goldf1q12_6k.htm - Generated by SEC Publisher for SEC Filing
 
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
REPORT OF FOREIGN ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the month of May, 2012
(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)
 


 
R. Tamoios, 246
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):

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

 

(Convenience Translation into English from the Original Previously Issued in Portuguese)

 

Gol Linhas Aéreas
Inteligentes S.A.

Individual and Consolidated Interim

Financial Information for the

Quarter Ended March 31, 2012 and

Report on Review of

Interim Financial Information

 

Deloitte Touche Tohmatsu Auditores Independentes

 

 


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

Index

Company data

Capital

01

Individual Financial Statements

Balance Sheet - Assets

02

Balance Sheet - Liability

03

Income Statement

04

Statements of Comprehensive Income

05

Statements of Cash Flows

06

Statement of Changes in Equity

Statement of Changes in Equity – 01/01/2011 to 03/31/2012

07

Statement of Changes in Equity – 01/01/2011 to 03/31/2011

08

Statement of Value Added

09

Consolidated Financial Statements

Balance Sheet - Assets

10

Balance sheet - Liability

11

Income Statement

12

Statement of Comprehensive Income

13

Statements of Cash Flows

14

Statement of Changes in Equity

Statement of Changes in Equity – 01/01/2011 to 03/31/2012

15

Statement of Changes in Equity – 01/01/2011 to 03/31/2011

16

Statement of Value Added

17

Comments on performance

18

Notes

24

Opinions and Statements

Report on Review of Interim Financial Information

69


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

Company Profile / Subscribed Capital

 

Number of Shares

Current Quarter

 

(Thousands)

03/31/2012 

 

Paid-in Capital

 

 

Common

137,032,734

 

Preferred

133,357,270

 

Total

270,390,004

 

Treasury

 

 

Common

0

 

Preferred

3,724,225

 

Total

3,724,225

 

 

 

 

 

Page 1 of 70


 

 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Financial Statements / Balance Sheets – Assets

(In Thousands of Brazilian Reais)

 

   

Current Quarter

Prior Year

Line code

Line item

03/31/2012

12/31/2011

1

Total Assets

3,838,649

3,873,498

1.01

Current Assets

328,374

342,387

1.01.01

Cash and Cash Equivalents

210,801

232,385

1.01.02

Short-term Investments

75,611

69,885

1.01.06

Recoverable Taxes

41,791

39,981

1.01.07

Prepaid Expenses

171

136

1.02

Noncurrent Assets

3,510,275

3,531,111

1.02.01

Long-term Assets

552,550

651,019

1.02.01.06

Deferred Taxes

45,137

45,137

1.02.01.08

Related-party Transactions

492,362

593,817

1.02.01.08.04

Others Related-party Transactions

492,362

593,317

1.02.01.09

Other Noncurrent Assets

15,051

12,065

1.02.01.09.03

Deposits

13,549

12,065

1.02.01.09.04

Restricted Cash

1,502

-

1.02.02

Investments

2,111,580

2,103,325

1.02.03

Property, Plant and Equipment

846,078

776,678

1.02.04

Intangible Assets

67

89

 

Page 2 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

Individual Interim Financial Statements / Balance Sheets - Liabilities

(In Thousands of Brazilian Reais)

 

 

 

Current Quarter

Prior Year

Line code

Line item

03/31/2012

12/31/2011

2

Total Liabilities and Equity

3,838,649

3,873,498

2.01

Current Liabilities

77,934

89,670

2.01.01

Salaries, Wages and Benefits

30

25

2.01.01.02

Salaries, Wages and Benefits

30

25

2.01.02

Accounts Payable

342

6,353

2.01.03

Taxes Payable

3,305

3,233

2.01.04

Short-term Debt

73,411

79,475

2.01.05

Other Current Liabilities

846

584

2.01.05.02

Other

846

584

2.01.05.02.01

Dividends Payable

584

584

2.01.05.02.04

Other Liabilities

262

-

2.02

Noncurrent Liabilities

1,533,193

1,577,917

2.02.01

Long-term Debt

1,309,452

1,347,300

2.02.02

Taxes Payable

223,741

230,617

2.02.02.01

Liabilities with Related-party Transactions

216,244  

222,725

2.02.02.02

Other

7,497

7,892

2.02.02.02.03

Other Current Liabilities

7,497

7,892

2.03

Consolidated Equity

2,227,522

2,205,911

2.03.01

Capital

2,284,549

2,284,549

2.03.01.01

Issued Capital

2,316,500

2,316,500

2.03.01.02

Cost on Issued Shares

(31,951)

(31,951)

2.03.02

Capital Reserves

264,427

260,098

2.03.02.01

Premium on Issue of Shares

31,076

31,076

2.03.02.02

Special Reserve Goodwill

29,187

29187

2.03.02.05

Treasury Shares

(51,377)

(51,377)

2.03.02.06

Advance for Future Capital Increase

183,189  

182,610

2.03.02.07

Share-based Payments

72,352

68,602

2.03.05

Accumulated Losses

(300,872)

(259,468)

2.03.06

Other Comprehensive Income

(20,582)

(79,268)

 

Page 3 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Financial Statements /Income Statement

(In Thousands of Brazilian Reais)

 

   

Current Quarter

Prior Year YTD

Line code

Line item

01/01/2012 to 03/31/2012

01/01/2012 to 03/31/2012

3.04

Operating Expenses/Income

(47,399)

72,682

3.04.02

General and administrative expenses

(4,163)

(10,409)

3.04.04

Other operating expenses

6,743

-

3.04.06

Equity in subsidiaries

(49,979)

83,091

3.05

Income Before Income Taxes and Financial Income/Expenses

(47,399) 

72,682

3.06

Finance Income/Expenses

7,064

(3,233)

3.06.01

Financial income

38,712

25,069

3.06.01.01

Financial income

11,519

7,041

3.06.01.02

Exchange variation

27,193

18,028

3.06.02

Financial expenses

(31,648)

(28,302)

3.07

Income Before Income Taxes

(40,335)

69,449

3.08

Income Tax (Expenses)

(1,069)

(53)

3.08.01

Current

(1,069)

(53)

3.09

Profit from Continuing Operations

(41,404)

69,396

3.11

Profit (Loss) for the Period

(41,404) 

69,396

 

Page 4 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Statements of Comprehensive Income

(In Thousands of Brazilian Reais)

 

   

Current Quarter

Prior Year YTD

Line code

Line item

01/01/2012 to 03/31/2012

01/01/2012 to 03/31/2012

4.01

Net Profit (Loss) for the Period

(41,404) 

69,396

4.02

Other Comprehensive Income

58,686

15,283

4.03

Comprehensive Income for the period

17,282  

84,679

 

Page 5 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Financial Statements / Statements of Cash Flows – Indirect Method

In Thousands of Brazilian Reais)

 

   

Current YTD

Prior Year YTD

Line code

Line item

01/01/2012 to 03/31/2012

01/01/2011 to 03/31/2011

6.01

Net Cash Provided by (Used in) Operating Activities

(28,255) 

(3,147)

6.01.01

Cash Flows from Operating Activities

21,063 

(74,589)

6.01.01.01

Depreciation and Amortization

22

22

6.01.01.03

Equity in subsidiaries

49,979

(83,091)

6.01.01.04

Shared-based Payments

3,750

7,742

6.01.01.05

Exchange and Monetary Variations, Net

(27,193) 

(18,028)

6.01.01.06

Interests on Loans, Net

29,560

27,067

6.01.01.08

Interests Paid

(33,986)

(8,248)

6.01.01.09

Income Tax Paid

(1,069)

(53)

6.01.02

Changes Assets and Liabilities

(7,914)

2,046

6.01.02.01

Deposits

(1,484)

(2,121)

6.01.02.02

Prepaid Expenses, Recovery Taxes and others

(1,380) 

(13)

6.01.02.04

Tax Obligation

746

123

6.01.02.07

Others Liabilities

215

5,898

6.01.02.08

Accounts Payable

(6,011)

(1,841)

6.01.03

Other

(41,404)

69,396

6.01.03.01

Net Income (loss) for the Period

(41,404) 

69,396

6.02

Net Cash Used in Investing Activities

(78,704) 

(56,069)

6.02.01

Short-term Investments

-

(2,070)

6.02.02

Restricted Cash

(7,227)

-

6.02.03

Property, Plant and Equipment

(71,477)

(53,999)

6.03

Net Cash Generated by Financing Activities

85,375  

10,452

6.03.02

Payments of Debts

-

(44,584)

6.03.03

Credit with related parties

84,796

54,229

6.03.04

Capital increase

-

807

6.03.05

Advance for Future Capital Increase

579  

-

6.05

Net Decrease in Cash and Cash Equivalents

(21,584) 

(48,764)

6.05.01

Cash and Cash Equivalents at Beginning of the Period

232,385  

229,436

6.05.02

Cash and Cash Equivalents at End of the Period

210,801  

180,672

Page 6 of 70


ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Financial Statements / Statements of Changes in Equity – From 01/01/2012 to 03/31/2012

(In Thousands of Brazilian Reais)

 

LINE CODE

LINE ITEM

CAPITAL STOCK

CAPITAL RESERVES, OPTIONS GRANTED AND TREASURE SHARES

INCOME RESERVES

ACCUMULATED

LOSSES

OTHER COMPREHENSIVE INCOME

TOTAL

CONSOLIDATED

EQUITY

5.01

Opening Balance

2,284,549

260,098

-

(259,468)

(79,268)

2,205,911

5.03

Adjusted Balance

2,284,549

260,098

-

(259,468)

(79,268)

2,205,911

5.04

Shareholders Capital Transactions

-

4,329

-

-

-

4,329

5.04.08

Advance for Future Capital Increase

-  

579

-

-

-

579

5.04.09

Stock Option

-

3,750

-

-

-

3,750

5.05

Total Other Comprehensive Income

-

-

-

(41,404)

58,686

17,282

5.05.02

Total Comprehensive Income

-

-

-

(41,404)

58,686

17,282

5.05.02.06

Losses for the Period

-

-

-

(41,404)

-

(41,404)

5.05.02.07

Other Comprehensive Income

-

-

-

-

58,686

58,686

5.07

Closing Balance

2,284,549

264,427

-

(300,872)

(20,582)

2,227,522

Page 7 of 70


ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Financial Statements / Statement of Changes in  Equity – From 01/01/2011 to 03/31/2011

(In Thousands of Brazilian Reais)

 

LINE CODE

LINE ITEM

CAPITAL STOCK

CAPITAL RESERVES, OPTIONS GRANTED AND TREASURE SHARES

INCOME RESERVES

ACCUMULATED

LOSSES

OTHER COMPREHENSIVE INCOME

TOTAL

CONSOLIDATED

EQUITY

5.01

Opening Balance

2,296,461

92,103

529,532

(37,462)

11,073

2,891,707

5.03

Adjusted Balance

2,296,461

92,103

529,532

(37,462)

11,073

2,891,707

5.04

Shareholders Capital Transactions

807

7,742

-

-

15,283

23,832

5.04.08

Capital Increase the option to purchase shares

807  

-

-

-

-

807

5.04.09

Stock Option

-

7,742

-

-

-

7,742

5.04.10

Total Other Comprehensive Income

-

-

-

-

15,283

15,283

5.05

Total Comprehensive Income

-

-

-

69,396

-

69,396

5.05.01

Profit for the Period

-

-

-

69,396

-

69,396

5.07

Closing Balance

2,297,268

99,845

529,532

31,934

26,356

2,984,935

Page 8 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Individual Interim Financial Statements / Statements of Value Added

(In Thousands of Brazilian Reais)

 

   

Current YTD

Prior Year YTD

Account Code

 Account Description

01/01/2012 to 03/31/2012

01/01/2011 to 03/31/2011

7.01

Revenues

6,743

-

7.01.02

Other Income

6,743

-

7.02

Acquired from Third Parties

397

(1,709)

7.02.02

Materials, Energy, Outside Services and Other

397  

(1,709)

7.03

Gross Value Added

7,140

(1,709)

7.04

Retentions

(22)

(22)

7.04.01

Depreciation, Amortization and Exhaustion

(22)

(22)

7.05

Added Value Produced

7,118

(1,731)

7.06

Value Added Received in Transfer

(38,460) 

90,132

7.06.01

Equity equivalence result

(49,979)

83,091

7.06.02

Finance income

11,519

7,041

7.07

Total Wealth for Distribution (Distributed)

(31,342) 

88,401

7.08

Wealth for Distribution (Distributed)

(31,342)

88,401

7.08.01

Employees

4,136

8,122

7.08.02

Taxes

1,471

609

7.08.03

Third Part Capital Remuneration

4,455

10,274

7.08.05

Other

(41,404)

69,396

Page 9 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

 

Consolidated Interim Financial Statements / Balance Sheets – Assets

(In Thousands of Brazilian Reais)

 

   

Current Quarter

Prior Year

Line code

Line item

03/31/2012

12/31/2011

1

Total Assets

10,491,333

10,655,141

1.01

Current Assets

3,031,573

3,138,303

1.01.01

Cash and Cash Equivalents

1,314,624

1,230,287

1.01.02

Short-term Investments

722.445

1,009,068

1.01.03

Trade Receivables

376,485

354,134

1.01.04

Inventories

144,265

151,023

1.01.06

Recoverable Taxes

178,673

212,998

1.01.07

Prepaid Expenses

83,518

93,797

1.01.08

Other Current Assets

211,563

86,996

1.01.08.03

Others

211,563

86,996

1.01.08.03.01

Restricted Cash

89,036

8,554

1.01.08.03.02

Deposits

37,335

35,082

1.01.08.03.03

Other Credits

41,920

39,147

1.01.08.03.04

Rights from derivative transactions

43,272

4,213

1.02

Noncurrent Assets

7,459,760

7,516,838

1.02.01

Long-term Assets

1,728,051

1,842,411

1.02.01.06

Deferred Taxes

1,057,663

1,086,990

1.02.01.07

Prepaid Expenses

42,571

44,964

1.02.01.09

Other Noncurrent Assets

627,817

710,457

1.02.01.09.01

Other Noncurrent Assets

8,753

14,399

1.02.01.09.03

Restricted Cash

30,642

100,541

1.02.01.09.04

Deposits

588,422

595,517

1.02.03

Property, Plant and Equipment

3,948,411

3,890,470

1.02.03.01

Property, Plant and Equipment

1,603,265

1,513,236

1.02.03.01.01

Other Flight Equipment

976,371

955,306

1.02.03.01.02

Advance of Property, Plant and Equipment Acquisition

432,098  

365,067

1.02.03.01.04

Others

194,796

192,863

1.02.03.02

Lease Property, Plant and Equipment

2,345,146  

2,377,234

1.02.03.02.01

Lease Property, Plant and Equipment

2,345,146  

2,377,234

1.02.04

Intangible Assets

1,783,298

1,783,957

1.02.04.01

Intangible Assets.

1,720,189

1,241,655

1.02.04.02

Goodwill

63,109

542,302

 

Page 10 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

Consolidated Interim Financial Statements / Balance Sheets - Liabilities

(In Thousands of Brazilian Reais)

 

 

Current Quarter

Prior Year

Line code

Line item

03/31/2012

12/31/2011

2

Total Liabilities and Equity

10,491,333

10,655,141

2.01

Current Liabilities

2,424,179

3,595,665

2.01.01

Salaries, Wages and Benefits

244,710

250,030

2.01.02

Accounts Payable

378,035

414,563

2.01.03

Taxes Payable

79,970

76,736

2.01.04

Short-term Debt

469,351

1,552,440

2.01.05

Other Current Liabilities

1,181,209

1,226,328

2.01.05.02

Others

1,181,209

1,226,328

2.01.05.02.01

Dividends Payable

584

584

2.01.05.02.04

Tax and landing fees

211,036

190,029

2.01.05.02.05

Advance Ticket Sales

721,583

744,743

2.01.05.02.06

Customer Loyalty Programs

79,695

71,935

2.01.05.02.07

Advances from Customers

15,063

30,252

2.01.05.02.08

Other Current Liabilities

76,371

73,353

2.01.05.02.09

Liabilities from derivative transactions

76,877

115,432

2.01.06

Provisions

70,904

75,568

2.02

Noncurrent Liabilities

5,839,632

4,853,565

2.02.01

Short-term Debt

4,404,192

3,439,008

2.02.02

Other Current Liabilities

426,256

419,669

2.02.02.02

Others

426,256

419,669

2.02.02.02.03

Customer Loyalty Programs

228,550

214,779

2.02.02.02.05

Taxes Payable

116,955

112,935

2.02.02.02.06

Other Current Liabilities

80,751

91,955

2.02.03

Deferred Taxes

780,145

763,706

2.02.04

Provisions

229,039

231,182

2.03

Consolidated Equity

2,227,522

2,205,911

2.03.01

Capital

2,171,221

2,171,221

2.03.01.01

Issued Capital

2,316,500

2,316,500

2.03.01.02

Cost on Issued Shares

(145,279)

(145,279)

2.03.02

Capital Reserves

264,427

260,098

2.03.02.01

Premium on Issue of Shares

31,076

31,076

2.03.02.02

Special Reserve Goodwill

29,187

29,187

2.03.02.05

Treasury Shares

(51,377)

(51,377)

2.03.02.06

Advance for Future Capital Increase

183,189

182,610

2.03.02.07

Share-based Payments

72,352

68,602

2.03.05

Accumulated Losses

(187,544)

(146,140)

2.03.06

Other Comprehensive Income

(20,582)

(79,268)

 

Page 11 of 70


ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

Consolidated Interim Financial Statements /Income Statement

(In Thousands of Brazilian Reais)

 

   

Current Quarter

Prior Year YTD

Line code

Line item

01/01/2012 to 03/31/2012

01/01/2011 to 03/31/2011

3.01

Sales and services revenue

2,166,068

1,895,722

3.01.01

Passenger

1,924,254

1,703,848

3.01.02

Cargo and Other

241,814

191,874

3.02

Cost of Sales and Services

(1,920,875) 

(1,481,992)

3.03

Gross Revenue

245,193

413,730

3.04

Operating Expenses/Income

(237,931)

(278,460)

3.04.01

Selling expenses

(140,538)

(149,435)

3.04.01.01

Marketing expenses

(140,538)

(149,435)

3.04.02

General and Administrative expenses

(104,136)

(129,025)

3.04.04

Other operational income

6,743

-

3.05

Income Before Income Taxes and Financial Income/Expenses

(7,262) 

135,270

3.06

Financial Income/Expenses

(23,211)

(25,806)

3.06.01

Financial income

176,529

168,656

3.06.01.01

Income on Investments

103,832

98,871

3.06.01.02

Exchange variation, net

72,697

69,785

3.06.02

Financial expenses

(199,740)

(194,462)

3.07

Income Before Income Taxes

(15,949)

109,464

3.08

Income Tax (Expenses)

(25,455)

(40,068)

3.08.01

Current

(9,922)

(23,400)

3.08.02

Deferred

(15,533)

(16,668)

3.09

Profit from Continuing Operations

(41,404)

69,396

3.11

Consolidated Profit (Loss) for the Period

(41,404) 

69,396

3.11.01

Attributable to Shareholders of the Company

(41,404) 

69,396

Page 12 of 70


 

ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

Consolidated Interim Statements of Comprehensive Income

(In Thousands of Brazilian Reais)

 

   

Current Quarter

Prior Year YTD

Line code

Line item

01/01/2012 to 03/31/2012

01/01/2011 to 03/31/2011

4.01

Net Consolidated Profit (Loss) for the Period

(41,404) 

69,396

4.02

Other Comprehensive Income

58,686

15,283

4.02.01

Available for sale financial assets

-  

(487)

4.02.02

Cash Flow Hedges

88,918

23,894

4.02.03

Tax effect

(30,232)

(8,124)

4.03

Consolidated Comprehensive Income for the period

17,282

84,679

4.03.01

Attributable to Shareholders of the Company

17,282  

84,679

Page 13 of 70


ITR - Quarterly Information – 03/31/2012 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                 Version: 1      

 

Consolidated  Interim Financial Statements / Statements of Cash Flows – Indirect Method

(In Thousands of Brazilian Reais)

   

Current YTD

Prior Year YTD

Line code

Line item

01/01/2012 to 03/31/2012

01/01/2011 to 03/31/2011

6.01

Net Cash Provided by Operating Activities

357,801 

107,992

6.01.01

Cash Flows from Operating Activities

229,190

203,810

6.01.01.01

Depreciation and Amortization

118,982

90,157

6.01.01.02

Allowance for Doubtful Accounts

990

2,647

6.01.01.03

Provisions for contingencies

5,353

1,634

6.01.01.04

Provisions for Onerous Contracts

-

6,151

6.01.01.05

Provision for Inventory Obsolescence

198

(223)

6.01.01.06

Deferred Taxes

15,533

16,668

6.01.01.07

Shared-based Payments

3,750

7,742

6.01.01.08

Exchange and Monetary Variations, Net

(72,436) 

(69,783)

6.01.01.09

Interests on loans and other, net

114,605  

89,522

6.01.01.10

Unrealized Hedge income, Net of taxes

(19,545)

30,616

6.01.01.11

Provision for Return of Aircraft

-  

11,192

6.01.01.12

Others Provision

19,688

4,388

6.01.01.13

Low non-monetary items

20,540

17,040

6.01.01.14

Mileage Program

21,532

(3,941)

6.01.02

Changes in Assets and Liabilities

170,015

(165,214)

6.01.02.01

Accounts receivable

(38,684)

39,879

6.01.02.02

Inventories

6,560

5,184

6.01.02.03

Deposits

(30,257)

22,675

6.01.02.04

Prepaid Expenses and Recovery Taxes

77,846  

(27,255)

6.01.02.05

Other Assets

2,873

(43,691)

6.01.02.06

Accounts Payable

(36,528)

(16,878)

6.01.02.07

Advance ticket sales

(23,161)

(112,886)

6.01.02.09

Salaries, Wages and Benefits

(5,320)

18,659

6.01.02.10

Sales Tax and Landing Fees

21,007  

(5,080)

6.01.02.11

Tax Obligation

17,176

50,823

6.01.02.12

Provision

(28,089)

(53,307)

6.01.02.13

Other Liabilities

(8,293)

15,713

6.01.02.14

Interests Paid

(46,627)

(35,650)

6.01.02.15

Income Tax Paid

(9,922)

(23,400)

6.01.02.16

Short term Investments used for trading

286,623

-

6.01.02.17

Advance from Customers

(15,189)

-

6.01.03

Others

(41,404)

69,396

6.01.03.01

Profit (Loss) for the Period

(41,404) 

69,396

6.02

Net Cash Used in Investing Activities

(190,979) 

(147,678)

6.02.01

Short term Investments

-

(26,892)

6.02.02

Restricted Cash

(10,583)

1,316

6.02.03

Property, Plant and Equipment

(169,441)

(120,915)

6.02.04

Intangible Assets

(10,955)

(1,187)

6.03

Net Cash Generated by Financing Activities

(86,502) 

(119,087)

6.03.02

Debt Increase

110,583

85,133

6.03.03

Payments of Debt

(197,664)

(205,027)

6.03.04

Capital increase

-

807

6.03.05

Advance for Future Capital Increase

579  

-

6.04

Exchange Variation on Cash and Cash Equivalents

4,017  

531

6.05

Net Decrease in Cash and Cash Equivalents

84,337  

(158,242)

6.05.01

Cash and Cash Equivalents at Beginning of the Period

1,230,287  

1,955,858

6.05.02

Cash and Cash Equivalents at End of the Period

1,314,624  

1,797,616

Page 14 of 70


 

ITR - Quarterly Information – 06/30/2011 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                                                                                                                                                                                              Version: 1      

 

Consolidated  Interim Financial Statements / Statements of Changes in Equity – From 01/01/2012 to 03/31/2012

(In Thousands of Brazilian Reais)

 

LINE CODE

LINE ITEM

CAPITAL STOCK

CAPITAL RESERVES, OPTIONS GRANTED AND TREASURE SHARES

INCOME RESERVES

ACCUMULATED

LOSSES

OTHER COMPREHENSIVE INCOME

EQUITY

TOTAL NON-CONTROLLERS

PARTICIPATION

CONSOLIDATED

EQUITY

5.01

Opening Balance

2,171,221

260,098

-

(146,140)

(79,268)

2,205,911

-

2,205,911

5.03

Adjusted Balance

2,171,221

260,098

-

(146,140)

(79,268)

2,205,911

-

2,205,911

5.04

Shareholders Capital Transactions

-

579

-

-

-

579

-

579

5.04.08

Increase in advances for future capital

-  

579

-

-

-

579

-

579

5.05

Total Comprehensive Income

-

3,750

-

(41,404)

58,686

21,032

-

21,032

5.05.02

Total Other Comprehensive Income

-

3,750

-

(41,404)

58,686

21,032

-

21,032

5.05.02.06

Other Comprehensive Income

-

-

-

-

58,686

58,686

-

58,686

5.05.02.07

Accumulated Losses

-

-

-

(41,404)

-

(41,404)

-

(41,404)

5.05.02.08

Stock Option

-

3,750

-

-

-

3,750

-

3,750

5.07

Closing Balance

2,171,221

264,427

-

(187,544)

(20,582)

2,227,522

-

2,227,522

Page 15 of 70


 

ITR - Quarterly Information – 06/30/2011 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                                                                                                                                                                                              Version: 1      

 

Consolidated  Interim Financial Statements / Statement of Changes in  Equity – From 01/01/2011 to 03/31/2011

(In Thousands of Brazilian Reais)

LINE CODE

LINE ITEM

CAPITAL STOCK

CAPITAL RESERVES, OPTIONS GRANTED AND TREASURE SHARES

INCOME RESERVES

ACCUMULATED

OTHER COMPREHENSIVE INCOME

EQUITY

TOTAL NON-CONTROLLERS

CONSOLIDATED

LOSSES

PARTICIPATION

EQUITY

5.01

Opening Balance

2,183,133

92,103

642,860

(37,462)

11,073

2,891,707

-

2,891,707

5.03

Adjusted Balance

2,183,133

92,103

642,860

(37,462)

11,073

2,891,707

-

2,891,707

5.04

Shareholders Capital Transactions

807

7,742

-

-

15,283

23,832

-

23,832

5.04.08

Increase in advances for future capital

807  

-

-

-

-

807

-

807

5.04.09

Stock Option

-

7,742

-

-

-

7,742

-

7,742

5.04.10

Total Other Comprehensive Income

-

-

-

-

15,283

15,283

-

15,283

5.05

Total Other Comprehensive Income

-

-

-

69,396

-

69,396

-

69,396

5.05.01

Accumulated Losses

-

-

-

69,396

-

69,396

-

69,396

5.07

Accumulated Losses

2,183,940

99,845

642,860

31,934

26,356

2,984,935

-

2,984,935

 
 

Page 16 of 70


 

ITR - Quarterly Information – 06/30/2011 – GOL LINHAS AÉREAS INTELIGENTES SA                                                                                  Version: 1      

 

Consolidated Interim Financial Statements / Statements of Value Added

(In Thousands of Brazilian Reais)

 

Current YTD

Prior Year YTD

Account Code

 Account Description

01/01/2012 to 03/31/2012

01/01/2011 to 03/31/2011

7.01

Revenues

2.275,190

1.978.373

7.01.02

Other Revenues

2.276,180

1.981.020

7.01.02.01

Passenger, cargo and other passenger revenues

2.269,437

1.981.020

7.01.02.02

Other Operational Revenues

6.743

-

7.01.04

Provision/Reversion of Doubtful Accounts

(990)

(2.647)

7.02

Acquired from Third Parties

(1.446.123)

(1.117.980)

7.02.02

Materials, Energy, Outside Services and Other

(379.793)

(342.728)

7.02.04

Others

(1.066.330)

(775.252)

7.02.04.01

Fuel and Lubricant suppliers

(966.464)

(677.588)

7.02.04.02

Aircraft Insurance

(7.947)

(8.441)

7.02.04.03

Sales and Marketing

(91.919)

(89.223)

7.03

Gross Value Added

829,067

860.393

7.04

Retentions

(118.982)

(90.157)

7.04.01

Depreciation, Amortization and Exhaustion

(118.982)

(90.157)

7.05

Wealth Created

710,085

770.236

7.06

Value Added Received in Transfer

103.832

98.871

7.06.02

Finance income

103.832

98.871

7.07

Total Wealth for Distribution (Distributed)

813,917

869.107

7.08

Wealth for Distribution (Distributed)

813,917

869.107

7.08.01

Employees

407.327

359.438

7.08.02

Taxes

179,269

187.352

7.08.03

Third Part Capital Remuneration

268.725

252.921

7.08.03.02

Rents

141.682

128.244

7.08.03.03

Other

127.043

124.677

7.08.03.03.01

Lenders

127.043

124.677

7.08.05

Others

(41,404)

69.396

 

Page 17 of 70


 

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 


São Paulo, May 3, 2012 –
GOL Linhas Aéreas Inteligentes S.A.,“GLAI”, (BM&FBovespa: GOLL4 and NYSE: GOL), (S&P: B+; Fitch: B+, Moody`s: B3), the largest low-cost and low-fare airline in Latin America, announces today its results for the first quarter of 2012 (1Q12). All the information herein is presented in accordance with International Financial Reporting Standards (IFRS) and in Brazilian Reais (R$), and all comparisons are with the first quarter of 2011 (1Q11). All information related to the 1Q11 considers the financial statements filed on March 27, 2012, as Notice to the Market announced on the same date. The quarter's results are consolidated and incorporate 100% of Webjet’s results

Message from Management  

 

Confidence and determination are the Company’s watchwords at the moment – confidence that GOL is on the right path and determination to do whatever it takes to recover positive margins.

 

GOL is announcing its results for the first quarter of 2012, with the adoption of measures to bring its capacity and cost structure in line with the new Brazil and global macroeconomic situation.

 

At the beginning of March, GOL and Webjet announced a reduction of around 100 flights in order to keep domestic supply in 2012 flat in relation to the previous year, compatible with the new domestic demand scenario. Today, however, GOL announced that its new target for 2012 is to reduce domestic supply by up to 2% over 2011. The Company is determined to do everything possible to help discipline and rationalize a market that has been growing in an unsustainable manner, a situation that could well jeopardize the health of the industry in the midterm.

 

First-quarter CASK ex–fuel of 8.63 cents (R$) reflects the Company’s efforts to reduce operating costs in 2011 and at the beginning of 2012. Low costs have always constituted GOL’s main competitive advantage. The first figures of the year show that the measures has produced results. Additional cost optimization projects are being implemented and the Company is confident in the success of its strategy.

 

GOL and Webjet’s results, despite all the cost pressure from current oil prices and the unfavorable Real/Dollar exchange rate, underlines Company’s confidence in the low-cost model and opens new opportunities for synergies and improved practices in both airlines.

 

GOL closed 1Q12 with a cash position of R$2.2 billion and no refinancing pressure for the next three years, factors have contributed to the implementation of the Company’s strategy in an adverse economic scenario. GOL will continue to focus on maintaining high liquidity and an appropriate debt profile in the coming quarters..

 

GOL is constantly evaluating opportunities for augmenting its platform and increasing passenger services. This quarter, GOL NO AR (GOL ON AIR), the free on-board entertainment service was available on 40% of GOL’ unit flights, representing around 350 departures per day. The on-board sales service also continued to expand and is already available on around 250 daily flights.

 

In line with its pursuit of additional revenue sources, the Company received authorization from Anac (Brazil’s Civil Aviation Authority) to undertake conventional and electrostatic painting, weighing and recalculation services for other aircraft models belonging to other airlines in its Maintenance Center at Confins Airport in Belo Horizonte.

Page 18 of 70


NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 


 

GOL’s strategy remains the same – prioritizing simplicity above everything else. Once again GOL’s team has demonstrated confidence, determination and commitment, always aligned with its values: safety, focus on the client, sustainability, innovation and profitability.

These are the attitudes that are making GOL increasingly the best company to fly with, work for and invest in.

Constantino de Oliveira Junior

Founder and CEO of GOL Linhas Aéreas Inteligentes S.A.

 

AVIATION MARKET – INDUSTRY

 

Domestic aviation industry supply and demand increased by 11.3% and 7.1%, respectively, over 1Q11, with an average load factor of 69.4%, versus 72.1% in 1Q11. The fact that supply growth lagged demand growth in a quarter with the highest passenger traffic volume of the year, confirms the change in the industry’s behavior, especially that of its leading players as they pursued route profitability in a scenario characterized by substantial pressure on operating costs.

 

TOTAL SYSTEM (in Billion)

1Q12

1Q11

% Var.

4Q11

% Var.

ASK – Industry

39.3

36.3

8.2%

38.8

1.2%

RPK - Industry

28.2

26.5

6.1%

27.3

3.1%

Load Factor - Industry

71.7%

73.1%

-1.4pp

70.4%

+1.4pp

DOMESTIC MARKET

1Q12

1Q11

% Var.

4Q11

%Var.

ASK – Industry

31.1

27.9

11.3%

30.5

1.9%

RPK - Industry

21.5

20.1

7.1%

20.8

3.4%

Load Factor - Industry

69.4%

72.1%

-2.7pp

68.4%

+1.0pp

INTERNACIONAL MARKET

1Q12

1Q11

% Var.

4Q11

%Var.

ASK – Industry

8.2

8.4

-2.2%

8.3

-1.7%

RPK - Industry

6.6

6.4

3.0%

6.5

2.1%

Load Factor - Industry

80.6%

76.5%

+4.1pp

77.5%

+3.0pp

Data from the Brazilian Civil Aviation Agency (Anac). The 1Q11 operating figures were recalculated in accordance with the current DCA Manual.

Page 19 of 70


 
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

AVIATION MARKET – GOL

The information below refers to GOL’s route network (excluding Webjet):

TOTAL SYSTEM (in Billion)

1Q12

1Q11

% Var.

4Q11

% Var.

ASK - GOL

12.2

12.2

0.3%

12.6

-3.5%

RPK - GOL

8.1

8.6

-5.9%

8.1

-0.1%

Load Factor - GOL

66.6%

71.0%

-4.4pp

64.3%

+2.2 pp

DOMESTIC MARKET

1Q12

1Q11

% Var.

4Q11

% Var.

ASK - GOL

11.1

10.7

3.6%

11.6

-3.8%

RPK - GOL

7.4

7.8

-4.7%

7.5

-1.2%

Load Factor - GOL

66.5%

72.2%

-5.8pp

64.7%

+1.8 pp

INTERNACIONAL MARKET

1Q12

1Q11

% Var.

4Q11

% Var.

ASK - GOL

1.1

1.4

-24.4%

1.1

0.6%

RPK - GOL

0.7

0.9

-16.7%

0.6

12.8%

Load Factor - GOL

67.7%

61.4%

+6.3pp

60.4%

+7.3 pp

Data from the Brazilian Civil Aviation Agency (Anac). The 1Q11 operating figures were recalculated in accordance with the current DCA Manual.

SUPPLY (ASK)

 

GOL's domestic route network recorded a 3.6% upturn in supply over 1Q11, chiefly due to the increase in the number of aircraft (120 aircraft in 1Q12, versus 115 in 1Q11). Supply was also partially impacted by the 3.6% reduction in productivity from 13.3 block hours/day in 1Q11 to 12.9 block hours/day in 1Q12, and the 4.4% reduction in the average stage length from 930 km to 889 km in the same period. In March 2012, the Company announced an initial cutback of around 70 flights on both GOL’s and Webjet’s routes. However, this figure is now close to 100 flights. The discontinuation criteria were: (i) flights with low profitability; (ii) flights with longer stretches and; (iii) night flights (early hours of the morning).  The Company’s target is to cut domestic supply by 2% in 2012.

 

In the same period, international supply fell by 24.4% due to: (i) the discontinuation of international charter flights due to the return of three B767 aircraft; and (ii) the discontinuation of flights to Bogotá, in Colombia. 

DEMAND (RPK) and LOAD FACTOR

GOL’s domestic demand fell by 4.7% over 1Q11, chiefly due to the slowing of Brazil’s economy, together with the 2.5% upturn in consolidated yields. Demand on GOL’s international route network declined by 16.7% year-on-year, primarily due to the discontinuation of flights to Bogotá, Colombia, and the winding up of international charter flights with the B767 aircraft.

As a result of the above, GOL’s load factor averaged 66.6% in 1Q12, 4.4 p.p. down on the 71.0% reported in 1Q11.

Page 20 of 70


NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

CONSOLIDATED OPERATING INDICATORS (GOL and Webjet)

Consolidated Operating Indicators

1Q12

1Q11

% Var.

4Q11

% Var.

ASK (in Bn)

14.0

12.2

15.1%

14.3

-2.0%

GOL

12.2

12.2

0.3%

12.6

-3.5%

Webjet

1.8

-

na

1.6

9.4%

RPK (in Bn)

9.5

8.6

10.2%

9.3

1.9%

GOL

8.1

8.6

-5.9%

8.1

-0.1%

Webjet

1.4

-

na

1.2

15.3%

Load Factor

67.9%

71.0%

-3.0%

65.4%

2.6%

GOL

66.6%

71.0%

-4.4%

64.3%

2.2%

Webjet

77.2%

-

na

73.2%

4.0%

Revenue Passengers (’000)

9,904

8,595

15.2%

10,005

-1.0%

GOL

8,467

8,595

-1.5%

8,656

-2.2%

Webjet

1,437

-

na

1,348

6.5%

Productivity (Block Hour/Day)

12.6

13.3

-5.6%

13.0

-3.2%

GOL

12.9

13.3

-3.6%

13.3

-3.4%

Webjet

11.2

-

na

11.4

-1.9%

Departures (000)

94,090

75,614

24.4%

96,328

-2.3%

GOL

80,111

75,614

5.9%

82,065

-2.4%

Webjet

13,979

-

na

14,263

-2.0%

Stage Lenght (km)

881

930

-5.3%

889

-0.9%

GOL

889

930

-4.4%

906

-1.8%

Webjet

837

-

na

795

5.3%

Average Operating Aircraft

138

111

23.9%

138

-0.2%

GOL

115

111

3.6%

116

-0.9%

Webjet

23

-

na

22

3.2%

Fuel Consumption (mm)

446

382

16.7%

462

-3.6%

GOL

379

382

-0.6%

397

-4.4%

Webjet

66

-

na

65

1.1%

Employee

20,548

18,706

9.8%

20,525

0.1%

GOL

18,805

18,706

0.5%

18,781

0.1%

Webjet

1,743

-

na

1,744

-0.1%

The 1Q11 operating figures were recalculated in accordance with the current DCA Manual.

 

Page 21 of 70


 
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

GOL AND WEBJET’S FLEET

 

The Company closed the first quarter with a total fleet of 124 B737-700 and 800 NG aircraft with an average age of 7.0 years, plus 24 B737-300s, with an average age of 19.0 years. In 1Q12, the Company took delivery of one aircraft under an operational leasing contract. No aircraft were returned in the period. 

 

The Company leases its fleet through a combination of financial and operational leases. Out of the total of 151 aircraft, 100 were under operational leases, 45 were under financial leases, and six are owned by the Company. GOL has purchase options on 39 of the 45 aircraft when their leasing contracts terminate.  In 2012, the increase in the two companies’ combined seat supply will not exceed 2.0%, the target being a 2% reduction.

 

The GOL unit closed the quarter with 120 operational aircraft (excluding the three Boeing 767-300s), 115 of which were actively flying in the period (versus an average of 111 in 1Q11). The Webjet unit ended the period with 28 operational aircraft, 23 of which actively flying, as shown in the table on page 5.

Fleet - End of Period

1Q12

1Q11 (3) 

Var

4Q11

Var

Consolidated Fleet

151

125

26

150

1

737-300

24

3

21

24

-

737-700

43

42

1

43

-

737-800

81

74

7

80

1

767-300

3

6

(3)

3

-

GOL’s Fleet

123

125

(2)

124

(1)

737-300

-

3

(3)

-

-

737-700

43

42

1

43

-

737-800

77

74

3

78

(1)

767-300 (1) 

3

6

(3)

3

-

Webjet’s Fleet

28

-

28

26

2

737-300

24

-

24

24

-

737-700

-

-

-

-

-

737-800 (2) 

4

-

4

2

2

(1)    

 Two of the three Boeing 767s in the fleet are in the final stage of transfer to Delta Air Lines and the other is subleased. The expenses related to transferring the two Boeing 767-300s are being 100% reimbursed by Delta.

(2)

 Two of GOL’s Boeing 737-800s were transferred to Webjet this quarter through a subleasing agreement. Including the two aircraft, Webjet has a total of 4 Boeing 737-800 aircraft under a a subleasing agreement.

(3)

 At the close of 1Q11, the Company had 10 non-operational aircraft: three 737-300s in the final stage of devolution, two Boeing 737-700s and three B737-800s undergoing maintenance, and two Boeing 767-300s not operating.

 

On March 31, 2012, the Company had 90 firm orders, 10 purchase rights and an additional 40 purchase options with Boeing. The approximate amount of the firm orders, excluding contract discounts, is R$15.2 billion, to be paid in accordance with the following schedule:

 

In addition to the above-mentioned obligations, the Company will pay R$1.8bn as advances on aircraft acquisitions in the above periods.

 

Page 22 of 70


 
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

Aircraft Payments Forecast (R$MM)

2012

2013

2014

2015

2016

>2016

Total

Pre Delivery Deposits

335.4

521.8

487.6

395.5

91.9

6.4

1,838.6

Aircraft Acquisition Commitments,

896.1

2,854.7

4,217.6

3,633.1

3,115.7

636.8

15,188.0

Total

1,065.5

3,376.5

4,705.2

4,028.6

3,207.6

643.2

17,026.6

FUTURE FLEET PLAN

 

The table below presents the consolidated fleet plan revised by the Company, including demand from GOL and Webjet. The plan also includes early returns of Webjet’s Boeing 737-300s and their replacement by Boeing 737-700/800 NGs, in accordance with the aircraft purchase order signed by GOL and Boeing.  The following table shows the Company’s current situation and expectations regarding negotiations with the lessors of Webjet’s Boeing 737-300s and is therefore subject to possible changes as these negotiations proceed.

 

Consolidated Fleet Plan – End of the Period

2011

2012

2013

2014

Boeing 737-700 NG

43

39

32

32

Boeing 737-800 NG

80

89

103

108

Boeing 737-300

24

9

-

-

Boeing 767 (1) 

3

1

1

-

Total Fleet

150

138

136

140

(1)   Part of the total fleet, but not part of the operational fleet.

CAPEX

GOL invested close to R$189.7mn in the quarter, 48% of which in the acquisition of aircraft for delivery between 2012 and 2014 (pre-delivery deposits); 47% in the purchase of parts; and around 5% in bases, IT and the expansion of the maintenance center in Confins, Minas Gerais (construction of the Wheel and Break Workshop).

2012 GUIDANCE

GOL may revise its guidance on a quarterly basis to incorporate any developments in its operating and financial performance, as well as any changes in interest, FX, GDP and WTI and Brent oil price trends. The guidance below refers to GOL's and Webjet's consolidated data:

2012 Guidance

Scenario

Worst

Best

Brazilian GDP Growth

3.0%

4.0%

Domestic Demand Growth (% RPKs)

7.0%

10.0%

Load Factor in Domestic Market

71%

75%

Passengers Transported (million)

42

45

GOL Capacity (ASKs billion)

50.2

51.2

RPK, System (billion)

39.0

41.5

Departures (000)

363.0

370.3

CASK Ex-Fuel (R$ cents)

9.0

9.6

Fuel Liters Consumed (billion)

1.70

1.73

Average Exchange Rate (R$/US$)

1.75

1.80

Operating Margin (EBIT)

4.0%

7.0%

Page 23 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

1.         General Information

 

Gol Linhas Aéreas Inteligentes S.A. (“Company” or “GLAI”) is a publicly-listed company incorporated in accordance with Brazilian Corporate Laws, organized on March 12, 2004. The Company is engaged in, exercising shareholding control of its wholly-owned subsidiary VRG Linhas Aéreas S.A. (“VRG”), and through its subsidiaries or affiliates, essentially exploring: (i) regular and non-regular air transportation services of passengers, cargo and mailbags, domestically or internationally, according to the concessions granted by the competent authorities; (ii) additional passenger air chartering services.

 

Additionally, GLAI is the direct parent company of the subsidiaries GAC Inc (“GAC”), Gol Finance (“Finance”), and indirect parent company of subsidiary SKY Finance II (“SKY II”) and Webjet Linhas Aéreas S.A. ("Webjet").

 

GAC was established on March 23, 2006, according to the laws of the Cayman Islands, and its activities are related to the aircraft acquisition for its single shareholder GLAI, which provides financial support for its operating activities and settlement of obligations. GAC is the parent company of SKY II, established on November 30, 2009, respectively, both located in the Cayman Islands, whose activities are related to obtaining funds to finance aircraft acquisition.

 

Finance was established on March 16, 2006, according to the laws the Cayman Islands, and it is engaged in raising funds for aircraft acquisition.

 

On April 9, 2007, the Company acquired VRG, a low-cost and low-fare airline company, which operates domestic and international flights using GOL and VARIG brands, and provides regular and non-regular air transportation services from/to the main destinations in Brazil, South America and the Caribbean.

 

On February 28, 2011, the subsidiary VRG constituted a Participation Account company engaged in developing and operating on-board sales of food and beverages in domestic flights. VRG controls 50% of this company, which started to operate in September, 2011.

 

On October 3, 2011, VRG subsidiary acquired the entire share capital of Webjet Linhas Aéreas SA ("Webjet"), a low-cost and low-fare airline headquartered in the city of Rio de Janeiro, which provides scheduled passenger air chartering services in Brazil.

 

On October 27, 2011, CADE, VRG and Webjet entered into a Transaction Reversibility Preservation Agreement ("APRO"), concerning the acquisition of 100% (one hundred percent) of the capital of Webjet, whereby the reversibility of the transaction and preservation of assets is assured until a final decision is handed down ​​by the governmental agency. The agreement ensures the independence in the management of both companies, including with respect to the Company’s frequent flyer program ("Smiles").Without reducing Webjet’s capacity, the agreement provides for the sharing of flights between the companies with the aim of optimizing the route network and offer more options to flyers.

 

The Company’s shares are traded on the New York Stock Exchange (NYSE) and on the São Paulo Stock Exchange (BOVESPA). The Company has entered into an Agreement for Adoption of Level 2 Differentiated Corporate Governance Practices with BOVESPA, and is included in the Special Corporate Governance Stock Index (IGC) and the Special Tag Along Stock Index (ITAG), which were created to identify companies committed to adopt differentiated corporate governance practices.

Page 24 of 70


NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

2.        Approval and summary of significant accounting policies applied in preparing the financial statements

 

This financial statements were authorized for issuance at the Board of Directors’ meeting held on May 03, 2012. The Company’s registered office is at Rua Tamoios, 246, Jd. Aeroporto, São Paulo, Brazil.

2.1  Basis of preparation

The consolidated interim financial information were prepared for the period ended on March 31, 2012 in accordance with International Accounting Standards (IAS) no. 34, related to consolidated interim financial statements, as issued by the International Accounting Standards Board (IASB) and technical pronouncement CPC 21 – Demonstração Intermediária (Interim Financial Reporting).

 

IAS 34 requires the use of certain accounting estimates by the Company Management. The consolidated interim financial information were prepared based on historical cost, except for certain financial assets and liabilities, which are measured at fair value.

 

The interim financial information of the parent company prepared in accordance with technical pronouncement CPC 21 – Demonstração Intermediária (Interim Financial Reporting).

 

The individual interim financial information prepared for statutory purposes, have the valuation of investments in subsidiaries by the equity method, according to Brazilian legislation. Thus, the consolidated interim financial information are not in accordance with IFRSs, which require the evaluation of investments in separate financial statements of the parent at fair value or cost.

 

These do not include all the information and disclosure items required in the consolidated annual financial statements therefore, they must be read together with the consolidated financial statements referring the year ended December 31, 2011, and filed on March 26, 2012, which were prepared according to accounting policies, as described above. There was no changes in accounting policies adopted on December 31,2011 to March 31,2012.

 

The Company has chosen to present these individual and consolidated interim financial information in one single set, side by side, because there is no difference between the individual and consolidated shareholders’ equity and net income (loss).

 

Page 25 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

3.    Seasonality

The Company expects that the revenues and profits from its flights reach the highest levels during the summer and winter vacation periods, in January and July, respectively, and during the last two weeks of December, during the season holidays. Given the high portion of fixed costs, this seasonality tends to result in fluctuations in our operational quarter-on-quarter income.

 

4.        Cash and cash equivalents

 

   

Individual

(BRGAAP)

Consolidated  

(IFRS and BRGAAP)

   

03/31/2012

 

03/31/2011

 

03/31/2012

 

03/31/2011

                 

Cash and bank deposits

 

4,022

 

13,406

 

215,898

 

157,452

Cash equivalents

 

206,779

 

218,979

 

1,098,726

 

1,072,835

   

210,801

 

232,385

 

1,314,624

 

1,230,287

 

As of March 31, 2012, cash equivalents were represented by private bonds (CDBs - Bank Deposit Certificates), Government bonds and fixed-income funds, paid at post fixed rates ranging between 98.5% and 103.5% of the Interbank Deposit Certificate Rate (CDI).

The breakdown of cash equivalents balance is as follows:

 

      

   

Individual

(BRGAAP)

Consolidated

(IFRS and BRGAAP)

   

03/31/2012

 

12/31/2011

 

03/31/2012

 

12/31/2011

                 

Bank deposit certificates

 

206,779

 

218,979

 

395,791

 

284,911

Government bonds

 

-

 

-

 

701,893

 

787,605

Investment funds

 

-

 

-

 

1,042

 

319

   

206,779

 

218,979

 

1,098,726

 

1,072,835

 

These investments have high liquidity, are readily convertible into known amounts of cash, are subject to an insignificant risk of value changes.

During the year ended March 31, 2012, the Company redeemed some of its private bonds and, through its investment strategy towards greater profitability, increased its position in Bank deposit certificates.

 

Page 26 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

5.    Short-term investments

   

Individual (BRGAAP

 

Consolidated (IFRS and BRGAAP)

   

03/31/12

 

12/31/11

 

03/31/12

 

12/31/11

Private Bonds

 

-

 

-

 

-

 

12,071

Government Bonds

 

-

 

-

 

63,785

 

124,400

Investment Funds

 

75,611

 

69,885

 

658,660

 

872,597

   

75,611

 

69,885

 

722,445

 

1,009,068

 

Private bonds comprise of CDBs (“Bank Deposit Certificates”), with maturity until September 2013 and highly liquidity, paid at 102% of the CDI rate.

Public bonds comprise of LTN (National Treasury Bills), NTN (National Treasury Bills), with immediate maturity, paid at an variable average rate of 11.12% p.a..

Investment funds are represented primarily by government bonds LTN,  CDBs and Debentures.


6. Restricted Cash

Consolidado

Restricted cash in current assets, as of March 31, 2012, was represented by an updated deposit made in a restricted account, relating to the acquisition of Webjet, in the amount of R$8,554 (R$8,554 as of December 31, 2011) and by a deposit requirements linked to operations with future of dollar and interest, paid at the rate moving average of 11.12% per year, totaling R$80,482.

The balance recorded in current liabilities was :

 

 

 

03/31/2012

 

12/31/2011

Margin deposits bond to hedge transactions (a)

11,453

 

82,996

Guarantee margin deposits bond to loans from the BNDES (b)

7,410

 

8,591

Deposits in guarantee with Safra Bank

8,634

 

8,471

Others deposits  

3,145

 

483

 

30,642

 

100,541

 

(a)            Deposits, in US dollar, subject to the overnight rate (average yield of 0.14% p.a.).

(b)          Guarantee margin, invested in DI investment funds and yielding the weighted average rate of 98.5% of CDI.

 

Page 27 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

7. Trade and other receivables

 

Consolidated (IFRS and BRGAAP)

 

03/31/12

 

12/31/11

Local currency:

 

 

 

Credit card administrators

101,654

 

100,214

Travel agencies

222,610

 

185,544

Installment sales

40,182

 

47,189

Cargo agencies

32,056

 

37,460

Airline partners companies

14,733

 

17,031

Other

36,396

35,077

 

447,631

 

422,515

Foreign currency:

 

 

 

Credit card administrators

8,496

 

9,228

Travel agencies

5,595

 

6,833

Cargo agencies

257

 

301

 

14,348

 

16,362

 

461,979

 

438,877

 

 

 

 

Allowance for doubtful accounts

(84,600)

 

(83,610)

 

377,379

 

355,267

Current

376,485

354,134

Noncurrent (*)

894

1,133

 
(*)The portion of noncurrent trade receivables is recorded in other receivables, in noncurrent assets, and corresponds to installment sales made under the Voe Fácil program, with maturity over 360 days. 

 

The aging list of accounts receivable is as follows:

 

Consolidated (IFRS and BRGAAP)

 

03/31/12

 

12/31/11

Falling due

341,535

 

317,016

Overdue until 30 days

10,873

 

20,618

Overdue 31 to 60 days

7,758

 

7,507

Overdue 61 to 90 days

9,382

 

4,954

Overdue 91 to 180 days

11,978

 

11,754

Overdue 181 to 360 days

11,878

 

15,307

Overdue above 360 days

68,575

 

61,721

 

461,979

 

438,877

 

 

Page 28 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The average collections period of installment sales is nine months and 5.99% interest is charged on the balance receivable, which is recognized as financial income. The average collection period of other receivables is 104 days (108 days as of December 31, 2011.)

Changes in the allowance for doubtful accounts, for the quarters ended March 31, 2012 and 2011, are as follows:

 

Consolidated (IFRS and BRGAAP) 

 

03/31/12

 

03/31/11

Balance at beginning of period

(83,610)

 

(60,127)

Additions

(7,780)

 

(7,328)

Unrecoverable amounts

441

 

762

Recoveries

6,349

 

3,919

Balance at the end of period

(84,600)

 

(62,774)

 

On March 31, 2012 and December 31, 2011, accounts receivable from travel agencies in the minimum amount of R$16,000, were given in guarantees to loan agreements with BNDES Bank.

Additionally, on March 31, 2012 and December 31, 2011, 30% of the receivable amounts from credit card administrators are bound to guarantee the contract with Banco Safra, collected by the indirect subsidiary Webjet.

8.             Inventories 

 

 

Consolidated (IFRS and BRGAAP)

 

03/31/2012

 

12/31/2011

 

 

 

 

Consumables

18,559

 

20,148

Parts and maintenance materials

126,748

 

127,080

Advances to suppliers

13,543

 

12,725

Imports in progress

758

 

1,612

Others

4,932

 

10,719

Provision for adjustment to market value (a)

(2,273)

 

(3,061)

Provision for obsolescence

(18,002) 

 

(18,200)

 

144,265

 

151,023

 

(a)     The amount refers to the allocation of goodwill arising from the business combination of Webjet over the fair value of inventories acquired at the time. In the first quarter ended March 31, 2012, there was a realization of the goodwill allocated to the amount of R$788.

 

Changes in the allowance for inventory obsolescence are as follows:

Page 29 of 70


NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Consolidated (IFRS and BRGAAP)

 

03/31/2012

 

03/31/2011

Balance at the beginning of the period

(18,200)

 

(17,004)

Additions

(42)

 

(4)

Write-offs

240

 

227

Balance at the end of the period

(18,002)

 

(16,781)

 

9.    Deferred and recoverable taxes

 

 

Individual (BRGAAP)

 

Consolidated (IFRS and BRGAAP)

 

 

03/31/2012

 

12/31/2011

 

03/31/2012

 

12/31/2011

Recoverable taxes:

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

ICMS (1)

 

-

 

-

 

14,689

 

13,222

Prepaid IRPJ and CSSL (2)

 

40,053

 

37,784

 

109,226

 

77,679

IRRF (3)

 

1,493

 

1,922

 

5,308

 

16,584

PIS and COFINS (4)

 

 

 

-

 

1,304

 

54,085

Withholding tax of public institutions

 

 

 

-

 

22,418

 

26,791

Value added tax – IVA (5)

 

 

 

-

 

5,379

 

4,242

Income tax on imports

 

245

 

275

 

18,568

 

17,740

Others

 

 

 

-

 

1,781

 

2,656

Total recoverable taxes - current

 

41,791

 

39,981

 

178,673

 

212,999

 

 

 

 

 

 

 

 

 

Deferred taxes:

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Tax losses

 

33,121

 

33,121

 

427,167

 

427,167

Negative basis of social contribution

 

11,923

 

11,923

 

153,780

 

153,780

Temporary differences

 

 

 

 

 

 

 

 

Mileage program:

 

-

 

-

 

104,803

 

97,483

Allowance for doubtful accounts and others

 

-

 

-

 

69,837

 

62,317

Provision for loss on acquisition of VRG

 

 

 

 

 

143,350

 

143,350

Provision for legal and tax liabilities

 

-

 

-

 

59,038

 

57,151

Return of aircraft

 

-

 

-

 

25,613

 

22,089

Derivative transactions not settled

 

-

 

-

 

14,345

 

65,377

Effects from Webjet’s acquisition

 

-

 

-

 

6,186

 

7,086

Others

 

93

 

93

 

53,544

 

51,190

Total noncurrent deferred tax assets

 

45,137

 

45,137

 

1,057,663

 

1,086,990

 

 

 

 

 

 

 

 

 

Noncurrent liabilities

 

 

 

 

 

 

 

 

Temporary differences

 

 

 

 

 

 

 

 

Brands

 

-

 

-

 

21,457

 

21,457

Flight rights

 

-

 

-

 

353,226

 

353,226

Maintenance depots

 

-

 

-

 

92,586

 

101,630

Depreciation of engines and parts for aircraft maintenance

 

-

 

-

 

146,293

 

140,677

Reversal of goodwill amortization

 

-

 

-

 

82,979

 

76,596

Derivative transactions not settled

 

 

 

 

 

5,793

 

28,525

Leasing of aircraft

 

-

 

-

 

64,755

 

26,902

Other

 

-

 

-

 

13,056

 

14,693

Total noncurrent deferred tax liabilities

 

-

 

-

 

780,145

 

763,706

 

(1) ICMS: State tax on sales of goods and services.

(2) IRPJ: Brazilian federal income tax on taxable income.

     CSLL: social contribution on taxable income, created to sponsor social programs and funds.

(3) IRRF: withholding income tax levied on certain domestic transactions, such as payment of fees to some service providers, payment of salaries, and financial income from bank investments.

(4) PIS/COFINS: Contributions to Social Integration Program (PIS) and Contribution for the Financing of Social Security (COFINS)

(5) IVA: Value added tax on sales of goods and services abroad.

 

Page 30 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The Company and its subsidiary VRG have tax losses and negative basis of social contribution on calculation of taxable income, to be offset against 30% of annual taxable income, which can be carried forward indefinitely, in the following amounts:

 

 

Individual (GLAI)

 

Direct (VRG) and indirect subsidiary (Webjet)

 

03/31/12

 

12/31/11

 

03/31/12

 

12/31/11

Tax losses

256,913

 

258,268

 

1,887,267

 

1,887,267

Negative basis of social contribution

256,913

 

258,268

 

1,887,267

 

1,887,267

 

Tax credits arising from tax loss carryforwards and negative basis of social contribution were recorded based on the expected generation of future taxable income of the Company and its subsidiaries, as prescribed by tax laws.

Projected future taxable income for the utilization of tax loss carryforwards and negative basis of social contribution, technically prepared and supported based on business plans and approved by the Board of

Directors, indicates the existence of sufficient taxable income for the realization of the recognized deferred tax assets.

The Company has a total tax credits amount of R$761,288, wich R$87,350 are from the GLAI and R$673,938 are from its subsidiaries VRG and Webjet, and recognized an allowance for loss of R$180,341 (R$42,306 from the GLAI and R$138,035 from its subsidiaries VRG and Webjet, for credits that have no perspective of realization in an immediate future.

Management considers that the deferred tax assets arising from temporary differences will be realized proportionally to the realization of provisions and final outcome of future events.

Page 31 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Individual

 

Consolidated

 

03/31/12

 

12/31/11

 

03/31/12

 

12/31/11

Income (loss) before income tax and social contribution

(40,335)

 

69,449

 

(15,949)

 

109,464

Combined tax rate

34%

 

34%

 

34%

 

34%

Income tax at combined tax rate

13,714

 

(23,612)

 

5,423

 

(37,217)

Adjustments to calculate the effective tax rate:

 

 

 

 

 

 

 

Equity in subsidiaries

(16,992)

 

28,251

 

-

 

-

Nondeductible income from subsidiaries

(6,619)

 

(8,517)

 

(6,619)

 

(8,517)

Income tax on permanent differences

(225)

 

(112)

 

(826)

 

(3,002) 

Income tax and social contribution is not made ​​on tax loss carryforwards

 

-

 

-

 

(27,365)

 

-

Nondeductible expenses (nontaxable income)

(815)

 

(2,632)

 

(4,540)

 

2,099

Exchange differences on foreign investments

9,868

 

6,569

 

8,472

 

6,569

Income (expense) of tax and social contribution

 

(1,069)

 

(53)

 

(25,455)

 

(40,068)

 

 

 

 

 

 

 

 

Current income tax and social contribution

(1,069)

 

(53)

 

(9,922)

 

(23,400)

Deferred income tax and social contribution

-

 

-

 

(15,533)

 

(16,668)

 

(1,069)

 

(53)

 

(25,455)

 

(40,068)

 

10. Prepaid Expenses

 

Individual

(BRGAAP)

 

Consolidated (IFRS and BRGAAP)

 

03/31/12

 

12/31/11

 

03/31/12

 

12/31/11

Deferred losses from sale-leaseback transactions (a)

-

 

-

 

51,858

 

54,201

Prepayments of hedge premium

-

 

-

 

6,828

 

11,572

Lease prepayments

-

 

-

 

32,967

 

30,382

Insurance prepayments

171

 

136

 

14,636

 

22,775

Prepaid commissions

-

 

-

 

13,610

 

13,020

Others

-

 

-

 

6,190

 

6,811

 

171

 

136

 

126,089

 

138,761

 

 

 

 

 

 

 

 

Current

171

 

136

 

83,518

 

93,797

Noncurrent

-

 

-

 

42,571

 

44,964

 

(a) During the accounting periods of 2007, 2008, and 2009, the Company recorded losses on sale-leaseback transactions performed by its subsidiary GAC Inc. relating to 9 aircraft in the amount of R$89,337. These losses are being deferred and amortized proportionally to the payments of the respective lease contracts during the contractual term of 120 months. Further information related to the sale-leaseback transactions are described in explanatory Note 27 b.

 

Page 32 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

11.   Deposits

Parent company

Escrow deposits

Escrow deposits represent guarantees in legal proceedings related to labor nature, deposited in escrow until the resolution of the related claims, updated at SELIC  tax. The balances of escrow deposits as of March 31, 2012 recorded in noncurrent assets totaled R$13,549 (R$12,065 as of December 31, 2011).

Consolidated

Maintenance deposits

The Company and its subsidiaries VRG and Webjet made deposits in US dollars for maintenance of aircraft and engines that will be invested in future events as set forth in some finance lease contracts.

The maintenance deposits do not exempt the Company and its subsidiaries, as lessee, neither from the contractual obligations relating to the maintenance of the aircraft nor from the risk associated with maintenance activities. The Company and its subsidiaries hold the right to select any the maintenance service providers or to perform such services internally.

Based on the regular analysis of deposit recovery, management believes that the amounts reported in the consolidated balance sheet are recoverable and there are no indications of impairment of maintenance deposits, whose balances as of March 31, 2012 classified in current and noncurrent assets amount to R$37,335 and R$298,124, respectively (R$35,082 and R$323,062 in current and noncurrent assets as of December 31, 2011, respectively).

Deposits in guarantee for lease agreements

As required by the lease agreements, the Company and its subsidiaries hold guarantee deposits in US dollars on behalf of the leasing companies, who’s fully refund occurs upon the contract expiration date. As of March 31, 2012, the balance of guarantee deposits for lease agreements, classified in noncurrent assets, is R$96,461 (R$96,983 as of December 31, 2011).

Escrow deposits

Escrow deposits represent guarantees in legal proceedings related to tax, civil and labor nature, deposited in escrow until the resolution of the related claims, paid at SELIC  tax. The balances of escrow deposits as of March 31, 2012, recorded in noncurrent assets totaled R$193,837 (R$175,472 as of December 31, 2011).

 

Page 33 of 70


 

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

12.      Transactions with related parties

 

Loan agreements– noncurrent assets and liabilities– Individual

The Company and GAC maintains loan agreements, assets and liabilities with its subsidiary VRG without interest rates predicted, maturity or guarantees, as set forth below:

 

Asset

 

Liability

 

03/31/2012

 

12/31/2011

 

03/31/2012

 

12/31/2011

GLAI with VRG

50,325

 

48,514

 

-

 

-

GAC with VRG (a)

-

 

71,280

 

216,244

 

222,725

Finance with VRG (a)

442,037

 

474,023

 

-

 

-

 

492,362

 

593,817

 

216,244

 

222,725

 

a)         The values that ​​the Company maintains with GAC and Finance, subsidiaries abroad, are subject to exchange rate.

 

Graphic, consulting and transportation services

The subsidiary VRG holds contract with the related party Breda  Transportes e Serviços  S.A. for passenger and luggage transportation services between airports, and transportation of employees, maturating on May 31, 2012, renewable every 12 months for additional equal terms through an amendment instrument signed by the parties, annually adjusted based on the IGP-M fluctuation (General Market Price Index) .

The subsidiary VRG also holds contracts with the related parties Expresso União Ltda. and Serviços Gráficos Ltda., for employee transportation and graphic services, maturating on September 16, 2012 and February 18, 2012, respectively.

The subsidiary VRG also holds contracts for the operation of the Gollog franchise through the related party União Transporte de Encomendas e Comércio de Veículos Ltda., with 60-month maturity term.

The subsidiary VRG also holds contracts with related party Vaud Participações S.A. to provide executive administration and management services, with two year term beginning on October 2010.

During the period ended March 31, 2012, VRG recognized total expenses related to these services of R$3,592 (R$2,103 as of March 31, 2011). All the entities referred above belong to the same economic group.

 

Page 34 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

Property lease

VRG is the lessee of the property located at Rua Tamoios, 246, São Paulo, SP, owned by Patrimony Administradora de Bens, controlled by Comporte Participações S.A., a company owned by the same shareholder of the Company, whose contract expires annually on April 4, 2012, automatically extended by conditions agreed, but undetermined, and may be terminated by the lessee at any time by written notice 30 days in advance.  The contract includes an annual adjustment clause, based on the IGP-M. During the period ended March 31, 2012  VRG recognized total expenses related to this lease of R$121 (R$218 as of March 31, 2011).

Contracts Account Opening UATP (Universal Air Transportation Plan) to Grant Credit Limit

On September 2011, subsidiary VRG entered into agreements with related parties Pássaro Azul Taxi Aéreo Ltda. e Viação Piracicabana Ltda. The purpose of the agreement is the issuance of UATP (Universal Air Transportation Plan) accounts. VRG issued credits to related parties in the amounts of R$20 and R$40, respectively, to be used in the UATP system. Such system can be used to pay domestic and international air services to all members. VRG uses the UATP system, which is operated and maintained by the international air sector, and seeks to simplify billing and facilitate the payment of air travels and other related services.

Trade payables – current liabilities

As of March 31, 2012, balances payable to related companies amounting to R$969 (R$1,198 as of December 31, 2011) are included in the balance of accounts payables and substantially refers to the payment to Breda Transportes e Serviços S.A. for passenger transportation services.

Key management personnel payments

 

03/31/2012

 

03/31/2011

Salaries and benefits

3,442

 

3,915

Related taxes

1,202

 

1,437

Share-based payments

2,330

 

4,573

Total

6,974

 

9,925

 

As of March 31, 2012, the Company did not offer postemployment benefits, and there are no severance benefits or other long-term benefits for the Management or other employees.

Share-based payments

The Company’s Board of Directors within the scope of its functions and in conformity with the Company’s Stock Option Plan, approved the grant of preferred stock options to the Company’s management and key senior executive officers. For grants through 2009, the options vest at a rate of 20% per year, and can be exercised within up to 10 years after the grant date.

Due to changes in the Company's Stock Option Plan, approved at the Annual Shareholders’ Meeting held on April 30, 2010, for plans granted beginning 2010, 20% of the options become vested as from the first year, an additional 30% as from the second, and the remaining 50% as from the third year. The options under these plans may also be exercised within 10 years after the grant date.

 

Page 35 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The fair value of stock options was estimated on the grant date using the Black-Scholes option pricing model.

The date of the Board of Directors’ meetings and the assumptions utilized in the Black-Scholes option pricing model are as follows:

 

Stock option plans

 

2005

 

2006

 

2007

 

2008

 

2009 (a)

 

2010 (b)

 

2011

Board of Directors’ meeting date

December 9, 2004

 

January 2, 2006

 

December 31, 2006

 

December 20, 2007

 

February 4, 2009

 

February 2, 2010

 

December 20, 2010

Total options granted

87,418

 

99,816

 

113,379

 

190,296

 

1,142,473

 

2,774,640

 

2,722,444

Option strike price

33.06

 

47.30

 

65.85

 

45.46

 

10.52

 

20.65

 

27.83

Average fair value of the option on the grant date

29.22

 

51.68

 

46.61

 

29.27

 

8.53

 

16.81

 

16.01(c)

Estimated volatility of the share price

32.52%

 

39.87%

 

46.54%

 

40.95%

 

76.91%

 

77.95%

 

44.55%

Expected dividend

0.84%

 

0.93%

 

0.98%

 

0.86%

 

-

 

2.73%

 

0.47%

Risk-free return rate

17.23%

 

18.00%

 

13.19%

 

11.18%

 

12.66%

 

8.65%

 

10.25%

Option term (years)

10

 

10

 

10

 

10

 

10

 

10

 

10

                           

(a) In April 2010 additional options were granted, totaling 216,673 in addition to those approved by the 2009 plan.

(b) In April 2010 additional options were approved totaling 101,894, referring to the 2010 plan.

(c) The calculated fair the value for 2011 plan was 16.92, 16.11, and 15.17 for the related vesting periods (2011, 2012, and 2013).

 

Changes in the stock options as of March 31, 2012 are as follows:

 

Stock options

 

Weighted average strike price

Outstanding options as of December 31, 2011

4,621,192

 

24.34

Adjustment on forfeited rights estimate

(383,833) 

 

23.37

Outstanding options as of March 31, 2012

4,237,359 44,237,359  

 

24.43

 

 

 

 

Number of options to be vested as of December 31, 2011

1,784,759

 

23.89

Number of options to be vested as of March 31, 2012

2,025,510

 

23.90

 

The strike price range and the average maturity of outstanding options, as well as the strike price range for the exercisable options as of March 31, 2012, are summarized below:

 

Page 36 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

Outstanding options

 

Options exercisable

Strike price range

Outstanding options

Remaining weighted average maturity in years

Average strike price

 

Options exercisable

Average strike price

33.06

31,222

3

33.06

 

31,222

33.06

47.30

36,860

4

47.30

 

36,860

47.30

65.85

36,516

5

65.85

 

36,516

65.85

45.46

86,243

6

45.46

 

73,307

45.46

10.52

324,842

7

10.52

 

211,147

10.52

20.65

1,751,421

8

20.65

 

1,094,638

20.65

27.83

1,970,255

9

27.83

 

541,820

27.83

10,52-65,85

4,237,359

8,25

24.34

 

2,025,510

23.90

For the period ended March 31, 2012, the Company recognized in shareholders’ equity an result with stock options in the amount of R$3,750 (R$7,742 for the period ended March 31, 2011), being the expense disclosed in the consolidated income statements as personnel expenses.

13.      Investments

Due to the changes in Law 6404/76 introduced by Law 11,638/07, investments in foreign subsidiaries, GAC and Finance were considered as an extension of the controller GLAI and consolidated on a line by line basis, only subsidiary VRG was considered as an investment.

Changes in investments in March 31, 2012 are as follows:

Balances as of December 31, 2010

2,713,261

Equity in subsidiaries

(518,274)

Unrealized hedge losses (VRG)

(89,853)

Amortization losses, net of sale-leaseback (a)

(1,809)

Balances as of December 31, 2011

2,103,325

Equity in subsidiaries

(49,979)

Unrealized hedge gains (VRG)

58,686

Deferred gains, net of sale leaseback transaction with (a)

(452)

Balances as of March 31, 2012

2,111,580

(a) The subsidiary GAC has net balance of deferred losses and gains on sale leaseback, whose deferral is subject to the payment of contractual installments made by its subsidiary VRG. Accordingly, as of March 31, 2012, the net balance to be deferred of R$30,233 (R$30,685 for the year ended December 31, 2011) is basically a part of the parent's net investment in the VRG. See explanatory note N°. 27 b.

The subsidiary VRG’s shares are not traded on stock exchanges. The relevant information on VRG is summarized below:

 
 

Page 37 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Total number of shares

Interest - %

Capital

Shareholders’ equity (b)

Net income (loss)

12/31/11

3,002,248,156

100%

2,294,191

2,072,640

(518,274)

03/31/12

3,002,248,156

100%

2,294,191

2,081,347

(49,979)

 

(a) The difference between the balance of investment and equity participation in the VRG corresponds to the net effect of  R$30,233 from sale leaseback, mentioned above under (a)

 

14. Earnings or Loss per Share   

Although there are differences between common and preferred shares in terms of voting rights and priority in case of liquidation, the Company’s preferred shares are not entitled to receive any fixed dividends. Rather, preferred shareholders are entitled to receive dividends per share in the same amount of the dividends per share paid to common shareholders. Therefore, the Company understands that, substantially,  there is no difference between preferred shares and common shares, and, accordingly, basic and diluted earnings or loss per share are calculated equally for both shares.

Consequently, basic earnings or loss per share are computed by dividing income or losses by the weighted average number of all classes of shares outstanding during the period. Diluted earnings or loss per share are computed including stock options granted to key management and employees using the treasury stock method when the effect is dilutive. The antidilutive effect of all potential shares is disregarded in calculating diluted earnings or loss per share.

 

 

 

Individual and Consolidated (IFRS and BRGAAP)

 

03/31/12

 

03/31/11

Numerator

 

 

 

Income (loss) for the period

(41,404)

 

69,396

 

 

 

 

Denominator

 

 

 

Weighted average number of outstanding shares (in thousands)

270,390

 

269,806

 

 

 

 

Effect of dilutive securities

 

 

 

Stock Option Plan (in thousands)

-

 

358

 

 

 

 

Adjusted weighted average number of outstanding shares and diluted presumed conversions (in thousands)

270,390

 

270,164

 

 

 

 

Basic earnings (loss) per share

(0.153)

 

0.257

Diluted earnings (loss) per share

(0.153)

 

0.257

 

Page 38 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

Diluted earnings or loss per share are calculated by considering the instruments that may have a potential dilutive effect in the future. As of March 31, 2012, the strike price of vested stock options under the 2009 plans is lower than the average market quotation for the period (in-the-money),even when the vesting stock options expenses are included in the strike price of the expenses that will be incurred, of the “vesting” option. However, due to the loss reported for period ended on March 31, 2012, these shares have anti-dilutive effect and, therefore, are not considered in the total number of outstanding shares.

15. Property, Plant and Equipment

Individual

The balance correspond to advances for acquisition of aircraft, related to prepayments made based on contracts with Boeing Company to acquire 100 aircrafts 737-800 Next Generation (101 aircrafts as of 31 December 2011) in the amount of R$428,915 (R$359,515 at December 31, 2011) and the right on the residual value of aircraft in the amount of R$417,163 (R$417,163 at December 31, 2011), both held by the subsidiary GAC.

Consolidated

 

03/31/2012

 

12/31/2011

 

Weighted anual depreciation rate

 

Cost

 

Accumulated

depreciation

 

Net

amount

 

Net

amount

Flight equipment

 

 

 

 

 

 

 

 

 

Aircraft under finance leases

4%

 

2,942,892

 

(597,746)

 

2,345,146

 

2,377,234

Sets of replacement parts and spare engines

4%

 

912,324

 

(182,632)

 

728,692

 

733,095

Aircraft reconfigurations / overhauling

30%

 

542,280

 

(262,843)

 

279,437

 

253,655

Aircraft and safety equipment

20%

 

1,852

 

(939)

 

913

 

822

Tools

10%

 

26,188

 

(8,206)

 

17,982

 

18,387

 

 

 

4,425,536

 

(1,053,366)

 

3,372,170

 

3,383,193

 

-

 

 

 

 

 

 

 

 

Impairment losses  

-

 

(50,653)

 

-

 

(50,653)

 

(50,653)

 

 

 

4,374,883

 

(1,053,366)

 

3,321,517

 

3,332,540

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment in use

 

 

 

 

 

 

 

 

 

Vehicles

20%

 

9,996

 

(7,171)

 

2,825

 

2,969

Machinery and equipment

10%

 

47,816

 

(13,566)

 

34,250

 

31,573

Furniture and fixtures

10%

 

20,184

 

(9,872)

 

10,312

 

10,323

Computers and peripherals

20%

 

46,220

 

(29,093)

 

17,127

 

15,712

Communication equipment

10%

 

2,994

 

(1,517)

 

1,477

 

1,334

Facilities

10%

 

4,498

 

(2,739)

 

1,759

 

1,854

Maintenance center – Confins

7%

 

105,971

 

(14,593)

 

91,378

 

92,047

Leasehold improvements

20%

 

50,504

 

(20,702)

 

29,802

 

15,115

Construction in progress

-

 

5,866

 

-

 

5,866

 

21,936

 

 

 

294,049

 

(99,253)

 

194,796

 

192,863

 

 

 

4,668,932

 

(1,152,619)

 

3,516,313

 

3,525,403

 

 

 

 

 

 

 

 

 

 

Advances for acquisition of aircraft

-

 

432,098

 

-

 

432,098

 

365,067

 

 

 

 

 

 

 

 

 

 

 

 

 

5,101,030

 

(1,152,619)

 

3,948,411

 

3,890,470

 

Page 39 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

Changes in property, plant and equipment balances are as follows:

 

Property, plant and equipment under finance lease

 

Others flight equipment (a)

 

Advances for acquisition of property, plant and equipment

 

Others

 

Total

As of December 31, 2010

As of December 31, 2010

2,210,433

 

751,816

 

323,661

 

175,058

 

3,460,968

Additions from Webjet’s acquisition

-

 

65,328

 

-

 

6,264

 

71,592

Additions

371,262

 

300,915

 

273,984

 

38,576

 

984,737

Disposals

-

 

(3,383)

 

(232,578)

 

(5,132)

 

(241,093)

Depreciation

(204,461)

 

(136,120)

 

-

 

(21,903)

 

(362,484)

Impairment losses

-

 

(23,250)

 

-

 

-

 

(23,250)

As of December 31, 2011

2,377,234

 

955,306

 

365,067

 

192,863

 

3,890,470

Additions

18,484

 

91,481

 

89,355

 

8,853

 

208,173

Disposals

-

 

(20,426)

 

(22,324)

 

(114)

 

(42,864)

Depreciation

(50,572)

 

(49,990)

 

-

 

(6,806)

 

(107,368)

As of March 31, 2012

2,345,146

 

976,371

 

432,098

 

194,796

 

3,948,411

 

(a)     Additions in 2011 primarily represent total estimated costs to be incurred relating to the reconfiguration of aircraft when returned and improvement costs relating to major overhauled of engine under operating lease.

 

 

16. Intangible assets

Individual

As of March 31, 2012, the balance in the Parent Company in the amount of R$67 refers to software (R$89 as of December 31, 2011).

Consolidated

 

Goodwill (a)

 

Trademarks

 

Airport operating licenses

 

Software

 

Total

Balance as of December 31, 2010

542,302

 

63,109

 

560,842

 

100,924

 

1,267,177

Additions from Webjet’s acquisition

 

 

 

 

 

 

209

 

209

Additions

-

 

-

 

-

 

73,598

 

73,598

Disposals

-

 

-

 

-

 

(8,936)

 

(8,936)

Amortization

-

 

-

 

-

 

(26,149)

 

(26,149)

Provisional fair value from Webjet’s acquisition (note 13)

-

 

-

 

478,058

 

-

 

478,058

Balance at December 31, 2011

542,302

 

63,109

 

1,038,900

 

139,646

 

1,783,957

Additions

-

 

-

 

-

 

10,955

 

10,955

Amortization

-

 

-

 

-

 

(11,614)

 

(11,614)

Balance as of March 31, 2012

542,302

 

63,109

 

1,038,900

 

138,987

 

1,783,298

 

Page 40 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

17. Short and Long-term Debt

     

 

             
      Effective average interest rate (p.a.)

 

Individual

Consolidated

 

Maturity

 

03/31/2012

 

03/31/2012

 

12/31/2011

 

03/31/2012

 

12/31/2011

Short-term debt:

 

                   

Local currency:

                     

Debentures IV

Sep, 2015

 

11.33%

 

-

 

-

 

-

 

595,160

Debentures V

Jun, 2017

 

11.53%

 

-

 

-

 

-

 

493,284

BNDES loan Safra

Oct, 2014

 

11.50%

 

-

 

-

 

29,956

 

29,956

Santander

Oct, 2012

 

11.63%

 

40,676

 

40,676

 

40,676

 

40,676

Citibank

Dec, 2012

 

9.92%

 

-

 

-

 

17,905

 

19,401

BNDES (direct)

Jul, 2012

 

8.66%

 

-

 

-

 

4,784

 

8,372

BDMG

Mar, 2018

 

9.00%

 

-

 

-

 

4,019

 

3,600

Industrial CDB

Mar, 2012

 

-

 

-

 

-

 

-

 

1,250

Banco IBM

Mar, 2017

 

12.17%

 

-

 

-

 

3,031

 

-

Working Capital/ Banco Itaú

Mar, 2013

 

12.34%

 

-

 

-

 

85,000

 

-

Interests

       

-

 

-

 

62,159

 

23,421

         

40,676

 

40,676

 

247,530

 

1,215,120

Foreign currency

                     

(in U.S. Dollars):

                     

Working Capital

Mar, 2012

 

3.42%

 

-

 

-

 

-

 

95,894

IFC

Jul, 2013

 

4.54%

 

-

 

-

 

22,777

 

31,264

FINIMP

Sep,2012

 

3.95%

 

-

 

-

 

10,298

 

3,127

Aeroturbine

Dec,2012

 

-

 

-

 

-

 

2,900

 

4,579

Interests

       

32,735

 

38,799

 

31,628

 

40,701

         

32,735

 

38,799

 

67,603

 

175,565

         

73,411

 

79,475

 

315,133

 

1,390,685

                       

Finance lease

Mar, 2013

     

-

 

-

 

154,218

 

161,755

Total short-term debt

       

73,411

 

79,475

 

469,351

 

1,552,440

                       

Long-term debt:

                     

Local currency:

                     

Debentures IV

Sep, 2015

 

11.33%

 

-

 

-

 

595,483

 

-

Debentures V

Jun,2017

 

11.53%

 

-

 

-

 

493,589

 

-

Safra

Dec,2015

 

12.74%

 

-

 

-

 

196,217

 

196,000

BNDES – Loan Safra

Out, 2014

 

11.50%

 

-

 

-

 

35,612

 

42,837

BDMG

Mar, 2018

 

9.00%

 

-

 

-

 

24,971

 

25,851

Banco IBM

Mar, 2017

 

12.17%

 

-

 

-

 

12,000

 

-

         

-

 

-

 

1,357,872

 

264,688

Foregn Currency

Foreign currency

                     

(in U.S. Dollars):

                     

Senior bond I

Apr, 2017

 

7.50%

 

409,972

 

421,669

 

382,641

 

393,532

Senior bond II

Jul,2020

 

9.25%

 

535,060

 

550,471

 

535,060

 

550,471

Perpetual bond

-

 

8.75%

 

364,420

 

375,160

 

326,156

 

335,768

         

1,309,452

 

1,347,300

 

1,243,857

 

1,279,771

         

1,309,452

 

1,347,300

 

2,601,729

 

1,544,459

                       

Finance lease

Dec, 2021

     

-

 

-

 

1,802,463

 

1,894,549

Total long-term debt

       

1,309,452

 

1,347,300

 

4,404,192

 

3,439,008

         

1,382,863

 

1,426,775

 

4,873,543

 

4,991,448

                       

 

Page 41 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The maturities of long-term debt for the next twelve months as of March 31, 2012, are as follows:

 

 

Individual

 

 

After

2016

 

Without maturity date

 

Total

Foreign currency

 

 

 

 

 

 

(Dollars):

 

 

 

 

 

 

Senior bond I

 

409,972

 

-

 

409,972

Senior bond II

 

535,060

 

-

 

535,060

Perpetual bond

 

-

 

364,420

 

364,420

Total

 

945,032

 

364,420

 

1,309,452

 

 

Consolidated

 

2013

 

2014

 

2015

 

2016

 

After

2016

 

Without maturity date

 

Total

Local currency:

 

 

 

 

 

 

 

 

 

 

 

 

 

BNDES – Loan Safra

21,674

 

13,938

 

-

 

-

 

-

 

-

 

35,612

Safra

65,406

 

65,406

 

65,405

 

-

 

-

 

-

 

196,217

BDMG

6,076

 

4,810

 

4,511

 

4,511

 

5,063

 

-

 

24,971

IBM

1,500

 

3,000

 

3,000

 

3,000

 

1,500

 

-

 

12,000

Debêntures

-

 

-

 

595,483

 

246,795

 

246,794

 

-

 

1,089,072

 

94,656

 

87,154

 

668,399

 

254,306

 

253,357

 

-

 

1,357,872

Foreign currency

Foreign currency

 

 

 

 

 

 

 

 

 

 

 

 

 

(Dollars):

 

 

 

 

 

 

 

 

 

 

 

 

 

Senior bond I

-

 

-

 

-

 

-

 

382,641

 

-

 

382,641

Senior bond II

-

 

-

 

-

 

-

 

535,060

 

-

 

535,060

Perpetual bond

-

 

-

 

-

 

-

 

-

 

326,156

 

326,156

 

-

 

-

 

-

 

-

 

917,701

 

326,156

 

1,243,857

Total

94,656

 

87,154

 

668,399

 

254,306

 

1,171,058

 

326,156

 

2,601,729

                           

 

Page 42 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The fair values of senior and perpetual bonds, as of March 31, 2012, are as follows:

 

 

Individual

 

Consolidated

 

 

Book

 

Market (a)

 

Book

 

Market (a)

Senior bonds (I and II)

 

945,032

 

968,898

 

917,701

 

941,556

Perpetual bonds

 

364,420

 

307,370

 

326,156

 

269,106

 

(a)           Senior and perpetual bonds market prices are obtained through market quotations and exchange rate variation.

 

Finimp

 

On March 21, 2012, the Company, through its subsidiary VRG, raised the amount of US$3,985, corresponding to R$7,261 in the Banco do Brasil,.The purpose of this loan was the purchase of parts for aircraft. On March 31, 2012, the amount recorded in current liabilities was R$10,298 (R$3,127 recorded in current liabilities at December 31, 2011). As security for this operation there are two Promissory Note in the amount of U.S.$ 8,082.

 

Working Capital

On March 15, 2012, the Company settled this loan in foreign currency, raised on March 21, 2011 in the amount of R$85,000 (USD51,121), an effective rate of 3.42% and raised a line new a working capital loan with Banco Itaú in the amount of R$85,000, with no borrowing costs, with an effective rate of 12.34% per annum and maturing on March, 2013. As of March 31, 2012 the balance recorded in current liabilities was R$85,000.

Banco IBM

On March 23, 2012 the Company, through its subsidiary VRG, signed a floating rate guaranteed loan in the amount of R$15,031 in domestic currency with the Banco IBM S.A., with no borrowing costs. The funds designed to finance the acquisition of machinery and provision of information technology. The loan has a term of 60 months maturing March 26, 2017, with semi-annual amortization of principal and interest. The interest rate is calculated based on the CDI plus 2.42% pa, effective rate of 12.17% pa. On March 31, 2012 the balance recorded in current liabilities and noncurrent was R$ 3,031 and R$12,000 respectively.

Finance leases

Future payments of US dollar-denominated finance lease installments are as follows:

 

Consolidated (IFRS and BRGAAP)

 

03/31/2012

 

12/31/2011

2012

202,976

 

281,165

2013

284,463

 

292,835

2014

284,447

 

292,819

2015

276,078

 

284,205

2016

268,194

 

276,098

After 2016

1,090,148

 

1,118,240

Total minimum lease payments

2,406,306

 

2,545,362

Less total interest

(449,625)

 

(489,058)

Present value of minimum lease payments

1,956,681

 

2,056,304

Less short-term installment portion

(154,218)

 

(161,755)

Long-term installment portion

1,802,463

 

1,894,549

 

Page 43 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The discount rate used to calculate the present value of the minimum leasing payments is 6.10% as of March 31, 2012 (6.10% as of December 31, 2011). There are no significant differences between the present value of minimum leasing payments and the fair value of these financial liabilities.

The Company extended the maturity date of financing for some of its aircraft leased for 15 years using the SOAR framework (mechanism for extending financing amortization and repayment), which enables performing calculated withdrawals to be made for a bullet payment settlement at the end of the lease agreement. As of March 31, 2012, the withdrawals made for the repayment at maturity date of the lease agreement amount to R$61,768 (R$59,552 as of December 31, 2011), are recorded in long-term debt.

Covenants

VRG has restrictive covenants ("covenants") in its financing agreements with the following financial institutions: IFC, BNDES, Bradesco  (Debenture V) and Banco do Brasil (Debentures IV e V).

The restrictive covenants measures for these loans are: (i) net debt / EBITDAR, (ii) Current Assets / Current Liabilities, (iii) EBITDA / Debt Service, (iv) Short-term Debt / EBITDA, (v) Net debt/ EBITDA and (vi) Debt Coverage Ratio (ICD).

On March 31, 2012, the Company and its subsidiaries did not reach the minimum standards established for the financing from the IFC, BNDES and the Debentures IV and V, bond to EBITDA and EBITDAR due to accumulated losses in the year ended March 31, 2012.

VRG issued to BNDES a letter of guarantee of R$14.5 million, whose amount exceeds the current debt, and is not therefore subject to liquidity problems in case it is required to settle such debts.

On March 15, 2012, the Company obtained authorization to non-declaration of acceleration and / or application of any penalty on breach of its restrictive contractual clauses. This was deliberate release of the Company in General Meeting of Debenture Holders of the fourth and fifth issues of debentures for the calculation periods ended March 31, 2012 and June 30, 2012. As a result of this authorization, the company is defaulting in its obligations agreed upon in writing of the debentures, thus no need to reschedule its debt in the short term on March 31, 2012, in order to meet the Brazilian and international accounts standards.

Page 44 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

18.  Advance Ticket Sales

As of March 31, 2012, the balance of advance ticket sales in current liabilities of R$721,583 (R$744,743 as of December 31, 2011) is represented by 5,167,908 tickets sold and not yet used (4,364,524 as of 31 December 2011) with 70 days of average term of use (75 days as of December 31, 2011).

19.      Smiles Deferred Revenue

 

As of March 31, 2012, the balance of Smiles deferred revenue is R$79,695 and R$228,550 classified in the current and non-current liabilities, respectively (R$71,935 and R$214,779 as of December 31, 2011). The number of miles open on March 31, 2012 amounted to 25,072,974,028   (23,004,285,890 on December 31, 2011).

20. Advances from Customers

 

As of March 31, 2012, the Company recognized R$15,063 (R$30,252 on December 31,2011), as detailed below:

Operating Agreement- Co-Branded 

The subsidiary VRG, signed with Banco Bradesco S.A. and Banco do Brasil S.A., in September 2009, an Operating Agreement for the sale of miles and right to use the database of the Smiles mileage program, and right of use of Smiles brand related to the credit card issues in Co-Branded format. The agreement is effective for five years.

The mileage sells was registered as advances from customers and as of March 31,2012 the balance of R$1,200 (R$9,620 as of December 31,2011) represented by remaining miles which were not transferred to the customers mileage account. The right of data bank use of Smiles mileage program was registered on other current and noncurrent liabilities and is recognized on cargo and other revenue at straight line basis according to the agreement period. The right of use the Smiles brand on credit card was recognized on cargo and other revenue as of July, 2009.

CVC Advance

The Company, through its indirect subsidiary Webjet, holds an advance made ​​on October 26, 2011 in the amount of R$25,000, related to an agreement signed with CVC, to buy tickets from Webjet. As of March 31,2012, the Company has an amount of R$13,511 (R$20,632 on December 31,2011)

Advances Banco Patagônia S.A.

The subsidiary VRG, signed with Banco Patagônia SA, in April 2011, a contract of sale and granting of miles, in order to encourage the use of credit cards from Banco Patagônia by its customers for the accumulation of points your Incentive Program called Club Patagonia. The term of the contract is one year, renewable for the same period through additive signed between the parties. On the period ended on  March 31,2012 the Company received an advance related to this agreement in the amount of R$352.

Page 45 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

21. Taxes Payable

 

 

 

Individual (BRGAAP)

 

Consolidated (IFRS and BRGAAP)

 

 

03/31/12

 

12/31/11

 

03/31/12

 

12/31/11

 

 

 

 

 

 

 

 

 

PIS and COFINS

 

-

 

-

 

114,431

 

107,987

REFIS

 

8,052

 

8,212

 

23,774

 

24,249

IRRF on payroll

 

6

 

5

 

15,877

 

26,372

ICMS

 

-

 

-

 

15,335

 

12,602

Import tax

 

-

 

-

 

3,345

 

3,410

CIDE

 

33

 

556

 

629

 

1,274

IOF

 

198

 

80

 

198

 

670

IRPJ and CSLL to collect

 

2,502

 

1,433

 

18,229

 

8,573

Others

 

11

 

839

 

5,107

 

4,534

 

 

10,802

 

11,125

 

196,925

 

189,671

 

 

 

 

 

 

 

 

 

Current

 

3,305

 

3,233

 

79,970

 

76,736

Noncurrent

 

7,497

 

7,892

 

116,955

 

112,935

 

PIS and COFINS

With the beginning of the non-cumulative calculation system of taxes on revenue PIS (Law
10637/02) and COFINS (Law 10833/03), the subsidiary VRG implemented those rules and challenged in the courts the rate used to calculate these taxes. The provision recorded in balance sheet as of March 31, 2012, amounting to R$114,431 (R$107,987 as of December 31, 2011) includes the unpaid portion, adjusted for inflation using the SELIC. There are escrow deposits in the amount of R$79,005 (R$77,539 as of December 31, 2011) to ensure the suspension of the tax collection. On January 9, 2012, the Company filed the withdrawal of judicial process and is awaiting review and approval of the conversion of deposits by the Judicial Court.
Until March 31, 2012 the Company received no response from the judiciary regarding the withdrawal of the case above.

Page 46 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

22. Provisions

 

 

 

Insurance provision

 

Provision for anticipated return of aircraft

 

Return of aircraft and engine

 

Litigation

 

Total

Balance as of December 31, 2011

23,499

 

26,263 

 

181,044

 

75,944

 

306,750

Additional provisions recognized

-

 

783

 

18,905

 

5,353

 

25,041

Utilized provisions

(13,342)

 

 -

 

(13,158)

 

(1,590)

 

(28,090)

Foreign exchange

(1,613)

 

(724)

 

(1,421)

 

-

 

(3,758)

Balance as of March 31, 2012

8,544

 

26,322 

 

185,370

 

79,707

 

299,943

                 

 

Balance as of December 31, 2011

                 

Current

23,499

 

16,252

 

35,817

 

-

 

75,568

Noncurrent

-

 

10,011 

 

145,227

 

75,944

 

231,182

 

23,499

 

26,263 

 

181,044

 

75,944

 

306,750

                 

 

Balance as of December 31, 2012

                 

Current

8,544

 

16,169

 

46,191

 

-

 

70,904

Noncurrent

-

 

10,153 

 

139,179

 

79,707

 

229,039

 

8,544

 

26,322 

 

185,370

 

79,707

 

299,943

 

Provision for anticipated return of Webjet’s aircraft

In 2011, according to the strategic planning of Webjet, provision was made for anticipated return of aircraft. This provision was calculated based on the return flow of 14 aircraft Boeing 737-300 with operating leases contracts, as part of the Company's fleet renewal. The anticipated returns from aircraft are scheduled to occur between 2012 and 2013 and the original maturities of leases are in between 2012 to 2014.

Return of aircraft and engines

The provision for return considers the costs that meet the contractual conditions for the return of engines maintained under operating leases, as well as the costs to reconfigure the aircraft without purchase option, as described in return conditions of lease contracts, which the counterpart is capitalized in the fixed assets (aircraft reconfigurations/overhauling), note 15.

Lawsuits

As of March 31, 2012, the Company and its subsidiaries are parties to 23,843 lawsuits and administrative proceedings. The lawsuits and administrative proceedings are classified into Operation (those arising from the Company’s normal course of operations), and Succession (those arising from the succession of former Varig S.A. obligations). Under this classification, the number of proceedings is as follows:

 

Page 47 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Operation

 

Succession

 

Total

Civil lawsuits

13,336

 

643

 

13,979

Civil proceedings

1,707

 

18

 

1,725

Civil miscellaneous

44

 

1

 

45

Labor lawsuits

4,397

 

3,615

 

8,012

Labor proceedings

80

 

2

 

82

Total

19,564

 

4,279

 

23,843

                                                            

The civil lawsuits are primarily related to compensation claims generally related to flight delays, flight cancellations, baggage loss, and damages. The labor claims primarily consist of discussions related to overtime, hazard pay, and pay differences.

The provisions related to civil and labor suits, whose likelihood of loss is assessed as probable are as follows:

 

03/31/12

 

12/31/11

Civil

35,637

 

34,101

Labor

44,070

 

41,843

 

79,707

 

75,944

 

Provisions are reviewed based on the progress of the proceedings and history of losses based on the best current estimate for labor and civil lawsuits.

There are other lawsuits assessed by management and its legal counsel as possible risks, in the estimated amount as of March 31, 2012 of R$29,888 for civil claims and R$18,085 for labor claims (R$33,221 and R$16,019 as of December 31, 2011 respectively), for which no provisions are recognized.

On March 31, 2012 the Company was party to three (03) labor lawsuits in France due to debts of the former Varig S.A. The amount involved in the discussions, not provisioned, is approximately R$5,103 (corresponding to € 2.1 million).

The Company and its subsidiaries are challenging in court the ICMS levied on aircraft and engines imported under aircraft lease transactions without purchase options in transactions carried out with lessors headquartered in foreign countries. The Company’s and its subsidiaries’ management understands that these transactions represent simple leases in view of the contractual obligation to return the assets that are the subject matter of the contract. Management believes there are no the evidence of goods circulation and so, there are no legal events to generate ICMS taxation. Based on the legal counsel opinion and supported by similar lawsuits with favorable decisions to taxpayers by the Superior Court of Justice (STJ) and Supreme Federal Court (STF) in the second quarter of 2007, the Company understands that the likelihood of loss is remote, and thus did not recognize provisions for these amounts. The estimated aggregated amount of the ongoing lawsuits related to the non-levy of ICMS tax on said imports is R$208,006 as of March 31, 2012 (R$205,102 as of December 31, 2011) adjusted for inflation, not including later payment charges.

Page 48 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

23.      Shareholders’ Equity

 

a)                  Issued capital

 

As of March 31, 2012 and December 31, 2011, the Company’s capital is represented by 270,390,004 shares, of which 137,032,734 are common and 133,357,270 are preferred. The Fundo de Investimento em Participações Volluto is the Company’s controlling fund, which is equally controlled by Constantino de Oliveira Júnior, Henrique Constantino, Joaquim Constantino Neto, and Ricardo Constantino.

Shares are held as follows:

       

     

 

03/31/2012

 

12/31/2011

 

Common

 

Preferred

 

Total

 

Common

 

Preferred

 

Total

Fundo Volluto

100.00%

 

21.81%

 

61.44%

 

100.00%

 

22.21%

 

61.63%

Delta Airlines, Inc

-

 

6.22%

 

3.07%

 

-

 

6.22%

 

3.07%

Wellington Management Company

-

 

5.04%

 

2.49%

 

-

 

5.04%

 

2.49%

Fidelity Investments

-

 

5.27%

 

2.60%

 

-

 

5.27%

 

2.60%

Treasury shares

-

 

2.79%

 

1.38%

 

-

 

2.79%

 

1.38%

Other

-

 

1.51%

 

0.74%

 

-

 

1.50%

 

0.74%

Free float

-

 

57.36%

 

28.29%

 

-

 

56.97%

 

28.09%

 

100.00%

 

100.00%

 

100.00%

 

100.00%

 

100.00%

 

100.00%

                       

 

The authorized share capital as of March 31, 2012 is R$4.0 billion (R$4.0 billion on December 31,2011). Within the authorized limit, the Company can, as approved by the Board of Directors, increase its capital regardless of any amendment to its bylaws, by issuing shares, without necessarily keeping the proportion between the different types of shares. The Board of Directors will define the issuance conditions, including price and payment term.

The advance for future capital increase of R$579 refers to the shares subscribed by minority shareholders from the auction of surplus. This increase is part of the transaction that was initiated on December 21, 2011 due to increased capital of the Company approved by the Board, on the same date.

The price of Company shares as of March 31, 2012 are quoted, in the São Paulo Stock Exchange – BOVESPA, in the amount of R$12.19 and US$6.73 (R$12.44 and US$6.63 on December 31,2011) in New York Stock Exchange – NYSE. The book value per share as of March 31, 2012 is R$8.32 (R$8.16 as of December 31, 2011).

 

Page 49 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

b)         Retained earnings

i. Legal reserve

It is recognized by allocating 5% of profit for the year after the absorption of accumulated losses in accordance with Article 193 of Law 11,638/07, limited to 20% of the capital, according to the Brazilian Corporate Law and the Company’s bylaws. On December 31, 2011, was used in its entirety to absorb losses.

ii. Reinvestment reserve

The reserve of retained earnings was constituted under Article 196 of Law 6.404/76, which intended to use in planned investments in the capital budget, approved at the Board of Directors. As of December 31, 2011 was used in its entirety to absorb losses.

c)         Dividends  

The Company’s bylaws provide for a mandatory minimum dividend to common and preferred shareholders, in the aggregate of at least 25% of annual adjusted profit. The Brazilian corporate law, permits the payment of cash dividends only from retained earnings, and certain reserves recognized in the Company’s statutory accounting records.

d)         Treasury shares

As of March 31, 2012, the Company has 3,724,225 treasury shares, totaling R$51,377, with a fair value of R$45,398 (R$51,377 in shares with fair value of R$46,329 as of December 31, 2011).

e)         Share-based payments

As of March 31, 2012, the balance of share-based payments reserve was R$72,352. The Company recorded a share-based payment expense amounting to R$3,750 during the period ended March 31, 2012, with a balancing item in the income statement as personnel costs (R$7,742 as of March 31, 2011).

f)          Other comprehensive income

The fair value measurement of short-term investments classified as available for sale and financial instruments designated as cash flow hedges is recognized in line item Valuation Adjustments to Equity, net of taxes, until maturity of the contracts. The balance as of March 31, 2012 corresponds to a loss of R$20,582 (loss of R$79,268 as of December 31, 2011).

 

Page 50 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

24.      Costs of Services, Administrative and Selling Expenses

 

 

 

Individual (BRGAAP)

 

 

 

03/31/2012

 

03/31/2011

 

 

Total

%

 

Total

%

Salaries (a)

 

(4,136)

(160.3)

 

(8,122)

78.0

Services Rendered

 

-

0.0

 

(1,365)

13.1

Depreciation and amortization

 

(22)

(0.9)

 

(22)

0.2

Other expenses

 

(5)

(0.2)

 

(900)

8.6

Other operating income (b)

 

6,743

261.4

 

-

0.0

 

 

2,580

100.0

 

(10,409)

100.0

 

(a)      The Company recognizes the cost of the Audit Committee and Board of Directors, as well as a plan of share-based compensation in the controller.

(b)     Refer to the gain with sale leaseback transaction on the period.

 

 

 

Consolidated (IFRS and BRGAAP)

 

 

03/31/2012

 

Cost of services

Selling expenses

Administrative expenses

Other operating (expenses) income (b)

Total

%

Salaries

 

(345,796)

(21,798)

(39,733)

-

(407,327)

18.9

Fuel and lubricants

 

(951,566)

-

-

-

(951,566)

44.1

Aircraft rent

 

(141,682)

-

-

-

(141,682)

6.6

Aircraft Insurance

 

(7,947)

-

-

-

(7,947)

0.4

Maintenance materials and repairs

 

(61,246)

-

-

-

(61,246)

2.8

Traffic servicing

 

(73,296)

(12,213)

(37,749)

-

(123,258)

5.7

Sales and marketing

 

-

(92,909)

-

-

(92,909)

4.3

Tax and landing fees

 

(142,182)

-

-

-

(142,182)

6.6

Depreciation and amortization

 

(100,416)

-

(18,566)

-

(118,982)

5.5

Other income (expenses), net

 

(96,744)

(13,618)

(8,088)

6,743

(111,707)

5.1

 

 

(1,920,875)

(140,538)

(104,136)

6,743

(2,158,806)

100.0

               

 

Page 51 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

 

Consolidated (IFRS and BRGAAP)

 

 

03/31/2011

 

Cost of services

Selling expenses

Administrative expenses

Total

%

Salaries

 

(301,955)

(21,764)

(35,719)

(359,438)

20.4

Fuel and lubricants

 

(669,050)

-

-

(669,050)

38.0

Aircraft rent

 

(128,244)

-

-

(128,244)

7.3

Aircraft Insurance

 

(8,441)

-

-

(8,441)

0.5

Maintenance materials and repairs

 

(79,331)

-

-

(79,331)

4.5

Traffic servicing

 

(55,795)

(14,945)

(37,890)

(108,630)

6.2

Sales and marketing

 

-

(91,870)

-

(91,870)

5.2

Tax and landing fees

 

(85,132)

-

-

(85,132)

4.8

Depreciation and amortization

 

(76,333)

-

(13,824)

(90,157)

5.1

Other operating expenses

 

(77,711)

(20,856)

(41,592)

(140,159)

8.0

 

 

(1,481,992)

(149,435)

(129,025)

(1,760,452)

100.0

 

25. Sales Revenue

a)                  The net sales revenue for the period has the following composition:

 

 

Consolidated (IFRS and BRGAAP)

 

03/31/2012

 

03/31/2011

Passenger transportation

1,991,222

 

1,762,329

Cargo transportation and other revenue

278,215

 

218,691

Gross revenue

2,269,437

 

1,981,020

Related taxes

(103,369)

 

(85,298)

Net revenue

2,166,068

 

1,895,722

       

 

The revenues are net of federal, state and municipal taxes, which are paid and transferred to the appropriate government entities.

b)                 Revenue by geographical segment is as follows:

 

 

Consolidated (IFRS and BRGAAP)

 

03/31/2012

%

 

03/31/2011

%

Domestic

2,007,667

92.7

 

1,717,391

90.6

International

158,401

7.3

 

178,331

9.4

Net revenue

2,166,068

100.0

 

1,895,722

100.0

 

Page 52 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

26. Financial result

 

 

 

Individual
(BRGAAP)

 

Consolidated
(IFRS and BRGAAP)

Financial income

 

03/31/2012

03/31/2011

 

03/31/2012

03/31/2011

Income from derivatives

 

-

-

 

60,008

58,012

Income from short-term investments and Investment funds

 

6,889

3,776

 

31,741

34,189

Monetary variation

 

694

281

 

4,378

2,156

Other

 

3,936

2,984

 

7,705

4,514

 

 

11,519

7,041

 

103,832

98,871

Financial expenses

 

 

   

 

 

Loss from derivatives

 

-

-

 

(40,463)

(88,628)

Interest on short and long term debt

 

(29,560)

(27,067)

 

(114,605)

(89,522)

Bank interest and expenses

 

(669)

(1,235)

 

(21,714)

(4,254)

Monetary variation

 

-

-

 

(4,639)

(6,871)

Other

 

(1,419)

-

 

(18,319)

(5,187)

 

 

(31,648)

(28,302)

 

(199,740)

(194,462)

 

 

 

   

 

 

Foreign exchange changes, net

 

27,193

18,028

 

72,697

69,785

 

27. Commitments

 

As of March 31, 2012 the Company had with Boeing 90 firm orders, 10 purchase rights and 40 purchase options granted on non-onerous basis, for aircraft acquisition. The commitments to  purchase aircraft include estimates for contractual price increases during the construction phase. The approximate amount of firm orders, not including contractual discount is R$15,187,954 corresponding to US$8,335,412 (R$15,780,007 on December 31, 2011, corresponding to US$8,412,414)  and are segregated according to the following periods:

 

03/31/2012

 

12/31/2011

2012

730,128

 

896,087

2013

2,854,655

 

2,938,786

2014

4,217,580

 

4,341,879

2015

3,633,063

 

3,740,135

2016

3,115,744

 

3,207,569

After 2016

636,784

 

655,551

 

15,187,954

 

15,780,007

 

Page 53 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

As of March 31, 2012, in addition to the commitments mentioned above, the Company has the amount of R$1,838,589 (R$1,991,402 on December 31, 2011), as advances for aircraft acquisition, as follows:  

 

03/12/2012

 

12/31/2011

2012

335.397

 

443.909

2013

521.760

 

537.137

2014

487.605

 

501.975

2015

395.460

 

407.115

2016

91.925

 

94.634

After 2016

6.442

 

6.632

 

1.838.589

 

1.991.402

 

The installment financed by Long-term debt, collateralized by the aircraft by the U.S. Ex-Im Bank (“Exim”) corresponds approximately to 85% of total cost of the aircraft. Other agents finance the acquisitions with percentages equal or above this percentage, reaching up to the limit of 100%.

The Company is making payments related to the acquisition of aircraft using its own funds, short and long term debt, cash provided by operating activities, short- and medium-term credit facilities, and supplier financing.

The Company leases its entire aircraft fleet using a combination of finance and operating leases, except for 6 aircrafts owned by its indirect subsidiary Webjet. As of March 31, 2012, the total leased fleet was comprised of 145 aircraft  (123 from VRG and 22 from Webjet), which 100 were operating leases and 45 were recorded as finance leases. The Company has 39 financial aircraft with purchase option. During the period ended March 31, 2012, the Company received one aircraft based on lease contracts. There were no returns of aircraft during the period.

 

a)        Operating leases

 

Future payments of non-cancelable operating leases are denominated in U.S. dollars, and are as follows:

 

 

03/31/2012

 

12/31/2011

2012

449,098

 

594,976

2013

524,057

 

517,326

2014

356,100

 

341,486

2015

224,888

 

205,631

2016

177,852

 

157,231

After 2016

537,214

 

452,831

Total minimum leasing payments

2,269,209

 

2,269,481

 

Page 54 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

b)    Sale-leaseback transactions

As of March 31, 2012, the Company recognized R$7,564 and R$14,040, respectively, as ‘Other payables’ in current and non-current liabilities, respectively (R$7,564 and R$15,931as of December 31, 2011), related to gains on sale-leaseback transactions performed by its subsidiary GAC Inc. in 2006, related to eight 737-800 Next Generation aircraft. This gain is being deferred proportionally to the monthly payments of the related lease agreements over the contractual term of 124 months.

On the same date, the Company recorded R$9,373 and R$42,485, in ‘Prepaid expenses’, in current and non-current assets, respectively (R$9,373 and R$44,828 as of December 31, 2011), related to losses on sale-leaseback transactions performed by its subsidiary GAC Inc. during the years of 2007, 2008 and 2009, related to nine aircraft. These losses are being deferred and amortized proportionally to the monthly payments of the operational lease agreements over the contractual term of 120 months.

Additionally, in the period ended March 31, 2012, the Company recorded a gain of R$6,743, recognized directly in profit or loss,since gains and losses on sale-leaseback transactions were not offset over lease terms.

28.      Financial instruments

The Company and its subsidiaries have financial asset and financial liability transactions, which consist partially of derivative financial instruments.

The financial derivative instruments are used to hedge against the inherent risks relating to the operation. The Company and its subsidiaries consider as most relevant risks: fuel price, exchange rate and interest rate. These risks are mitigated by using exchange swap derivatives, U.S. dollar futures and options contracts in the oil market, U.S. dollar and interest.

Management follows a documented guideline when managing its financial instruments, set out in its Risk Management Policy, which is periodically revised by the Financial Policy and Risk Committee, after approved by the Board of Directors. The Committee sets the guidelines and limits, monitors controls, including the mathematical models adopted for a continuous monitoring of exposures and possible financial effects and also prevents the execution of speculative financial instruments transactions.

The gains on these transactions and the application of risk management controls are part of the Committee’s monitoring and are satisfactory to the objectives proposed.

The fair values of financial assets and liabilities of the Company and its subsidiaries are established through information available on the market and according to valuation methodologies.

Most of the derivative financial instruments hired with the purpose of hedging against fuel and exchange rates risks provide scenarios with low probability of occurrence, and thus have lower costs compared to other instruments with higher probability of occurrence. Consequently, despite the high correlation between the hedged item and the derivative financial instruments hired, a significant portion of the transactions presents ineffective results upon settlement, which are presented in the tables below.

Page 55 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The description of the consolidated account balances and the categories of financial instruments included in the balance sheet as of March 31, 2012 and December 31, 2011 is as follows:

 

Measured at fair value through profit and loss

 

Measured at amortized cost (a)

 

03/31/12

 

12/31/11

 

03/31/12

 

12/31/11

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

1,314,624

 

1,230,287

 

 

 

-

Short-term investments

722,445

(c)

1,009,068

 

 

 

-

Restricted cash

119,678

 

109,095

 

 

 

-

Derivatives operation assets

43,272

(b)

4,213

 

 

 

-

Accounts receivable

-

 

-

 

376,485

 

354,134

Deposits

-

 

-

 

431,920

 

455,127

Other credits

-

 

-

 

50,673

 

53,546

Prepayment of hedge premium

6,828

 

11,572

 

 

 

-

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Loans and financing

-

 

-

 

4,873,543

 

4,991,448

Suppliers

-

 

-

 

378,035

 

414,563

Derivatives Obligation

76,877

(b)

115,432

 

-

 

-

 

(a)      The fair value are approximatelly the book values, according to the short term maturity period of these assets and liabilities, except by the amounts related to Perpetual Bonds  and Senior Notes, as disclosed on Note 17.

(b)     The Company records as of March 31, 2012 the amount of R$20,582 in shareholders’ equity as valuation adjustment to equity as a balancing item of this assets and liability.

(c)      The Company manages its investment as a part of its cash to supply its operational expenses.

 

On March 31, 2012 and December 31,2011 the Company had no assets available for sale (Measured at fair value but not through profit and loss).

Risks

The operating activities subject the Company and its subsidiaries to the following financial risks: market (especially currency risk, interest rate risk, and fuel price risk), credit and liquidity risks.

The Company’s risk management policy aims at mitigating potential adverse effects from transactions that could affect its financial performance.

 The Company’s and its subsidiaries’ decisions on the exposure portion to be hedged against financial risk, both for fuel consumption and currency and interest rate exposures, consider the risks and hedge costs.

 

Page 56 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

The Company and its subsidiaries do not usually contract hedging instruments for its total exposure, and thus they are subject to the portion of risks resulting from market fluctuations. The portion of exposure to be hedged is determined and reviewed at least quarterly in compliance with the strategies determined in the Risk Policies Committees.

The relevant information on the main risks affecting the Company’s and its subsidiaries’ operations is as follows:

a) Fuel price risk

As of March 31, 2012, fuel expenses accounted for 44% of the costs and operating expenses of the Company and its subsidiaries. The aircraft fuel price fluctuates both in the short and in the long terms, in line with crude oil and oil byproduct price fluctuations.

In order to mitigate the fuel price risk, the Company and its subsidiaries contract derivatives linked mainly to crude oil and possibly its byproducts. As of March 31, 2012, the Company used options, collar and swap agreements.

Fuel hedge transactions, classified as cash flow hedges are contracted by the counterparties rated as investment grade, or are performed on the NYMEX.

b) Exchange rate risk

The exchange rate risk derives from the possibility of unfavorable fluctuation of foreign currencies to which the Company’s liabilities or cash flows are exposed. The exposure of the Company’s and its subsidiaries’ assets and liabilities to the foreign currency risk mainly derives from foreign currency-denominated leases and financing.

The Company’s and its subsidiaries’ revenues are mainly denominated in Reais, except for a small portion in U.S. dollars, Argentinean pesos, Bolivian bolivianos, Chilean peso, Colombian peso, Paraguay guarani, Uruguayan peso, Venezuela bolivar, etc.

In order to mitigate the currency risk, the Company contracts the following currency derivatives: U.S. dollar futures and options settled on the BM&F-BOVESPA. These transactions may be performed using exclusive investment funds, as described in the Company’s Risk Management Policy.

The Company’s foreign exchange exposure as of March 31, 2012 and December 31, 2011 is as follows:

Page 57 of 70

 


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Individual

 

Consolidated

(BRGAAP)

(IFRS and BRGAAP)

 

03/31/2012

 

12/31/2011

 

03/31/2012

 

12/31/2011

Assets

             

Cash and short-term investments

3,832

 

38,458

 

150,822

 

237,668

Deposits

-

 

-

 

431,920

 

455,127

Hedge premium

-

 

-

 

6,828

 

11,572

Prepaid Expenses with leases

-

 

-

 

32,967

 

30,382

Related parties transaction

492,362

 

593,817

 

-

 

-

Others

 

 

-

 

-

 

6,588

Total assets

496,194

 

632,275

 

622,537

 

741,337

Liabilities

             

Foreign suppliers

16

 

-

 

27,046

 

32,270

Short- and long-term debt

1,342,187

 

1,386,099

 

1,311,460

 

1,455,336

Finance leases payable

-

 

-

 

1,894,913

 

1,996,752

Other leases payable

-

 

-

 

61,768

 

59,552

Provision for aircraft return

-

 

-

 

185,370

 

181,044

Related Parties

216,244

 

222,725

 

-

 

-

Other U.S. dollar-denominated liabilities

-

 

-  

 

6,341

 

7,616

Total liabilities

1,558,447

 

1,608,824

 

3,486,898

 

3,732,570

Exchange exposure in R$

1,062,253

 

976,549

 

2,864,361

 

2,991,233

               

Obligations not recognized in balance sheet

             

Future obligations resulting from operating leases

1,838,589

 

1,991,402

 

1,838,589

 

1,991,402

Future obligations resulting from firm aircraft orders

15,187,954

 

15,780,007

 

15,187,954

 

15,780,007

Total

17,026,543

 

17,771,409

 

17,026,543

 

17,771,409

 

 

 

 

 

 

 

 

Total exchange exposure R$

18,088,796

 

18,747,958

 

19,890,904

 

20,762,642

Total exchange exposure US$

9,927,444

 

9,994,647

 

10,916,472

 

11,068,686

Exchange Rate (R$/US$)

1.8221

 

1.8758

 

1.8221

 

1.8758

 

c) Interest rate risk

The Company and its subsidiaries are exposed to fluctuations in domestic and foreign interest rates, substantially the CDI and Libor, respectively. The highest exposure is in lease transactions, indexed to the Libor, and local debt.

In the period ended March 31, 2012, for interest rate hedges, the Company and its subsidiaries held swap transactions with counterparties rated as investment grade.

d)  Credit risk

The credit risk is inherent in the Company’s and its subsidiaries’ operating and financing activities, mainly represented by trade receivables, cash and cash equivalents, including bank deposits.

The trade receivable credit risk consists of amounts falling due of the largest credit card companies, with credit risk better than or equal to those of the Company and its subsidiaries, and receivables from travel agencies, installment sales, and government sales, with a small portion exposed to risks from individuals or other entities.

 

Page 58 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

As defined in the Risk Management Policy, the Company and its subsidiaries are required to evaluate the counterparty risks in financial instruments and diversify the exposure. Financial instruments are performed with counterparties rated at least as investment grade by S&P and Moody’s, or they are mostly contracted on commodities and futures exchanges (BM&FBOVESPA and NYMEX), which substantially mitigates the credit risk. The Company’s and its subsidiaries’ Risk Management Policy establishes a maximum limit of 20% per counterparty for short-term investments.

e)  Liquidity risk

Liquidity risk takes on two distinct forms: market liquidity risk and cash flow liquidity risk. The first is related to current market prices and varies in accordance with the types of assets and the markets where they are traded. Cash flow liquidity risk, however, is related to difficulties in meeting the contracted operating obligations at the agreed dates.            

As a way of managing the liquidity risk, the Company and its subsidiaries invest its funds in liquid assets (governmental bonds, CDBs, and investment funds with daily liquidity), and the Cash Management Policy establishes that the Company’s and its subsidiaries’ weighted average debt maturity should be higher than the weighted average maturity of the investment portfolio. As of March 31, 2012, the weighted average maturity of the Company’s and its subsidiaries’ financial assets was 6 days and of their financial liabilities was 5 years.

f)  Capital management

The table below shows the financial leverage rate as of March 31, 2012 and December 31, 2011:

 

Consolidated

(IFRS and BRGAAP)

 

03/31/12

 

12/31/11

Shareholder’s equity

2,227,522

 

2,205,911

Cash and cash equivalents

(1,314,624)

 

(1,230,287)

Restricted cash

(119,678)

 

(109,095)

Short-term investments

(722,455)

 

(1,009,068)

Short- and long-term debts

4,873,543

 

4,991,448

Net debt (a)

2,716,796

 

2,642,998

Total capital (b)

4,944,318

 

4,848,909

Leverage ratio (a) / (b)

55%

 

55%

    

The Company and its subsidiaries remain committed to maintaining high liquidity and an amortization profile without pressure in the short-term refinancing.

Page 59 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Derivative financial instruments

The derivative financial instruments were recognized in the following balance sheet line items:

Description

Balance sheet account

03/31/12

 

12/31/11

Rights from derivatives operation (assets)

Rights of derivative transactions

43,272

 

4,213

Obligation from derivatives operation (liabilities)

Liabilities from derivative transactions

76,877

 

115,432

Prepayment of hedge premium

Prepaid expenses

6,828

 

11,572

 

The Company and its subsidiaries adopt hedge accounting and in March 31, 2012, the derivative contracted to hedge currency risks, interest rate risk and fuel price risk as "cash flow hedge", according to the parameters described in the Brazilian accounting standard CPC 38, and 40, technical guidance OCPC03 and International Accounting Standard IAS 39.

Classification of derivatives financial instruments

i) Cash flow hedges

The Company and its subsidiaries use cash flow hedges to hedge against future revenue or expense fluctuations resulting from changes in the exchange rates, interest rates or fuel price, and accounts for actual fluctuations of the fair value of derivative financial instruments in shareholders’ equity until the hedged revenue or expense is recognized.

The Company and its subsidiaries estimates the effectiveness based on statistical correlation methods and the ratio between gains and losses on the financial instruments used as hedge, and the cost and expense fluctuation of the hedged items.

The instruments are considered as effective when the fluctuation in the value of derivatives offsets between 80 % to 125% the impact of the price fluctuation on the cost or expense of the hedged item.

The balance of the actual fluctuations in the fair values of the derivatives designated as cash flow hedges is transferred from shareholders’ equity to profit or loss for the period in which the hedged costs or expenses impacts profit or loss. Gains or losses on effective cash flow hedges are recorded in balancing accounts of the hedged expenses, by reducing or increasing the operating cost, and the ineffective gains or losses are recognized as financial income or financial expenses for the period.

ii) Derivative financial instruments not designated as hedges

The Company and its subsidiaries contracts derivative financial instruments that are not formally designated for hedge accounting. This occurs when transactions are in the short term and the control and disclosure complexity make them unfeasible, or when the change in a derivative’s fair value must be recognized in profit or loss for the same period of the effects of the hedged risk.

 

Page 60 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Designation of hedged item

a)    Fuel hedge  

Due to the low liquidity of jet fuel derivatives traded in commodities exchanges, the Company and its subsidiaries contracts crude oil derivatives and its byproducts—West Texas Intermediate (WTI), Brent and Heating Oil—to hedge against fluctuations in jet fuel prices. Historically, oil prices are highly correlated with jet fuel prices. 

As of March 31, 2012, the Company and its subsidiaries have derivative contracts designated as cash flow hedge fuel, traded ​​in Nymex and OTC markets.

Oil derivative contracts, designated as fuel hedges of the Company and its subsidiaries, are summarized below:

Closing balance at

03/31/12

 

12/31/11

Fair value at end of the period (R$)

50,754

 

(9,217)

Volume hedged for future periods (thousand barrels)

2,303

 

3,631

Gains (losses) with hedge effectiveness recognized in shareholders’ equity, net of taxes (R$)

30,157

 

(20,898)

 

Period ended:

 

03/31/12

 

12/31/11

Loss on hedge effectiveness recognized in operating costs (R$)

 

(1,585)

 

-

Gains (losses) on hedge ineffectiveness recognized in financial income (expenses)

 

(11,944)

 

802

Gains (losses) on hedge ineffectiveness recognized in financial income (expenses) for future periods (R$)

 

6,032

 

(5,181)

Total losses on hedge ineffectiveness recognized in financial income (expenses) (R$)

 

(5,912)

 

(4,379)

Exposure percentage hedged during the period

 

47%

 

42%

 

The table below shows the notional amount of derivatives designated as hedges contracted by the Company and its subsidiaries to hedge future fuel expenses, the average rate contracted for the derivatives, and the percentage of fuel exposure hedged by reporting period as of March 31, 2012:

Market risk factor: Fuel price

 

 

 

 

 

 

 

 

 

Over-the-counter market

 

 

 

 

 

 

 

 

 

 

2T12

 

3T12

 

4T12

 

1T13

 

Total

Percentage of fuel exposure hedged

40%

 

28%

 

10%

 

10%

 

22%

Notional amount in barrels (thousands)

1,623

 

1,162

 

428

 

433

 

3,646

Future rate agreed per barrel (US$) *

124,85

 

113,16

 

99,87

 

112,68

 

116,75

Total in reais **

369,207

 

239,591

 

77,883

 

88,901

 

775,583

 

* Weighted average between call strikes,

** The exchange rate as of 03/31/12 was R$1. 8221/ US$1.00.

 

Page 61 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

a)                  Foreign Exchange Hedge  

 

The Company and its subsidiaries uses derivative contracts as U.S. dollar hedges conducted with BM&FBOVESPA, using an exclusive investments fund as vehicle for contracting risk coverage.

In September 2011, Management, faced with a future economic scenario, decided to suspend temporarily the currency hedge of the Company’s cash flows. In January 2012, the Administration resumed hedging.

As of March 31, 2012, R$80,482 financial assets of investments fund were bank guarantee linked to margin deposits.

As of March 31, 2012, the Company and its subsidiaries do not have foreign exchange derivative contracts designated as U.S. dollar cash flow hedges. Losses from hedge ineffectiveness recognized during the period ended March 31, 2012 and of 2011 are presented below:

Period ended:

03/31/2012

 

12/31/2011

Fair value at the end of period (R$)

791

 

-

Volume hedged for future periods (R$)

365,500

 

-

 

Period ended:

03/31/2012

 

03/31/2011

Total hedge ineffective gains (losses) recognized in financial income (expenses) (R$)

30,715

 

(109)

Percentage exposure hedged during the period

4,65%

 

11%

 

 

2T12

 

3T12

 

4T12

 

Total

Percentage of cash flow exposure

22%

 

20%

 

15%

 

14%

Notional amount (US$)

136,750

 

130,750

 

98,000

 

365,500

Future rate agreed (R$)

1,77

 

1,81

 

1,75

 

1,78

Total in reais

242,173

 

236,988

 

171,441

 

650,602

 

Since July/2011 the Company and its subsidiaries do not have foreign exchange derivative contracts designated as fair value hedge of U.S. dollar.

Period ended:

03/31/2012

 

03/31/2011

Hedge effectiveness losses recognized in financial expenses (R$)

-

 

(7,480)

 

As of March 31, 2012, won the currency swaps (USD x CDI) to hedge a credit facility (working capital) indexed to the dollar. The Company and its subsidiaries not made any new signings this type.The table below shows the amounts recognized in financial income (expenses) related to these transactions:

Page 62 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Period ended

03/31/2012

 

03/31/2011

Losses recognized in financial income (expenses)

(4,211)

 

(20,275)

 

a)                 Interest rate hedges

 

As of March 31, 2012, the Company and its subsidiaries have swap derivatives designated as cash flow hedge for Libor hedge. The following is a summary of Company and its subsidiaries interest rate derivative contracts designated as Libor cash flow hedges:

Closing balance at:

03/31/2012

12/31/2011

Fair value at the end of the period (R$)

(76,878)

(88,440)

Face value at the end of the period (US$)

503,969

505,181

Face value at the end of the period (R$)

918,281

947,618

Hedge losses recognized in shareholders’ equity, net of taxes (R$)

(50,739)

(58,370)

 
 

 

 

 

Period ended:

 

03/31/2012

 

03/31/2011

Hedge effectiveness gains losses recognized in financial expenses (R$)

 

(924)

 

-

         

 

As of March 31, 2012 the Company and its subsidiaries held positions in Libor interest derivative contracts not designated for hedge accounting. The table below shows the amounts recognized in financial income and expenses related to these transactions:

Period ended

03/31/2012

 

03/31/2011

Losses recognized in financial expenses

(123)

 

-

 

Sensitivity analysis of derivative financial instruments

The sensitivity analysis of financial instruments was prepared pursuant to CVM Instruction 475/08, in order to provide a 25% and 50% positive and negative variation in the main risk factor of each financial instrument and, therefore, the impact of such variation on the Company’s financial income and expenses in case such changes occur. The likely scenario is the Company's maintenance market levels.

The estimates presented, since they are based on simple statistics, do not necessarily reflect the amounts to be reported ​​in the next financial statements. The use of different methodologies and /or assumptions may have a material effect on the estimates presented.

The tables below show the sensitivity analysis for market risks and financial instruments considered relevant by management, open position as of March 31, 2012 and based on the scenarios described above.

 

Page 63 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

Consolidated

I)     Fuel risk factor

 

As of March 31, 2012, the Company held derivative contracts for oil WTI, Brent and Heating Oil, totaling 2,303 thousand barrels, maturing from June,2012 to March 2013.

 Derivative fuel

 

   

 

Risk

​​Exposed values

Adverse Scenario Remote

Possible Adverse Scenario

Probable Scenario

 

 

-50%

-25%

 

Curve drop in the price Brent

R$ 50,755

(R$ 173,267)

(R$ 58,945)

R$ 0

 

 

 

 

 

 

Brent

US$ 61,44/bbl

US$ 92,16/bbl

US$ 122,88/bbl

 

II)       Foreign exchange risk factor        

 

As of March 31, 2012, the Company held a derivatives contract in US dollar in the notional value of US$365,500 with maturity in June to December 2012.

 

Consolidated

         

Additional changes in the account balance

 

Risk Factor

 

Exposed amounts as of

 

-50%

03/31/2012

 

-25% 03/31/2012

 

Probable Scenario

 

25%

03/31/2012

 

50%

03/31/2012

 

 

 

03/31/2012

         

03/31/2012

       
                           

Net liabilities

Dollar 

 

R$2,864,361

 

-

 

-

 

-

 

(R$ 716,090)

 

(R$ 1,432,181)

                           

Derivative

Dollar

 

R$ 791

 

(R$ 291,847)

 

(R$ 146,722)

 

-

 

-

 

-

                           

Exchange rate used

 

R$0.9111/US$

 

R$1.3666/US$

 

R$1.8221/US$

 

R$2.2776/US$

 

R$2.7332/US$

 

 

III)    Interest risk factor

 

On March 31, 2012, the Company holds an asset position indexed to the CDI-Cetip overnight rate, financial liabilities indexed to the TJLP and Libor interest, loans indexed to the IPCA and derivatives position in LIBOR.


In the sensitivity analysis of non-derivative financial instruments was considered the scenarios impacts related to quarterly interests of exposed values.

Page 64 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

 

Consolidated

         

Additional changes in account balance

 

Risk factor

 

Exposed amounts at

 

-50%

03/31/2012

 

-25% 03/31/2012

 

Probable scenario

 

25%

03/31/2012

 

50%

03/31/2012

 

 

 

03/31/2012

         

03/31/2012

       
                           

Short-term financial investments

CDI

 

R$ 430,251

 

-

 

-

 

-

 

(R$ 8,067)

 

(R$ 16,134)

                           

Interest derivative

Libor

 

(R$ 76,878)

 

(R$ 68,742)

 

(R$ 34,371)

 

-

 

-

 

-

                           

Debt and finance lease

Libor

 

(R$ 357,177)

 

-

 

-

 

-

 

(R$ 688)

 

(R$ 1,376)

                           

Short and long term debt

TJLP

 

(R$ 70,689)

 

-

 

-

 

-

 

(R$ 84)

 

(R$ 168)

                           

Short and long term debt

IPCA

 

(R$ 29,186)

 

-

 

-

 

-

 

(R$ 49)

 

(R$ 98)

 

Individual

I)         Foreign exchange risk       

 

 

Individual

 

(BRGAAP)

 

Risk Factor

 

Exposed amounts in
03/31/2012

 

-50%
03/31/2012

 

-25%
03/31/2012

 

Probable Scenario
03/31/2012

 

25%
03/31/2012

 

50%
03/31/2012

USdollar-denominated assets and liabilities

Dollar appreciation curve

 

(R$ 1,062,253)

 

-

 

-

 

-

 

-R$ 265,56

 

-R$ 531,13

                         

 

Exchange rate used

       

R$0.9111/US$

 

R$1.3666/US$

 

R$1.8221/US$

 

R$2.2776/US$

 

R$2.7332/US$

 

IFRS

Besides the sensitivity analysis based on the abovementioned standards, the Company and its subsidiaries also analyze the impact of the financial instrument quotation fluctuation on the  Company’s and its subsidiaries’ profit or loss and shareholders’ equity considering:

·                Increase and decrease by 10 percentage points in fuel prices, by keeping constant all the other variables;

·                Increase and decrease by 10 percentage points in dollar exchange rate, by keeping constant all the other variables;

·                Increase and decrease by 10 percentage points in Libor interest rate, by keeping constant all the other variables;

 

Page 65 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

The sensitivity analysis includes only relevant monetary items that are material for the risks above mentioned. A positive number indicates an increase in income and equity when the risk appreciates by 10%.

The table below shows the sensitivity analysis made by the Company’s management, at March 31, 2012 and 2011, based on the scenarios described above:

Fuel:

 

 

Position as of March 31, 2012

 

Position as of March 31, 2011

Increase/(decrease) in fuel prices (percentage)

 

Effect on income before tax (R$ million)

 

Effect on equity (R$ million)

 

Effect on income before tax (R$ million)

 

Effect on equity (R$ million)

10

 

(94.0)

 

(37.2)

 

(294.6)

 

(186.0)

(10)

 

94.0

 

32.1

 

294.6

 

180.6

 

 

 

 

 

 

 

 

 

 

Foreign exchange - USD:

 

 

Position as of March 31, 2012

 

Position as of March 31, 2011

Appreciation/(depreciation) of USD/R$
(percentage)

 

Effect on income before tax (R$ million)

 

Effect on equity (R$ million)

 

Effect on income before tax (R$ million)

 

Effect on equity (R$ million)

10

 

(116.7)

 

(77.0)

 

(385.7)

 

(254.5)

(10)

 

116.7

 

77.0

 

385.7

 

254.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate - Libor:

 

 

Position as of March 31, 2012

 

Position as of March 31, 2011

Increase/(decrease) in Libor (percentage)

 

Effect on income before tax (R$ million)

 

Effect on equity (R$ million)

 

Effect on income before tax (R$ million)

 

Effect on equity (R$ million)

10

 

(0.3)

 

(9.3)

 

(0.5)

 

8.7

(10)

 

0.3

 

9.3

 

0.5

 

(9.4)

 

 

 

 

 

 

 

 

 

     

 Measurement of the fair value of financial instruments

In order to comply with the disclosure requirements for financial instruments measured at fair value, the Company and its subsidiaries must do the grouping of its instruments in Levels 1 to 3, based on observable fair value grades:

a)   Level 1: Fair value measurements are calculated based on quoted prices (without adjustment) in active market or identical liabilities

 

b)   Level 2: Fair value measurements are calculated based on other variables besides quoted prices included in Level 1, that are observable for the asset or liability directly (such as prices) or indirectly (derived from prices); and

 

c)    Level 3: Fair value measurements are calculated based on valuation methods that include the asset or liability but that are not based on observable market variables (unobservable inputs).

 

Page 66 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

The following table states a summary of the Company’s and its subsidiaries’ financial instruments measured at fair value, including their related classifications of the valuation method, as of March 31, 2012:

Financial Instrument

 

Carrying amount

 

Other Significant Observable Factors

(Level 2)

 

 

 

 

 

Cash equivalents

 

1,314,624

 

1,314,624

Short-term investments

 

722,445

 

722,445

Restricted cash

 

119,678

 

119,678

Rights of derivatives transactions

 

43,272

 

43,272

Liabilities from derivative transactions

 

76,877

 

76,877

Prepayment of hedge premium

 

 

6,828

 

6,828

 

29.  Non-cash transactions

 

In the year ended March 31, 2012, the Company and its subsidiaries increased their property, plant and equipment under finance leases in the amount of R$18,484 and reconfiguration / improvement of aircraft in R$18,905 in return for provisions for aircraft returns, these transactions did not affect its cash in the period.

 

30.      Insurance

 

As of March 31, 2012, the insurance coverage by nature, considering the aircraft fleet, and related to the maximum reimbursable amounts indicated in U.S. Dollars, is as follows:

Aeronautical type

In Brazilian reais

 

In US dollar

Guarantee – Hull/war

8,283,387

 

4,546,066

Civil liability per event/aircraft

4,555,250

 

2,500,000

Inventories (base and transit)

309,757

 

170,000

Franchising

5,922

 

3,250

Total loss

9,111

 

5,000

 

Pursuant to Law 10,744, of October 9, 2003, the Brazilian government assumed the commitment to complement any civil liability expenses related to third parties caused by war or terrorist events, in Brazil or abroad, which VRG may be required to pay, for amounts exceeding the limit of the insurance policies effective beginning September 10, 2001, limited to the amount in Brazilian reais equivalent to one billion U.S. Dollars.

Page 67 of 70


 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL INFORMATION RELATED TO THE FIRST QUARTER ENDED ON MARCH 31, 2012

(The Individual and Consolidated Interim Financial Information as of March 31, 2012 were reviewed by Independent Auditors on the extent described on the Report on Review of Interim Financial Information dated on May 03, 2012)

(In Thousands of Reais – R$, except when indicated otherwise) 

 

 

 

31.      Subsequent event

 

In the beginning of March 2011 the Company announced a reduction of approximately 100 flights, aiming to keep the 2012 domestic offer stable in relation of 2011, according with a new demand scenario in the aviation market. In addition, announced on May 03,2012 that the new target is a reduction on domestic offer of  2% in relation of 2011.

 

Page 68 of 70


 

 

(Convenience Translation into English from the Original Previously Issued in Portuguese)

REPORT ON REVIEW OF INTERIM FINANCIAL INFORMATION

To the Board of Directors and Shareholders of

Gol Linhas Aéreas Inteligentes S.A.

São Paulo - SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Gol Linhas Aéreas Inteligentes S.A. and its subsidiaries, included in the Interim Financial Information Form (ITR), for the quarter ended March 31, 2012, which comprises the balance sheet as of March 31, 2012 and the related income statement, statement of comprehensive income, statement of changes in equity and statement of cash flows for the three-month period then ended, including the explanatory notes.

Management is responsible for the preparation of the individual interim financial information in accordance with technical pronouncement CPC 21 - Interim Financial Reporting and the consolidated interim financial information in accordance with technical pronouncement CPC 21 and IAS 34 - Interim Financial Reporting, issued by the International Accounting Standards Board - IASB, as well as for the presentation of such information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with Brazilian and international standards on review of interim financial information (NBC TR 2410 and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the standards on auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Page 69 of 70


 

 

Conclusion on the individual interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with technical pronouncement CPC 21, applicable to the preparation of Interim Financial Information (ITR), and presented in accordance with the standards issued by the Brazilian Securities Commission (CVM).

Conclusion on the consolidated interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying consolidated interim financial information included in the ITR referred to above is not prepared, in all material respects, in accordance with technical pronouncement CPC 21 and IAS 34, applicable to the preparation of Interim Financial Information (ITR), and presented in accordance with the standards issued by the Brazilian Securities Commission (CVM).

Other matters

Interim statements of value added

We also have reviewed the individual and consolidated interim statements of value added (“DVA”), for the three-month period ended March 31, 2012, prepared under the responsibility of Management, the presentation of which is required by the standards issued by Brazilian Securities Commission (CVM), applicable to the preparation of Interim Financial Information (ITR), and is considered as supplemental information for International Financial Reporting Standards - IFRS that do not require the presentation of DVA. These statements were subject to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they are not prepared, in all material respects, in relation to the individual and consolidated interim financial information taken as a whole.

Convenience translation

The accompanying interim individual and consolidated financial information has been translated into English for the convenience of readers outside Brazil.

São Paulo, May 3, 2012

DELOITTE TOUCHE TOHMATSU

André Ricardo A. Paulon

Auditores Independentes

Engagement Partner

Page 70 of 70


 
SIGNATURE
 
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
Date: May 04, 2012
 
GOL LINHAS AÉREAS INTELIGENTES S.A.
By:

/S/ Leonardo Porciúncula Gomes Pereira


 
Name: Leonardo Porciúncula Gomes Pereira
Title:    Executive Vice-President and Chief Financial Officer
 

 

FORWARD-LOOKING STATEMENTS

This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates offuture economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will a ctually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.