

Flight Completion

98.6%

98.8%

-0.2 p.p

98.5%

98.5%

0.0 p.p

Passenger Complaints (per 1000 pax)

1.31

1.62

-19.3%

1.75

1.45

20.9%

Lost Baggage (per 1000 pax)

2.19

2.09

5.0%

2.03

2.06

-1.3%

Financial data

4Q18

4Q17

% Var.

2018

2017

% Var.

Net YIELD (R$ cents)

29.14

27.35

6.6%

27.67

25.69

7.7%

Net PRASK (R$ cents)

23.87

22.16

7.7%

22.13

20.48

8.0%

Net RASK (R$ cents)

25.59

23.80

7.5%

23.75

22.12

7.3%

CASK (R$ cents)

20.22

20.64

-2.0%

20.83

20.00

4.2%

CASK ex-fuel (R$ cents)

11.20

13.90

-19.4%

12.78

13.82

-7.5%

CASK ex-fuel4 (R$ cents)

16.28

13.90

17.1%

14.69

13.82

6.3%

CASK ex-fuel5 (R$ cents)

14.45

13.90

3.9%

14.14

13.82

2.4%

Breakeven Load Factor

64.7%

70.3%

-5.6 p.p

70.1%

72.1%

-2.0 p.p

Average Exchange Rate 1

3.8084

3.2466

17.3%

3.6558

3.1925

14.5%

End of period Exchange Rate 1

3.8748

3.3080

17.1%

3.8748

3.3080

17.1%

WTI (avg. per barrel. US$) 2

59.34

55.30

7.3%

64.90

50.85

27.6%

Price per liter Fuel (R$) 3

3.28

2.34

40.3%

2.91

2.15

35.2%

Gulf Coast Jet Fuel (avg. per liter. US$)2

0.52

0.46

13.5%

0.47

0.41

15.0%

 

1. Source: Brazilian Central Bank; 2. Source: Bloomberg; 3. Fuel expenses excluding hedge results and PIS/COFINS credits/liters consumed; 4. Excluding gains results of sale and sale-leaseback transactions; 5. Excluding gains results of sale and sale-leaseback transactions, and costs from maintenance of aircraft to the execution of the fleet renewal plan;   6. Average operating fleet excluding aircraft in sub-leasing and MRO. *4Q17 and 12M17 results have been restated based on IFRS 15. Certain calculations may not match with the information in the quarterly financials due to rounding.

 

Domestic market – GOL

GOL’s domestic supply increased by 0.4%, and demand increased by 1.8% in 4Q18. As a result, the Company’s domestic load factor reached 82.9%, an increase of 1.2 p.p. when compared to 4Q17. GOL transported 8.4 million domestic passengers in the quarter, an increase of 3.2%, when compared with the same period in 2017. The Company is the leader in transported passengers in Brazil’s domestic airline market.

3


 


International market - GOL

GOL’s international supply increased by 18.8%, and international demand increased 18.7% in 4Q18 compared to 4Q17. The Company’s international load factor in 4Q18 was 75.2%, reducing 0.1 p.p. over 4Q17. During the quarter, GOL transported 0.5 million passengers in the international market, a decrease of 0.9% when compared to the fourth quarter of 2017.

Volume of Departures and Total seats - GOL
 

The total volume of GOL departures was 63,431, a decrease of 2.3% in 4Q18 over 4Q17. The total number of seats available to the market was 11.0 million in the fourth quarter of 2018, increase of 1.9% quarter-over-quarter.

 

PRASK, Yield and RASK
 

Net PRASK increased by 7.7% in the quarter when compared to 4Q17, reaching 23.87 cents (R$), driven by a growth in net passenger revenue of 10.3% in the quarter. GOL’s Net RASK was 25.59 cents in (R$) 4Q18, an increase of 7.5% over 4Q17. Net yieldincreased by 6.6% in 4Q18 over 4Q17, reaching 29.14 cents (R$), consequence of a 6.7% increase in GOL’s average fare.


For reference, below is a comparison of passenger and ancillary (cargo and other) revenue for the quarterly periods in 2017 and 2018 in accordance with IFRS15.

Net Operating Revenue/ASK (R$ cents)

 

1Q

2Q

3Q

4Q

Passenger

2018

22.53

20.11

21.70

23.87

2017

20.21

18.63

20.66

22.16

Cargo and Other

2018

1.33

1.95

1.52

1.72

2017

1.35

2.04

1.57

1.64

 

4


 

Operating result

Operating income (EBIT) in the fourth quarter was R$672.4 million, increase of 74.0% compared to the same period in 2017. 4Q18 operating margin was 21.0%, increase of 7.7 p.p. in relation to 4Q17. On a per available seat-kilometer basis, EBIT was 5.38 cents (R$) in 4Q18, compared to 3.16 cents (R$) in 4Q17 (increase of 70.2%).

EBITDA in 4Q18 totaled R$851.0 million in the period, increase of 60.6% over 4Q17. The impact of the increase in RASK of 1.79 cent (R$) and the decrease in CASK ex-depreciation of 0.67 cent (R$) resulted in an EBITDA per available seat-kilometer of 6.80 cents (R$) in 4Q18, increase of 2.47 cents (R$) compared to 4Q17.

EBITDAR in 4Q18 totaled R$1,162.9 million in the period, increase of 53.6% over 4Q17. On a per available seat-kilometer basis, EBITDAR was 9.30 cents (R$) in 4Q18, compared to 6.19 cents (R$) in 4Q17 (increase of 50.1%).

EBITDAR Calculation (R$ cents/ASK)

4Q18

4Q17

% Var.

2018

2017

% Var.

Net Revenues

25.59

23.80

7.5%

23.75

22.12

7.3%

Operating Expenses

 (20.22)

 (20.64)

-2.0%

 (20.83)

 (20.00)

4.2%

EBIT

5.38

 3.16

70.2%

2.91

 2.12

37.5%

Depreciation and Amortization

 (1.43)

 (1.18)

21.6%

 (1.39)

 (1.08)

28.5%

EBITDA

6.80

 4.33

57.0%

4.30

 3.20

34.5%

EBITDA Margin

26.6%

18.2%

8.4 p.p

18.1%

14.5%

3.6 p.p

Aircraft Rent

 (2.49)

 (1.86)

34.1%

 (2.32)

 (2.01)

15.1%

EBITDAR

 9.30

 6.19

50.1%

 6.62

 5.21

27.0%

EBITDAR Margin

36.3%

26.0%

10.3 p.p

27.9%

23.6%

4.3 p.p

*4Q17 and 12M17 results have been restated based on IFRS 15. Certain calculations may not match with the information in the quarterly financials due to rounding.

 

Operating Margins (R$ MM)

4Q18

4Q17

% Var.

2018

2017

% Var.

EBIT

672.4

 386.3

74.0%

1,400.0

989.4

41.5%

EBIT Margin

21.0%

13.3%

7.7 p.p

12.3%

9.6%

2.7 p.p

EBITDA

851.0

529.9

60.6%

2,068.5

1,494.8

38.4%

EBITDA Margin

26.6%

18.2%

8.4 p.p

18.1%

14.5%

3.6 p.p

EBITDAR

1,162.9

757.0

53.6%

3,181.3

2,434.5

30.7%

EBITDAR Margin

36.3%

26.0%

10.3 p.p

27.9%

23.6%

4.3 p.p

*4Q17 and 12M17 results have been restated based on IFRS 15.  Certain calculations may not match with the information in the quarterly financials due to rounding.

 

5


 

 

EBIT, EBITDA and EBITDAR reconciliation

(R$ MM)*

4Q18

4Q17

% Var.

2018

2017

% Var.

Net income (loss)¹

 580.2

 62.2

832.8%

 (779.7)

 377.8

NM

    (-) Income taxes 

 (74.6)

 98.5

NM

 (297.1)

 307.2

NM

    (-) Net financial result

 (17.6)

 (422.6)

-95.8%

 (1,882.6)

 (918.8)

104.9%

EBIT

672.4

 386.3

74.0%

1,400.0

 989.4

41.5%

    (-) Depreciation and amortization

 (178.7)

 (143.6)

24.5%

 (668.5)

 (505.4)

32.3%

EBITDA

 851.0

 529.9

60.6%

 2,068.5

 1,494.8

38.4%

    (-) Aircraft rent

 (311.9)

 (227.1)

37.3%

 (1,112.8)

 (939.7)

18.4%

EBITDAR

 1,162.9

 757.0

53.6%

 3,181.3

 2,434.5

30.7%

*In accordance with CVM Instruction 527, the Company presents the reconciliation of EBIT and EBITDA, whereby: EBIT = net income (loss) plus income and social contribution taxes and net financial result; and EBITDA = net income (loss) plus income and social contribution taxes, net financial result, and depreciation and amortization. GOL also shows the reconciliation of EBITDAR, given its importance as a specific aviation industry indicator, whereby: EBITDAR = net income (loss) plus income and social contribution taxes, the net financial result, depreciation and amortization, and aircraft operating lease expenses;

*4Q17 and 12M17 results has been restated based on IFRS 15.  Certain calculations may not match with the information in the quarterly financials due to rounding.

¹ Net income (loss) before minority interest

Fleet
 

Final

4Q18

4Q17

% Var.

3Q18

% Var.

Boeing 737s

121

119

+2

120

+1

800 NG

91

92

-1

92

-1

700 NG

24

27

-3

26

-2

MAX 8

6

0

+6

2

+4

By rental type

4Q18

4Q17

% Var.

3Q18

% Var.

Financial Leases

11

31

-20

25

-14

Operating Leases

110

88

+22

95

+15

¹Considers 13 aircraft in sale and leaseback operation

 

At the end of 4Q18, GOL’s total fleet was 121 Boeing 737 aircraft with all 121 aircraft in operation, includingsix aircraft MAX 8. At the end of December 2017, GOL’s total fleet was 119 Boeing 737 aircraft with all of them in operation on the Company’s routes.

GOL has 110 aircraft under operating leasing arrangements and 11 aircraft under financial leases, with a purchase option at the end of their lease contracts.

The average age of the fleet was 9.5 years at the end of 4Q18. On December 31, the Companyhad 130 firm Boeing 737 MAX orders, comprised of 100 737 MAX 8 orders and 30 737 MAX 10 orders.

6


 

On December 26, 2018, GOL announced its plan to accelerate the modernization of its fleetwith sale and leaseback agreements for 13 737 NG aircraft that will be exchanged for Boeing 737 MAX 8 aircraft in the fleet between 2019 and 2021.

Fleet plan

2018

2019E

2020E

>2020E

Total

Operating Fleet (End of the year)

121

126

130

 

 

Aircraft Commitments (R$ million)*

-

1,791.7

5,047.0

56,397.0

63,235.7

Pre-Delivery Payments (R$ million)

-

283.6

816.8

7,726.9

8,827.3

* Considers aircraft list price.

Relationship with Independent Auditors

 

When hiring services that are not related to external auditing from its independent auditors, Smiles bases its conduct on principles that preserve the auditor’s independence. Pursuant to internationally accepted standards, these principles consist of: (a) the auditors must not audit their own work, (b) the auditors must not execute managing functions for their clients and (c) the auditors must not represent their clients’ legal interests.

 

Based on the subparagraph III, article 2 of the CVM Instruction 381/2003, the Company adopts a formal procedure to hire services other than external auditing from our auditors. The procedure consists of consulting its Audit Committee to ensure that those services shall not affect the independence and the objectivity, required for the independent audit performance. Additionally, formal statements are required from the auditors regarding their independence while providing such services.

 

The Company informs that its independent auditor for the period, Ernst & Young Auditores Independentes (“EY”) did not provide additional services not related to auditing in the 2018 fiscal year.

 

7


 

Glossary of industry terms

|        AIRCRAFT LEASING: an agreement through which a company (the lessor), acquires a resource chosen by its client (the lessee) for subsequent rental to the latter for a determined period.

|        AIRCRAFT UTILIZATION: the average number of hours operated per day by the aircraft.

|        AVAILABLE SEAT KILOMETERS (ASK): the aircraft seating capacity multiplied by the number of kilometers flown.

|        AVAILaBLE FREIGHT TONNE KILOMETER (AFTK):  cargo capacity in tonnes multiplied by number of kilometers flown.

|        AVERAGE STAGE LENGTH: the average number of kilometers flown per flight.

|        BLOCK HOURS: the time an aircraft is in flight plus taxiing time.

|        BREAKEVEN LOAD FACTOR: the passenger load factor that will result in passenger revenues being equal to operating expenses.

|        BRENT: oil produced in the North Sea, traded on the London Stock Exchange and used as a reference in the European and Asian derivatives markets.

|        CHARTER: a flight operated by an airline outside its normal or regular operations.

|        EBITDAR: earnings before interest, taxes, depreciation, amortization and rent. Airlines normally present EBITDAR, since aircraft leasing represents a significant operating expense for their business.

|        FREIGHT LOAD FACTOR (FLF): percentage of cargo capacity that is actually utilized (calculated dividing FTK by AFTK)

|        FREIGHT TONNE KILOMETERS (FTK):  weight of revenue cargo in tonnes multiplied by number of kilometers flown by such tonnes.

|        LESSOR: the party renting a property or other asset to another party, the lessee.

|        LOAD FACTOR: the percentage of aircraft seating capacity that is actually utilized (calculated by dividing RPK by ASK).

|        LONG-HAUL FLIGHTS: long-distance flights (in GOL’s case. flights of more than four hours’ duration).

|        OPERATING COST PER AVAILABLE SEAT KILOMETER (CASK):operating expenses divided by the total number of available seat kilometers.

|        OPERATING COST PER AVAILABLE SEAT KILOMETER EX-FUEL (CASK EX-FUEL):operating cost divided by the total number of available seat kilometers excluding fuel expenses.

|        OPERATING REVENUE PER AVAILABLE SEAT KILOMETER (RASK): total operating revenue divided by the total number of available seat kilometers.

|        PASSENGER REVENUE PER AVAILABLE SEAT KILOMETER (PRASK):total passenger revenue divided by the total number of available seat kilometers.

|        REVENUE PASSENGERS: the total number of passengers on board who have paid more than 25% of the full flight fare.

|        REVENUE PASSENGER KILOMETERS (RPK): the sum of the products of the number of paying passengers on a given flight and the length of the flight.

|        SALE-LEASEBACK: a financial transaction whereby a resource is sold and then leased back, enabling use of the resource without owning it.

|        SLOT: the right of an aircraft to take off or land at a given airport for a determined period of time.

|        SUB-LEASE: an arrangement whereby a lessor in a rent agreement leases the item rented to a fourth party.

|        TOTAL CASH:the sum of cash, financial investments and short and long-term restricted cash.

|        WTI Barrel: West Texas Intermediate – the West Texas region, where US oil exploration is concentrated. Serves as a reference for the US petroleum byproduct markets.

|        YieldpEr PASSENGER KILOMETER:the average value paid by a passenger to fly one kilometer.

 

 

 

 

8


 

 

About GOL Linhas Aéreas Inteligentes S.A. (“GOL”)
 

GOLserves more than 30 million passengers annually. With Brazil's largest network, GOL offers customers more than 700 daily flights to 69 destinations in Brazil and in South America, the Caribbean and the United States. GOLLOGis a leading cargo transportation and logistics business serving more than 3,400 Brazilian municipalities and, through partners, more than 200 international destinations in 95 countries. SMILESis one of the largest coalition loyalty programs in Latin America, with over 15 million registered participants, allowing clients to accumulate miles and redeem tickets for more than 700 locations worldwide. Headquartered in São Paulo, GOLhas a team of more than 15,000 highly skilled aviation professionals and operates a fleet of 120 Boeing 737 aircraft, with a further 130 Boeing 737 MAX on order, delivering Brazil's top on-time performance and an industry leading 18 year safety record. GOLhas invested billions of Reais in facilities, products and services and technology to enhance the customer experience in the air and on the ground. GOL's shares are traded on the NYSE (GOL) and the B3 (GOLL4). For further information, visitwww.voegol.com.br/ir.

Disclaimer

This release 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, as well as the expected impact of the recently issued, but not yet adopted, accounting standard IFRS 16. These are merely estimates and projections and, as such, are based exclusively on the expectations of GOL’s management. Such forward-looking statements depend, substantially, on external factors, in addition to the risks disclosed in GOL’s filed disclosure documents and are, therefore, subject to change without prior notice. The Company's non-financial information and estimates regarding the impact of recently issued, but not yet adopted, accounting standard IFRS 16 were not reviewed by the independent auditors.

Non-GAAP Measures

To be consistent with industry practice. GOL discloses so-called non-GAAP financial measures which are not recognized under IFRS or U.S. GAAP. including “Net Debt”. “Adjusted Net Debt”. ”total liquidity”. "EBITDA" and EBITDAR”. The Company’s management believes that disclosure of non-GAAP measures provides useful information to investors. financial analysts and the public in their review of its operating performance and their comparison of its operating performance to the operating performance of other companies in the same industry and other industries. However. these non-GAAP items do not have standardized meanings and may not be directly comparable to similarly-titled items adopted by other companies. Potential investors should not rely on information not recognized under IFRS as a substitute for the GAAP measures of earnings or liquidity in making an investment decision.

Contacts

E-mail: ri@voegol.com.br

Phone: +55 (11) 2128-4700

Website: www.voegol.com.br/ir

 

9


 

Comments on business projection trends

The Company's financial perspectives are detailed below:

Financial Outlook

2019E(1)

 

2020E(1)

(Consolidated, IFRS)

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Revised

 

Previous

Revised

Total fleet (average)

122 to 125

122 to 125

 

125 to 128

125 to 128

Total operational fleet (average)

~117

117

 

~120

120

ASKs, System (% change)

6 to 10

6 to 10

 

7 to 10

7 to 10

- Domestic

2 to 4

2 to 4

 

3 to 5

3 to 5

- International

35 to 45

35 to 45

 

10 to 20

10 to 20

Seats, System (% change)

3 to 4

3 to 4

 

1 to 3

1 to 3

Departures, System (% change)

3 to 5

3 to 5

 

1 to 3

1 to 3

Average load factor (%)

79 to 81

79 to 81

 

79 to 81

79 to 81

Ancillary revenues, net2 (R$ bn)

~ 1.0

~ 1.0

 

~ 1.1

~ 1.1

Total net revenues (R$ billion)

~ 12.9

~ 12.9

 

~ 14.2

~ 14.2

Non-fuel CASK (R$ cents)

~ 13

~ 13

 

~ 13

~ 13

Fuel liters consumed (mm)

~ 1,420

~ 1,420

 

~ 1,480

~ 1,480

Fuel price (R$/liter)

~ 2.9

~ 2.8

 

~ 3.0

~ 2.9

EBITDA margin (%)

~ 27

~ 28

 

~ 28

~ 29

EBIT margin (%)

~ 17

~ 18

 

~ 18

~ 19

Net financial expense3 (R$ billion)

~ 1.2

~ 1.2

 

~ 1.2

~ 1.2

Pre-tax margin3 (%)

~ 9

~ 10

 

~ 11

~ 12

Effective income tax rate (%)

~ 20

~ 20

 

~ 20

~ 20

Minority interest4 (R$ mm)

~ 300

~ 300

 

~ 330

~ 330

Capex, net (R$ mm)

~ 650

~ 650

 

~ 600

~ 600

Net Debt5 / EBITDA (x)

~ 3.0x

~ 2.9x

 

~ 2.5x

~ 2.4x

Fully-diluted shares out. (million)

348.7

349.9

 

348.7

349.9

EPS, fully diluted (R$)

2.20 to 2.60

2.40 to 2.80

 

2.60 to 3.10

2.80 to 3.30

Fully-diluted ADS out. (million)

174.4

174.9

 

174.4

174.9

EPADS, fully diluted (US$)

1.20 to 1.40

1.30 to 1.50

 

1.60 to 1.90

1.70 to 2.00

           

(1) Considers adoption of IFRS 16; (2) Net revenue of cargo, loyalty, buy-on-board and other ancillary revenues; (3) Excluding currency gains and losses;  (4) Source: average of analyst estimates reported on Bloomberg; (5) Excluding perpetual bonds.

 

10


 

Report of the Statutory Audit Committee (CAE)

 

General Information and Responsibilities

 

The Statutory Audit Committee (CAE) is a statutory body linked to the Board of Directors of Gol Linhas Aéreas Inteligentes S.A. (“Company”), which is composed of three independent members of the Board of Directors, who are elected by the Board members on annual basis, one of whom must be qualified as a Financial Expert. Pursuant to its internal regulations, the CAE is responsible for overseeing the quality and integrity of financial reports and statements; compliance with legal, regulatory and statutory standards; the suitability of risk management processes, internal control policies and procedures; internal audit activities. It is also responsible for overseeing the independent auditors’ work, including their independence and the quality and appropriateness of the services provided, as well as any differences of opinion with management. It determines the registration and  vexercise of the independent audit within the scope of the Brazilian Securities and Exchange Commission (CVM) and performs the function of an Audit Committee, in compliance with the Sarbanes Oxley Act, to which the Company is subject to, since it is registered at the Securities and Exchange Commission – SEC. The CAE is also responsible for overseeing related-party transactions and operating the complaints channel.

 

CAE’s Activities in 2018: In order to discuss the matters related to the year ended December 31, 2018, the CAE met eight times and, within its scope, carried out the following activities:

 

·         Its coordinator established the agendas and presided over the meetings;

 

·         It assessed the annual work plan and discussed the results of the activities performed by the independent auditors in 2017;

 

·         It supervised the activities and performance of the Company’s internal audit, analyzing the annual work plan, discussing the result of the activities and reviews. Any issues raised by the internal audit about improvements in the internal control environment are discussed with the respective managers/officers in order to implement continuous improvements. It supervised and analyzed the effectiveness, quality and integrity of internal control mechanisms in order to, among others, monitor compliance with the provisions related to the integrity of the financial statements, including quarterly financial information and other interim financial statements;

 

·         It supervised, together with management and the internal audit, the different agreements entered into between the Company or its subsidiaries, on the one hand, and the controlling shareholder, on the other hand, in order to verify compliance with the Company’s policies and controls regarding related-party transactions;

 

·         It met with the independent auditors, Ernst & Young, and addressed the following topics: the relationship and communication between the CAE and the external auditors, the scope of the auditors’ work, and the findings based on the implementation of the independent auditor’s work plan, among others; and

 

·         It prepared the CAE’s activities and operation report in 2018, in accordance with good corporate governance practices and the applicable regulation.

 

 

Internal Control Systems

 

Based on the agenda defined for 2018, the CAE addressed the main topics related to the Company’s internal controls, assessing risk mitigation initiatives and the senior management’s commitment to its continuous improvement. As a result of the meetings with the Company’s internal areas, the Statutory Audit Committee had the opportunity to make suggestions to the Board of Directors for improvements in the processes, overseeing the results already obtained in 2018.

 

Based on the work developed during 2018, the CAE considers the internal control system of the Company and its subsidiaries to be suitable for the size and complexity of their businesses and structured in order to ensure the efficiency of their operations and the systems that generate the financial reports, as well as compliance with applicable internal and external regulations.

 

Corporate Risk Management

 

CAE members, in the exercise of their duties and legal responsibilities, received information from the Company’s Administration about the relevant corporate risks, including the continuity risks, making evaluations and recommendations to increase the effectiveness of the risk management processes directly at Board of Directors’ meetings, contributing to and ratifying the initiatives implemented in 2018.

 

Conclusion

 

The CAE considers that the facts that have been presented to it, based on the works carried out and described in this Report, to be appropriate, and recommended, in its report, the approval of the Company’s audited financial statements for the year ended December 31, 2018.

 

São Paulo, February 27, 2019.

 

 

André Béla Jánszky

Member of the Statutory Audit Committee

 

Antônio Kandir

Member of the Statutory Audit Committee

 

Francis James Leahy Meaney

Member of the Statutory Audit Committee

11


 

Fiscal Council’s Report

 

 

The Fiscal Council of Gol Linhas Aéreas Inteligentes S.A., in the exercise of their legal and statutory duties and having reviewed the Company’s Management Report, Statement of Financial Position, Statement of Income, Statement of Comprehensive Income, Statement of Cash Flows, Statement of Changes in Equity, Statement of Value Added and respective Notes, individual and consolidated, for the fiscal year ended December 31, 2018, together with the Independent Auditors’ report, believes that they duly reflect the Company’s equity situation and financial and economic position as of December 31, 2018, recognizing that they are fit to be approved by the Annual Shareholders’ Meeting.

 

 

São Paulo, February 27, 2019.

 

Marcelo Moraes

Chairman of the Fiscal Council

         

Marcelo Curti

Member of the Fiscal Council

 

Marcela de Paiva

Member of the Fiscal Council

 

 

 

12


 

Declaration of the officers on the financial statements

 

 

In compliance with CVM Instruction No. 480/09, the Executive officers declare that they have discussed, reviewed and approved the financial statements for the year ended December 31, 2018.

 

 

 

São Paulo, February 27, 2019.

 

 

 

Paulo S. Kakinoff

President and Chief Executive Officer

 

 

Richard F. Lark Jr.

Executive Vice President and Chief Financial Officer

 

 

 

 

 

13


 

Declaration of the officers on the report of independent auditors on the interim financial information

 

 

In compliance with CVM Instruction No. 480/09, the Executive officers declare that they have discussed, reviewed and approved the opinions expressed in the review report of independent auditors, Ernst & Young Auditores Independentes S.S., on the individual and consolidated financial statements for the year ended December 31, 2018.

 

 

 

São Paulo, February 27, 2019.

 

 

 

Paulo S. Kakinoff

President and Chief Executive Officer

 

 

Richard F. Lark Jr.

Executive Vice President and Chief Financial Officer

 

 

 

 

14


 

Independent Auditors’ report on the individual and consolidated financial statements

 

To the shareholders and Board members and Officers of

Gol Linhas Aéreas Inteligentes S.A.             

São Paulo - SP

 

 

Opinion

 

We have audited the individual and consolidated financial statements of GOL Linhas Aéreas Inteligentes S.A. (the “Company”), identified as Parent and Consolidated, respectively, which comprise the balance sheets as at December 31, 2018, and the statements of operations, comprehensive income, changes in equity and cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies.

 

In our opinion, the accompanying financial statements present fairly, in all material respects, the individual and consolidated financial position of the Company as at December 31, 2018, and of its individual and consolidated financial performance and cash flows for the year then ended in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

 

Basis for opinion

 

We conducted our audit in accordance with Brazilian and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the individual and consolidated financial statements section of our report. We are independent of the Company and its subsidiaries in accordance with the relevant ethical principles set forth in the Code of Professional Ethics for Accountants and the professional standards issued by the Brazil’s National Association of State Boards of Accountancy (CFC), and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

 

Key audit matters

 

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the individual and consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description of how our audit addressed the matter, including any commentary on the findings or outcome of our procedures, is provided in that context.

 

We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of the individual and consolidated financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying financial statements.

                            

 

 

 

15


 

 

Revenue recognition from passenger transportation

 

Revenue recognition from passenger transportation is highly dependent on information technology (IT) systems and their internal controls for the revenue recognition from passenger transportation when the air transportation service is provided. This process also takes into consideration other complex aspects that may affect the proper revenue recognition, such as recording of tickets sold but not used, unused tickets recorded as credits to passengers, and subject to expiration, in addition to agreements with other airline companies, interline and codeshare agreements with other airline companies. Revenues recognized by the Company are disclosed in Note 24, the recognition criteria are described in Note 4.17.1.

 

This subject was considered significant to our audit due to the complexity of the technology environment and its respective controls related to revenue recognition, including ticket prices in different currencies, as well as, the acquisition of tickets through miles programs.

 

How our audit addressed this matter:

 

Our audit procedures included, among others, the involvement of systems specialists to support us in assessing the operational design and effectiveness of IT controls and internal controls that comprise the process of ticket sales, registration, execution of passenger transportation and revenue recognition; the execution of audit tests with the purpose of assessing the integrity of the data in the IT systems involved in the revenue recognition process, through selection of tickets samples for each revenue group and tests on tickets used and unused; other passenger revenues, and passenger no-show, rebooking and cancellation charges; tests of internal controls on the tickets sales process and revenue recognition; discussion with Management the assessment of the audit differences identified, review of the audit differences recorded by the Company, as well as, the assessment on the internal controls impacted by the audit differences identified.

 

Based on the results of our audit procedures performed on the revenue recognition for passenger transportation, we consider acceptable the assumptions and criteria related to the revenue recognition process prepared by Management, and the related disclosures, in the context of the financial statement taken as a whole.

 

Breakage revenue

 

The Company’s revenues take into consideration the estimated number of tickets and miles that are not expected to be used or redeemed up to their expiration date, and are recognized as breakage revenue based on a calculation of tickets and miles with high potential for expiration due to their expiration or no use. The analyses and assumptions for the revenue recognition of breakage is reviewed annually by the Company’s Management to take into consideration the historical trend of tickets and miles expired, as well, as those with high potential to expire.

 

This matter was considered significant to our audit, considering the subjectivity involved in this analysis and the high level of judgment adopted by Management to determine the assumptions used to determine the expected number of tickets and miles that will expire.

                            

 

 

 

16


 

 

How our audit addressed this matter:

 

Our audit procedures included, among others, the assessment of the design and operational effectiveness of controls implemented by Management for the revenue recognition of breakage; assessment of the reasonableness of assumptions related to the tickets and miles expected to expire, based on the historical data of tickets and miles expired; tests on a sampling based of miles earned, redeemed and expired; and analysis of the reasonableness of the other assumptions and methodology adopted by Management to determine the breakage rate used to recognize revenue.

 

Additionally, we assessed the adequacy of disclosures made by the Company on this matter, included in Notes 4.17.1 and 4.17.2 to the financial statements.

 

Based on the results of the audit procedures performed on the recognition of breakage revenue, which is consistent with Management’s assessment, re acceptable, in the context of the financial statement taken as a whole.

 

Other matters

 

Statements of value added

 

The individual and consolidated statements of value added (SVA) for year ended December 31, 2018, prepared under the responsibility of Company management, and presented as supplementary information for purposes of IFRS, were submitted to audit procedures conducted together with the audit of the Company’s financial statements. To form our opinion, we evaluated if these statements are reconciled to the financial statements and accounting records, as applicable, and if their form and content comply with the criteria defined by CPC 09 – Statement of Value Added. In our opinion, these statements of value added were prepared fairly, in all material respects, in accordance with the criteria defined in abovementioned accounting pronouncement, and are consistent in relation to the overall individual and consolidated financial statements.

 

Emphasis

Restatement of corresponding values

As mentioned in Note 24.17.1, as a result of the adoption of the new accounting standards, CPC 47 and IFRS 15 – Revenue from Contracts with Customers, the individual and consolidated corresponding amounts related to the financial position as of December 31, 2017 and related to the statements of operations, comprehensive income, the statements of changes in equity, cash flows and value added for the year ended December 31, 2017 presented for comparison purposes have been adjusted and are being restated as provided for in CPC 23 - Accounting Policies, Change in Estimate and Correction of Error and CPC 26 (R1) - Presentation of Financial Statements. Our conclusion does not contain a modification in relation to this matter.

                            

 

 

 

17


 

 

Other information accompanying the individual and consolidated financial statements and the auditor’s report

 

Management is responsible for such other information, which comprise the Management Report.

 

Our opinion on the individual and consolidated financial statements does not cover the Management Report and we do not express any form of assurance conclusion thereon.

 

In connection with our audit of the individual and consolidated financial statements, our responsibility is to read the Management Report and, in doing so, consider whether this report is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of the Management Report, we are required to report that fact. We have nothing to report in this regard.

 

Responsibilities of management and those charged with governance for the individual and consolidated financial statements

 

Management is responsible for the preparation and fair presentation of the individual and consolidated financial statements in accordance with the accounting practices adopted in Brazil and with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free of material misstatement, whether due to fraud or error.

 

In preparing the individual and consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company and its subsidiaries or to cease operations, or has no realistic alternative but to do so.

 

Those charged with governance are responsible for overseeing the Company’s and its subsidiaries’ financial reporting process.

 

Auditor’s responsibilities for the audit of the individual and consolidated financial statements

 

Our objectives are to obtain reasonable assurance about whether the individual and consolidated financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Brazilian and International standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

                            

 

 

 

18


 

 

As part of an audit in accordance with Brazilian and International Standards on Auditing, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

 

·      Identify and assess the risks of material misstatement of the individual and consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 

·      Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s and its subsidiaries’ internal control.

 

·      Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

 

·      Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s and its subsidiaries’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the individual and consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company and its subsidiaries to cease to continue as a going concern.

 

·      Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the individual and consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

 

·      Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

 

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

 

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements, including applicable independence requirements, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

                            

 

 

 

19


 

 

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

 

São Paulo, February 27, 2019

 

ERNST & YOUNG

Auditores Independentes S.S.

CRC- 2SP034519/O-6

 

 

Vanessa Martins Bernardi                                          

Accountant CRC-1SP244569/O-3

                            

 

                            

 

 

 

20


 

 

 

 

 

Statement of financial position

   

Parent Company

Consolidated

Assets

Note

2018

2017

2018

2017

     

 

   

Current assets

         

Cash and cash equivalents

5

282,465

103,727

826,187

1,026,862

Short-term investments

6

92,015

730,900

478,364

955,589

Restricted cash

7

-

-

133,391

-

Trade receivables

8

-

-

853,328

936,478

Inventories

9

-

-

180,141

178,491

Recoverable taxes

10.1

5,279

19,446

360,796

83,210

Derivatives

29

-

-

-

40,647

Other current assets

 

425,913

55,563

478,628

123,721

Total current assets

 

805,672

909,636

3,310,835

3,344,998

 

 

 

 

 

 

Noncurrent assets

 

 

 

 

 

Deposits

11

108,386

64,736

1,612,295

1,163,759

Restricted cash

7

39,784

38,432

688,741

268,047

Recoverable taxes

10.1

24,789

6,163

95,873

7,045

Deferred taxes

10.2

24,209

27,703

73,822

276,514

Related parties

12

2,294,143

1,570,591

-

-

Investments

13

437,875

388,235

1,177

1,333

Property, plant and equipment

14

202,698

323,013

2,818,057

3,195,767

Intangible assets

15

-

-

1,777,466

1,747,285

Total noncurrent assets

 

3,131,884

2,418,873

7,067,431

6,659,750

 

 

 

 

 

 

Total

 

3,937,556

3,328,509

10,378,266

10,004,748

 

The accompanying notes are an integral part of the individual and consolidated financial statements.

 

 

 

21


 

 
 
 
 

 

 

 

Parent Company

Consolidated

Liabilities and equity

Note

2018

2017

2018

2017

 

 

 

(Restated)

 

(Restated)

           

Current liabilities

         

Short-term debt

16

123,873

95,027

1,223,324

1,162,872

Suppliers

 

10,765

13,473

1,403,815

1,249,124

Suppliers - Forfaiting

17

-

-

365,696

78,416

Salaries

 

478

311

368,764

305,454

Taxes payable

18

8,944

7,856

111,702

134,951

Landing fees

 

-

-

556,300

365,651

Advance ticket sales

19

-

-

1,673,987

1,476,514

Mileage program

 

-

-

826,284

765,114

Advances from customers

 

-

-

169,967

21,718

Provisions

20

-

-

70,396

46,561

Derivatives

29

-

-

195,444

34,457

Operating leases

28

-

-

135,799

28,387

Other current liabilities

 

5,263

2,357

99,078

100,401

Total current liabilities

 

149,323

119,024

7,200,556

5,769,620

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

Long-term debt

16

4,535,229

3,939,948

5,861,143

5,942,795

Suppliers

 

-

-

120,137

222,026

Provisions

20

-

-

829,198

562,628

Mileage program

 

-

-

192,569

188,204

Deferred taxes

10.2

-

-

227,290

188,005

Taxes payable

18

7,794

14,678

54,659

66,196

Related companies

12

-

135,010

-

-

Derivatives

29

-

-

214,218

-

Provision for loss on investment

13

4,200,243

2,610,078

-

-

Operating leases

28

-

-

135,686

110,723

Other noncurrent liabilities

 

30,379

10,305

48,161

43,072

Total noncurrent liabilities

 

8,773,645

6,710,019

7,683,061

7,323,649

 

 

 

 

 

 

Equity

 

 

 

 

 

Capital stock

21.1

3,055,940

3,040,512

2,942,612

2,927,184

Advance for future capital increase

21.1

2,818

-

2,818

-

Treasury shares

21.2

(126)

(4,168)

(126)

(4,168)

Capital reserves

 

88,476

88,762

88,476

88,762

Equity valuation adjustments

 

(500,022)

(79,316)

(500,022)

(79,316)

Share-based payments reserve

23

117,413

119,308

117,413

119,308

Gains on change in investment

 

759,984

760,545

759,984

760,545

Accumulated losses

 

(8,509,895)

(7,426,177)

(8,396,567)

(7,312,849)

Deficit attributable to equity holders of the parent

 

(4,985,412)

(3,500,534)

(4,985,412)

(3,500,534)

 

 

 

 

 

 

Non-controlling interests from Smiles

 

-

-

480,061

412,013

Total equity (deficit)

 

(4,985,412)

(3,500,534)

(4,505,351)

(3,088,521)

 

 

 

 

 

 

Total liabilities and deficit

 

3,937,556

3,328,509

10,378,266

10,004,748

 

 

 

The accompanying notes are an integral part of the individual and consolidated financial statements.

 

 

 

22


 

 

DRE

 

 

Parent Company

Consolidated

 

Note

2018

2017

2018

2017

 

 

 

(Restated)

 

(Restated)

Net revenue

 

 

 

 

 

Passenger

 

-

-

10,633,488

9,564,041

Cargo and other

 

-

-

777,866

764,993

Total net revenue

24

-

-

11,411,354

10,329,034

 

 

 

 

 

 

Cost of services provided

25

-

-

(9,135,311)

(7,434,780)

Gross profit

 

-

-

2,276,043

2,894,254

 

 

 

 

 

 

Operating income (expenses)

 

 

 

 

 

Selling expenses

25

-

-

(761,926)

(922,298)

Administrative expenses

25

(25,551)

(25,996)

(1,028,709)

(976,065)

Other operating (expenses) income, net

25

562,571

(12,768)

914,167

(7,072)

Total operating (expenses) income

 

537,020

(38,764)

(876,468)

(1,905,435)

 

 

 

 

 

 

Equity results

13

(852,866)

365,545

387

544

 

 

 

 

 

 

Income (loss) before financial result, net and income taxes

 

(315,846)

326,781

1,399,962

989,363

 

 

 

 

 

 

Financial result

 

 

 

 

 

Financial income

 

108,969

89,153

259,728

213,446

Financial expenses

 

(440,119)

(389,509)

(1,061,089)

(1,050,461)

Exchange rate variation, net

 

(433,239)

(24,612)

(1,081,197)

(81,744)

Total financial result

26

(764,389)

(324,968)

(1,882,558)

(918,759)

 

 

 

 

 

 

Income (loss) before income taxes

 

(1,080,235)

1,813

(482,596)

70,604

 

 

 

 

 

 

Income and social contribution taxes

 

 

 

 

 

Current

 

(1,664)

-

(52,139)

(239,846)

Deferred

 

(3,494)

16,979

(244,989)

547,059

Total income and social contribution taxes

10.2

(5,158)

16,979

(297,128)

307,213

 

 

 

 

 

 

Net income (loss) for the year before non-controlling interests

 

(1,085,393)

18,792

(779,724)

377,817

 

 

 

 

 

 

Net income (loss) attributable to:

 

 

 

 

 

Equity holders of the parent

 

(1,085,393)

18,792

(1,085,393)

18,792

Non-controlling interests from Smiles

 

-

-

305,669

359,025

 

 

 

 

 

 

Basic earnings (loss) per share

 

 

 

 

 

Per common share

22

(0.089)

0.002

(0.089)

0.002

Per preferred share

22

(3.115)

0.054

(3.115)

0.054

 

 

 

 

 

 

Diluted earnings (loss) per share

 

 

 

 

 

Per common share

22

(0.089)

0.002

(0.089)

0.002

Per preferred share

22

(3.115)

0.053

(3.115)

0.053

 

 

 

The accompanying notes are an integral part of the individual and consolidated financial statements.

 

 

 

23


 

 

OCI

 

 

 

Parent Company

Consolidated

 

Note

2018

2017

2018

2017

 

 

 

(Restated)

 

(Restated)

 

 

 

 

 

 

Net income (loss) for the year

 

(1,085,393)

18,792

(779,724)

377,817

 

 

 

 

 

 

Other comprehensive income reverted to income

 

 

 

 

 

Cash flow hedges

29

(420,706)

67,913

(420,706)

67,913

 

 

 

 

 

 

Total comprehensive income for the year

 

(1,506,099)

86,705

(1,200,430)

445,730

 

 

 

 

 

 

Comprehensive income attributable to:

 

 

 

 

 

Equity holders of the parent

 

(1,506,099)

86,705

(1,506,099)

86,705

Non-controlling interests from Smiles

 

-

-

305,669

359,025

 

 

The accompanying notes are an integral part of the individual and consolidated financial statements.

 

 

 

24


 

 

 

 

 

 

 

 

 

Capital reserves

Equity valuation adjustments

 

 

 

 

 

Note

Capital

stock

Advance for future capital increase

Treasury shares

Goodwill on transfer

of shares

Special

goodwill

reserve of subsidiary

Unrealized

hedge

gain

(losses)

Share-

based

payments

Gains on change in investment

Accumulated losses

Total

Balances as of December 31, 2016 (Restated)

4.26.1

3,037,820

-

 (13,371)

20,420

70,979

 (147,229)

113,918

     693,251

(7,444,969)

(3,669,181)

Stock options exercised

 

2,692

-

-

-

-

-

-

-

-

2,692

Other comprehensive income, net

 

-

-

-

-

-

67,913

-

-

-

67,913

Share-based payments

23

-

-

-

-

-

-

11,956

-

-

11,956

Gains on change in investment

 

-

-

-

-

-

-

-

3,994

-

3,994

Sale of interest in subsidiary

 

-

-

-

-

-

-

-

63,300

-

63,300

Treasury shares transferred

 

-

-

9,203

(2,637)

-

-

(6,566)

-

-

-

Net income for the year (Restated)

4.26.1

-

-

-

-

-

-

-

-

18,792

18,792

Balances as of December 31, 2017 (Restated)

4.26.1

3,040,512

                    -

(4,168)

17,783

70,979

(79,316)

119,308

760,545

(7,426,177)

(3,500,534)

 

 

 

 

 

 

 

 

 

 

 

 

Initial adoption of accounting standard – CPC 48 (IFRS 9) (*)

4.26.2

-

-

-

-

-

-

-

-

1,675

1,675

Other comprehensive income, net

 

-

-

-

-

-

(420,706)

-

-

-

(420,706)

Stock options exercised

21.1

15,428

2,818

-

-

-

-

-

-

-

18,246

Share-based payments

23

-

-

-

-

-

-

17,790

-

-

17,790

Gains on change in investment

13

-

-

-

-

-

-

-

(561)

-

(561)

Treasury share buyback

21.2

-

-

(15,929)

-

-

-

-

-

-

(15,929)

Treasury shares transferred

21.2

-

-

19,971

(286)

-

-

(19,685)

-

-

-

Net loss for the year

 

-

-

-

-

-

-

-

-

(1,085,393)

(1,085,393)

Balances as of December 31, 2018

 

3,055,940

2,818

(126)

17,497

70,979

(500,022)

117,413

759,984

(8,509,895)

  (4,985,412)

 

(*) On January 1, 2018, the Company adopted IFRS 9 – “Financial instruments”, resulting in an initial adjustment to estimated losses with doubtful accounts. For further information, see Note 4.26.2.

 

 

 

The accompanying notes are an integral part of the individual and consolidated financial statements.

 

 

 

25


 

 

 

 

 

 

 

 

Capital

reserves

Equity valuation adjustments

 

 

 

 

 

 

 

 

Note

 

Capital stock

Advance for future capital increase

Treasury shares

Goodwill on transfer

of shares

Special goodwill reserve of subsidiary

Unrealized hedge gains

(losses)

Share-

based

payments

Gains on change in investment

Accumulated losses

Deficit attributable to equity holders of the parent

Smiles’

non-controlling

interests

Total

Balances as of December 31, 2016 (Restated)

4.26.1

2,924,492

-

 (13,371)

20,420

70,979

 (147,229)

113,918

693,251

(7,331,641)

(3,669,181)

293,247

(3,375,934)

Stock options exercised

 

2,692

-

-

-

-

-

-

-

-

2,692

-

2,692

Other comprehensive income (loss), net

 

 -

-

 -

-

-

67,913

-

-

-

67,913

-

67,913

Capital increase from exercise of stock option in subsidiary

 

-  

-

 -

-

-

-

-

-

-

-  

1,988

1,988

Share issuance costs

 

-

-

-

-

-

-

-

-

-

-

(523)

(523)

Share-based payments

23

 -

-

 -

-

-

-

11,956

-

-

11,956

192

12,148

Gains on change in investment

 

 -

-

 -

-

-

-

-

3,994

-

3,994

-

3,994

Sale of interest in subsidiary

 

-

-

-

-

-

-

-

63,300

-

63,300

4,865

68,165

Treasury shares transferred

 

-

-

9,203

(2,637)

-

-

(6,566)

-

-

-

-

-

Net income for the year (Restated)

4.26.1

 -

-

 -

-

-

-

-

-

18,792

18,792

359,025

377,817

Interest on equity distributed by Smiles

 

-

-

-

-

-

-

-

-

-

-

(14,071)

(14,071)

Minimum dividends distributed by Smiles

 

-

-

-

-

-

 -

-

-

-

-  

(46,931)

(46,931)

Dividends distributed by Smiles

 

-

-

-

-

-

 -

-

-

-

-  

(185,779)

(185,779)

Balances as of December 31, 2017 (Restated)

 

2,927,184

-

(4,168)

17,783

70,979

(79,316)

119,308

760,545

(7,312,849)

(3,500,534)

412,013

(3,088,521)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Initial adoption of accounting standard – CPC 48 (IFRS 9) (*)

4.26.2

-

-

-

-

-

-

-

-

1,675

1,675

38

1,713

Other comprehensive income (loss), net

 

-

-

-

-

-

(420,706)

-

-

-

(420,706)

-

(420,706)

Stock options exercised

21.1

15,428

2,818

-

-

-

-

-

-

-

18,246

-

18,246

Capital increase from exercise of stock option in subsidiary

 

-

-

-

-

-

-

-

-

-

-

875

875

Share-based payments

23

-

-

-

-

-

-

17,790

-

-

17,790

782

18,572

Gains on change in investment

13

-

-

-

-

-

-

-

(561)

-

(561)

561

-

Treasury share buyback

21.2

-

-

(15,929)

-

-

-

-

-

-

(15,929)

-

(15,929)

Treasury shares transferred

21.2

-

-

19,971

(286)

-

-

(19,685)

-

-

-

-

-

Net loss for the year

 

-

-

-

-

-

-

-

-

(1,085,393)

(1,085,393)

305,669

(779,724)

Dividends and interest on equity paid by Smiles

 

-

-

-

-

-

-

-

-

-

-

(172,865)

(172,865)

Dividends and interest on equity distributed by Smiles

 

-

-

-

-

-

-

-

-

-

-

(67,012)

(67,012)

Balances as of December 31, 2018

 

2,942,612

2,818

(126)

17,497

70,979

(500,022)

117,413

759,984

(8,396,567)

(4,985,412)

480,061

(4,505,351)

 

(*) On January 1, 2018, the Company adopted IFRS 9 – “Financial instruments”, resulting in an initial adjustment to estimated losses with doubtful accounts. For further information, see Note 4.27.2.

 

 

The accompanying notes are an integral part of the individual and consolidated financial statements.

 

 

 

26


 

 

 

Parent Company

Consolidated

 

2018

2017

2018

2017

 

 

(Restated)

 

(Restated)

 

 

 

 

 

Net income (loss) for the year

(1,085,393)

18,792

(779,724)

377,817

Adjustment to reconcile net income (loss) to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

-

-

668,516

 505,425

Allowance (reversal) for doubtful accounts

-

-

(9,789)

 24,913

Provision for legal proceedings

-

-

243,860

 158,263

Provision for inventory obsolescence

-

-

5,023

 3,059

Deferred taxes

3,494

 (16,979)

244,989

 (547,059)

Equity results

852,866

(365,545)

(387)

 (544)

Share-based payments

17,790

-

18,572

 14,849

Exchange and monetary variations, net

300,778

 52,588

946,732

 95,132

Interest on debt, financial lease and other liabilities

289,343

 210,639

679,985

 566,902

Unrealized hedge results

-

-

(13,239)

 8,639

Provision for profit sharing

-

-

127,618

 65,573

Write-off of property, plant and equipment and intangible assets

214,475

-

90,639

 145,855

Other provisions

-

-

65,334

 15,184

Adjusted net income (loss)

593,353

(100,505)

2,288,129

1,434,008

 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

Trade receivables

-

-

95,844

 (198,370)

Short-term investments

694,273

(730,851)

695,831

 (353,231)

Inventories

-

-

(6,673)

 1,038

Deposits

(41,166)

(22,500)

(402,495)

 46,388

Suppliers

(2,787)

12,156

16,382

 (202,462)

Suppliers – Forfaiting

-

-

267,502

 76,157

Advance ticket sales

-

-

197,473

271,386

Mileage program

-

-

65,535

 (47,714)

Advances from customers

-

-

148,249

 4,895

Salaries

167

2

(64,308)

 (43,641)

Landing fees

-

-

190,649

 126,085

Taxes payable

(5,774)

25,099

127,663

 460,980

Derivatives

-

-

8,385

 (32,310)

Provisions

-

-

(236,882)

 (270,970)

Operating leases

-

-

103,838

 131,877

Other assets (liabilities)

(328,933)

21,361

(736,638)

18,157

Interest paid

(291,216)

(272,597)

(508,973)

 (528,398)

Income tax paid

(2,532)

-

(167,642)

 (221,122)

Net cash flows (used in) from operating activities

615,385

(1,067,835)

2,081,869

672,753

 

 

 

 

 

Sale of interest in subsidiary, net of taxes

-

68,163

-

68,163

Transactions with related parties

(379,223)

372,582

-

-

Short-term investments of Smiles

-

-

(163,218)

(171,174)

Restricted cash

(1,352)

(5,776)

(548,928)

(100,835)

Capital increase in subsidiary and investee

-

(451,610)

-

-

Dividends and interest on shareholders’ equity received

245,178

293,651

543

1,249

Advances for property, plant and equipment acquisition, net

(94,160)

-

(106,628)

68,679

Property, plant and equipment acquisition

-

-

(686,946)

(370,438)

Intangible assets acquisition

-

-

(82,079)

(55,449)

Net cash flows (used in) from investing activities

(229,557)

277,010

(1,587,256)

(559,805)

 

 

 

 

27


 

 

 

Parent Company

Consolidated

 

2018

2017

2018

2017

 

 

 

 

 

Loan funding, net of issuance costs

486,735

 1,654,000

1,703,933

 1,898,738

Loan funding and exchange offer costs

(8,578)

 (56,950)

(39,926)

 (65,628)

Loan payments

-

 (166,752)

(1,318,349)