GOL Consolidates Fleet Renewal and Revenue Grows by 14.1%

          At the beginning of June, GOL became an effective member of IATA (International Air Transport Association), the world’s largest aviation industry body, representing approximately 230 airlines and concentrating 93% of scheduled international air traffic.

         The second quarter was celebrated with the three awards won by the Company which recognize the Company's performance in 2009 and 2010:

§  “IR Global Rankings2010”: in the 12^th edition of this award, which identify and classify the best Investor Relations practices, GOL won in the “Best Corporate Governance Practices” and “Best IR Website”categories;and

§  “IR Magazine Awards Brazil 2010”: GOL won the award on the “Most Progress in Investor Relations” category among those companies with the highest market capitalization in the country.

These achievements are a result of the Company’s commitment to the market and its mission of bringing people together with safety and intelligence.

Management Comments

GOL concluded several important steps in its growth plans in the second quarter of 2010.

On the operational front, the Company posted the best second-quarter traffic figures since it began operations in 2001, indicating the magnitude of potential demand in Brazil. It also recorded a considerable improvement in quality, which is absolutely essential if it is to fulfill its vision of being the best airline company to fly with, work for and invest in.

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

Operating Performance

Yields

However, excluding non-recurring passenger revenue of R$42mm in 2Q09, 2Q10 yields grew by 0.6% year-over-year.

This improvement over the previous quarter was due to the following factors: (i) the greater concentration of flights during working hours, benefiting business trips; (ii) the reduction in the average stage length due to the smaller number of flights from the South and Southeast to the North and Northeast; (iii) the reduced share of international flights in passenger revenue, given that international yields are lower than those for domestic flights; and (iv) the positive results from the new Fare Categories in 1Q10.

The Company believes that estimated growth for 2H10 will take place against a background of stable yields in relation to 2Q10. In the year as a whole, yields should close at close to 2009 levels.

Domestic Market: Demand

In 2Q10, the industry’s demand (RPK) registered increase of 20.1% over 2Q09, driven by the continuous improvement in Brazil’s economic scenario, especially in May, which recorded the highest confidence indices in the country’s history (measured by the Consumer Confidence Index – ICC and the Current Situation Index – ISA). Compared to 1Q10, domestic demand fell by 11.7%.

GOL’s demand moved up by 17.0% over 2Q09, and declined by 14.5% in comparison with 1Q10. The year-over-year demand rise was fueled by the introduction of the new Fare Categories, which provided a wider array of benefits for the business segment, and increased frequencies on the Company’s route network, especially for business flights, privileging yields in a seasonally weak quarter, as mentioned above.

The demand decline in comparison with the previous three months, was due to seasonality, given that the first quarter is the second best of the year in terms of traffic volume (behind the fourth), thanks to the peak of the summer season in January, while the second quarter is a low season period with no vacations and few holidays.

Domestic Market: Supply and Load Factor

Overall domestic-market seat supply, measured by available seat kilometers (ASK) increased by 18.8% year-over-year and 0.2% over 1Q10, while the average load factor stood at 63.2%, 0.7p.p. more than the 62.5% recorded in 2Q09. The upturn in relation to both quarters reflected expectations of strong demand growth in 2H10.

As a result, GOL's domestic load factor totaled 61.4% in 2Q10, 0.4 p.p. below the 61.8% reported in 2Q09 and 0.3% down on 1Q10, accompanied by a 10.2 p.p. decline in the load factor from 71.6%.

International Market

On the international market, overall demand moved up by 14.1% between 2Q09 and 2Q10, chiefly thanks to the more favorable economic scenario and the 13.5% depreciation of the Dollar against the Real. Overall supply remained virtually flat, with a discreet 0.8% increase, and the overall load factor reached 74.1%, 8.7 p.p. up on 2Q09 and 2.1 p.p. lower than 1Q10 (also due to seasonality).

Demand on GOL’s route network in the international market climbed by 13.7% year-over-year, due to the same factors that affected the industry as a whole, in addition to buoyant demand from the Southern Cone region, which had been jeopardized by the H1N1 influenza outbreak in 2Q09, especially for flights to Argentina and Chile, and the expansion of the Company’s international network with the introduction of new routes between Brazil and the Caribbean (Aruba, Barbados, Curaçao, Panama, Punta Cana and Saint Maarten).

GOL maintained its disciplined capacity management strategy in the international market, recording a 4.3% year-over-year reduction in capacity due to the repositioning of the network (less frequent flights to Chile and Argentina, discontinuation of flights to Lima, Peru, and the creation of new routes to the Caribbean). The capacity of the industry as a whole edged up by 0.8%, mainly due to higher capacity on intercontinental routes.

As a result of this repositioning, plus the upturn in demand, GOL’s international load factor increased by  9.3 p.p., from 49.7% in 2Q09 to 59.1% in 2Q10. Compared to 1Q10, demand dropped by 24.8% and the load factor fell by 14.3 p.p. due to the lack of vacations and holidays in

the second quarter, given that the Company’s international route network is mostly geared towards tourism.

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

Net Revenue

Net revenue totaled R$1,590.9mm in 1Q10, 14.1% up on the R$1,394.0mm recorded in 2Q09, and 8.0% less than the R$1,729.8mm reported in 1Q10, as shown below:

Second-quarter passenger revenue came to R$1,410.7mm, 13.2% more than the R$1,246.5mm recorded in the same period last year (or +17.1%, excluding non-recurring revenue of R$42mm in 2Q09). This improvement was chiefly due to Brazil’s healthy economic scenario,  which resulted in high consumer confidence indices, in turn encouraging demand growth, together with the expansion of the Company's competitive advantages, namely: (i) dynamic fare management, which strengthened quarterly yields; (ii) high operating quality indices (punctuality, regularity, client service and safety), particularly in May and June, when GOL recorded the highest punctuality levels in the industry; (iii) increased frequency between Brazil’s leading airports; and (iv) a focus on short-haul flights – around 95% of GOL's flights are for three hours or less, benefiting business travelers, which is normally the dominant segment in the second quarter.

1Q10 (R$161.9mm), ancillary revenue increased by 11.3%, mainly due to: (i) the 56.5% upturn in cargo revenue, particularly express cargo services, which is highly correlated with the business segment in Brazil; and (ii) the growth in no-show, cancellation, rebooking and refund fees, which are directly related to the Fare Categories, implemented in the beginning of the year to charge these fares if the clients make changes in their purchase with more than 7 days notice.

Given the 14.7% capacity upturn over 2Q09, RASK (revenue per available seat kilometer) fell by 0.5%, from 14.47 cents (R$) to 14.39 cents (R$) (+2.6%, excluding non-recurring revenue of R$42mm in 2Q09). In comparison with the 15.48 cents (R$) recorded in 1Q10, RASK declined by 7.0%, since the 1.1% decline in capacity was partially offset by the 6.9% increase in yields.

Operating Costs and Expenses

Excluding expenses of approximately R$37mm related to fleet renovation, involving  B737-300s  and B767s, total costs would come to R$1,497mm, 14.8 up on 2Q09 and 2.7% down on 1Q10.

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

Operating costs per ASK (CASK) amounted to 13.87 cents (R$) in 2Q10, 2.5% up on the 13.53 cents (R$) recorded in 2Q09, chiefly due to the 15.9% growth in fuel CASK.

However, this upturn in terms of ASKs, was lower than the nominal one, thanks to a combination of: (i) the 14.7% increase in capacity;(ii) the 15.8% rise in aircraft utilization; and (iii) the 1.2% extension of the average stage length in order to prepare GOL’s route network for the high season in the second half. In comparison with 1Q10, CASK grew by 0.8%, due to the 1.1% decline in capacity.

In comparison with the previous quarter, these costs increased by 3.8%, due to the 0.6% growth in the number of departures, the 1.3% rise in aircraft utilization and the 3.3% increase in the price per liter of jet fuel provided by Petrobras. In per-ASK terms, aircraft fuel costs climbed by 15.9% and 4.9%, respectively, over 2Q09 and 1Q10.

Salaries, wages and benefits increased by 12.6%, from R$276.7mm in 2Q09 to R$311.6mm in 2Q10, due to the 6% pay rise approved in December 2009 and the 8.7% expansion of the workforce, especially in the operational, airport and call center areas, in turn fueled by the need to keep pace with the growth in the Company's operations caused by the 12% increase in the number of passengers transported. In comparison to 1Q10, salaries, wages and benefits climbed by 9.5% due to the 2.5% increase in the workforce to keep up with higher demand in 1H10, as well as operational growth (the number of operational aircraft increased from 108 to 109 between the two quarters).

In addition, the Company constituted provisions in the amount of R$10.7 million for employee profit sharing based on the stock option plan. In accordance with IFRS rules, expenses is recognized in the year in which the options plan are granted, followed by a gradual reduction in provisions in the remaining years of the vesting period. In per-ASK terms, these expenses fell by 1.9% over 2Q09 and grew by 10.7% over 1Q10.

Aircraft leasing costs totaled R$136.5mm, virtually identical to the 2Q09 figure (R$136.4mm), given that part of 2Q09 leasing expenses had been renegotiated with lessors for subsequent periods (as disclosed in the 2Q09 release). In the year-over-year comparison, leasing expenses were offset by: (i) the average 13.5% depreciation of the Dollar against the Real between the two periods; (ii) the higher number of aircraft under financial leasing (35 in 2Q10 versus 26 in 2Q09); and (iii) the return of five B737-300s under operational leasing, which helped reduce expenses by approximately R$3.5mm in the quarter.

In comparison to 1Q10, leasing costs fell by 8.9%, chiefly due to the return of the above-mentioned B737-300s under operating leases and the 0.4% appreciation of the Real against the Dollar. In per-ASK terms, these costs declined by 12.7% over 2Q09 and 7.9% over 1Q10.

Aircraft insurance fell by 13.4%, from R$13.0mm in 2Q09, to R$11.3mm in 2Q10, due to the interim reduction in the fleet from 124 to 122 aircraft and the 13.5% appreciation of the Real against the Dollar, given that these contracts are executed in foreign currency.

In comparison to 1Q10, there was a reduction of 12.4%, chiefly due to the return of the B737-300s and the 0.4% appreciation of the Real against the Dollar. In per-ASK terms, these costs fell by 24.5% and 14.1%, respectively, over 2Q09 and 1Q10.

Sales and marketing expenses climbed by 1.8%, from R$86.6mm in 2Q09 to R$88.1mm in 2Q10, as a result of higher commissions paid to credit card administrators due to the increase in direct sales to the detriment of agency sales, partially offset by the elimination of ticket sale commissions for travel agents as of the beginning of February 2010.

Compared to 1Q10, these expenses moved up by 7.3% due to roughly R$13,5mm in advertising expenses resulting from the revitalization of the SMILES and an upturn of approximately R$1.5mm in cargo commission expenses as a result of the increase in the revenue base. In per-ASK terms, sales expenses fell by 11.3% over 2Q09 and climbed by 8.4% over 1Q10.

Landing fees totaled R$77.2mm in 2Q10, 3.2% down on the R$79.8mm recorded in 2Q09, due to fewer international departures and the 13.5% depreciation of the Dollar. Compared to 1Q10, these fees dipped by 1.2% for the same reasons, partially offset by the 1% increase in the number of domestic departures. In per-ASK terms, they fell by 15.6% over 2Q09 and 0.1% over 1Q10.

Aircraft and traffic servicing expenses totaled R$101.4mm in 2Q10, 11.0% up on 2Q09, due to the increase in operational services, generating higher collection, delivery and handling expenses as a result of 8.9% upturn in arrivals and departures.

In comparison to 1Q10, these expenses grew by 2.3% due to the termination of the SABRE system agreement (approximately R$3.0mm) and services expenses around R$2.0mm to adjust the Smiles database during migration from the IBM system to the Siebel (Oracle) system, scheduled for conclusion by the end of 2010, which will add more flexibility and value to the program. In per-ASK terms, aircraft and traffic servicing expenses fell by 3.2% over 2Q09 and rose by 3.4% over 1Q10.

Maintenance, materials and repairs came to R$97.4mm, 28.5% up on the R$75.8mm recorded in 2Q09, due to: (i) around R$9mm from the final stage of the fleet renovation and unification program, with the return of the five remaining B737-300s (out of a total of 11), which are grounded in the non-operational fleet in the final stages of devolution; and (ii) approximately R$28mm from the reactivation of four B767s during the quarter due to growing demand for long-haul charter flights. 

In relation to 1Q10, maintenance costs declined by 28.9%, due to the low season and reduced expenses from engine maintenance. In per-ASK terms, these expenses climbed by 12.0% year-over-year and fell by 28.2% over 1Q10.

Depreciation and amortization expenses totaled R$80.4mm in 2Q10, a hefty 147.6% up on the R$32.5mm reported in 2Q09, due to: (i) the higher number of aircraft under financial leasing (35 in 2Q10, versus 26 in 2Q09); and (ii) the change in the Company’s estimate for the depreciation of maintenance costs for engines under financial leasing, which now have a 5-year depreciation period, whereas the remaining items continue to depreciate over 25 years (as discussed in the 1Q10 release.) 

These expenses climbed by 26.1% over the R$63.8mm reported in 1Q10, due to the same factors. In per-ASK terms, they rose by 115.8% and 27.4%, respectively, over 2Q09 and 1Q10.

Other operating expenses (mainly comprising accommodation, crew travel and accommodation, direct passenger expenses, equipment leasing and general and administrative expenses) totaled R$58.0mm in 2Q10, 29.4% down on 2Q09, as a result of several factors, including: (i) more efficient controls over general and administrative expenses (telephone, water, gas and electricity), as well as losses of inventories, uniforms and other inputs in the operational bases, generating a reduction of around R$16mm; and (ii) gains of approximately R$10mm from the automation of the Company's internal systems (inventories, accounts, billing, legal affairs and accounts receivable, as discussed in the 4Q09 release), which led to tighter controls over provisions, a reduction in general and administrative expenses, and a more accurate classification of costs according to their nature, thereby decreasing the concentration of the “Other expenses” line; (iii) optimization of the Company’s route network; (iv) fewer flight cancellations; (v) lower Dollar expenditure on crew travel and accommodation due to the respective 6.5% and 4.2% reduction in the number of international arrivals (more expensive than domestic ones) compared to 2Q09 and 1Q10, respectively; and (vi) the greater volume of IT equipment under financial leasing, reducing expenses from equipment rentals.

In comparison to 1Q10, these expenses fell by 27.3% for the same reasons mentioned above, partially offset by the 0.6% increase in arrivals and departures. In per-ASK terms, they declined by 38.5% and 26.5%, respectively, over 2Q09 and 1Q10.

Operating Result^*

Excluding the expenses associated with fleet renovation (B737-300s and B767s), the quarter’s operating result came to R$94million, with a margin of 5.9%.

EBITDAR stood at R$274.2mm, with an EBITDAR margin of 17.2%, 1.3 p.p. below the 18.6% recorded in 2Q09 (on EBITDAR of R$258.8mm) and 6.2 p.p. lower than the 23.4% reported in 1Q10 (on EBITDAR of R$405.0mm).Excluding fleet renewal expenses, EBITDAR totaled R$311mm, with a margin of 19.5%.

Hedge Result

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

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

In the second quarter of 2010, the Company recognized a net loss from hedge operations of R$27.0mm (dealt with in more detail in the Financial Result section), with a negative cash impact of R$27.9mm in the same period, given that the Company increased its purchase of oil options to hedge 30% of estimated 12-month consumption, versus the 20% decreed by the hedge policy through 1Q10.

Fuel: fuel consumption hedge transactions, which are effected through crude oil (WTI) derivative contracts, generated losses of R$19.0mm in the quarter.

Of this total, losses of R$1.2mm were considered ineffective (for hedge accounting purposes)  from contracts maturing in 2Q10 (accrual basis), and losses of R$17.8mm from contracts maturing in the future, but which were booked in advance under the financial result.

Foreign exchange: net loss of R$4.0mm, of which losses of R$1.3mm were considered effective and booked pro-rata in the operating expenses lines (leasing, fuel, insurance, etc), and losses of R$2.7mm were considered ineffective and recognized as financial expenses. The Company also reported a R$0.9mm gain booked under financial expenses referring to a Dollar x CDI swap contracted to protect a debt against the exchange variation. This was not designed for hedge accounting purposes.

Interest: net loss of R$4.9mm, of which losses of R$0.7mm were considered effective and booked under the financial result, and losses of R$4.2mm from non-hedge derivatives were booked as financial expenses.

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

** On 06/30/2010, the exchange rate was R$1.8015 / US$1.00.

GOL adopts a hedging policy in order to protect the Company against market fluctuations in fuel prices, exchange rates and interest rates that can substantially harm its operational competitiveness. In order to perform this task, the Company employs a financial risk policy committee, comprising certain members of the Board, an external consultant, and senior

executives. The committee meets quarterly and sets 24-month targets on a rolling basis, in case pre-fixed triggers are reached,. The committee can also meet extraordinarily if any of its members calls a meeting. Management builds its hedge position based on these decisions.

The vast majority of the financial instruments used for hedging purposes consist of WTI or Dollar call options, WTI collars and swaps, foreign exchange and CDI swaps, and fixed and floating interest rate swaps. GOL focuses on simplified derivative structures, aiming to reduce its operating risks and ensure as much compliance as possible with the targets established in its annual budget.

Net Financial Result

The 2Q10 net financial result was an expense of R$113.3mm, versus revenue of R$369.9mm in 2Q09 and an expense of R$133.7mm in 1Q10.

Interest expenses totaled R$81.3mm, 40.9% up on 2Q09, chiefly due to: (i) quarterly interest expenses from debentures in 2Q10 (these debentures were issued in May 2009, so their resulting expenses impacted only one month of 2Q09); and (ii) the larger number of aircraft classified under financial leasing (35 in 2Q10, versus 26 in 2Q09); and (iii) financial discounts granted to travel agents for the pre-sale of business packages. In comparison to 1Q10, however, these expenses increased by 2.5%, chiefly due to the 1.2% appreciation of the Dollar (end of period), affecting interest on the foreign currency debt, which closed 2Q10 at R$2,635.3mm, and the approximate 1.5% upturn in the CDI interbank rate, to which the interest on the debentures is tied

The exchange variation generated an expense of R$29.9mm, mainly due to the impact of the 1.2% appreciation of the Dollar on the Company’s foreign-currency debt (80.6% of its total debt), versus revenue of R$448.4mm in 2Q09 due to the 15.7% appreciation of the Real against the Dollar and an increase in the Company’s foreign-currency loans (84.2% of the total debt). In 1Q10 there was a R$59mm expense due to the 2.3% depreciation of the Dollar

Interest and investment income was positive by R$25.7mm in 2Q10, more than 5.5 times more than the R$3.9mm recorded in 2Q09 and 14.9% up on the R$22.4mm reported in 1Q10, chiefly due to the increase in the Company’s total cash position, which is already equivalent to 24.7% of net revenue in the last twelve months (versus 24.0% in 1Q10 and 9.8% in 2Q09), and the financial gains from investing this cash

Other financial expenses totaled R$4.9mm, versus expenses of R$12.5mm in 2Q09 and R$2.7mm in 1Q10. In comparison with 1Q10, there was an increase of 82.8%, given that, in 2Q09, this line included financial revenue from the discount on the purchase of two reserve engines from CFM for approximately R$2.5mm.

Income Tax

Total 2Q10 income tax was a benefit of R$4.0mm, versus an expense of R$106.2mm in 2Q09 and an expense of R$33.8mm in 1Q10. The positive variation in current income tax between 1Q10 and 2Q10 was basically due to taxable income calculated in accordance with Law no. 6,404/76, which was a loss of R$55.9mm in 2Q10, versus income of R$57.8mm in 1Q10. In comparison the previous year, although taxable income was positive in 2Q09, it was mainly offset by expenses from the exchange variation.

The variation in the deferred income tax line was caused by temporary differences. The bigger reversal between 2Q10 and 1Q10 was chiefly due to the variation in maintenance deposits and engine depreciation. 2Q09 was mainly impacted by the increase in aircraft financial leasing operations.

Net Result

GOL posted a 2Q10 net loss of R$51.9mm, versus net income of R$353.7mm in 2Q09 and R$23.9mm in 1Q10. The loss was mainly due to: (i) the fact that the second quarter is the weakest of the year for the aviation industry in terms of demand and revenue generation; (ii) non-recurring maintenance expenses associated with the fleet renovation program, with the return of the B737-300s and reactivation of the four B767s; and (iii) the 1.2% appreciation of the Dollar against the Real between 2Q10 and 1Q10, generating exchange losses on foreign currency liabilities.

Liquidity and Indebtedness

Total cash closed the quarter at R$1,589.3mm (cash balance of R$1,518.0mm, plus R$31.9mm in immediate liquidity financial assets and R$39.5mm in restricted cash), 6.2% up on 1Q10 and 159.0% more than in 2Q09, equivalent to 24.7% of net revenue in the last 12 months and 2.7 times obligations due in the next 12 months.

As a result, GOL should achieved its target for 2010, which is to have a cash balance of approximately 25% of LTM net revenue, demonstrating its commitment to maintaining a strong balance sheet that gives it sufficient capacity to recover financially from any type of economic crisis, not to mention the foreign exchange, oil price and market volatility to which the aviation industry is subject, while at the same time supporting the Company’s growth strategy. Currently, GOL’s cash balance is on the same level as that of the world’s major players.

Short-term receivables include flight sales via credit card, receivables from the VoeFácil installment payment program, and accounts receivable from travel agencies and cargo transportation. At the end of 2Q10, these receivables totaled R$250.5mm, 21.2% down on the R$318.0mm recorded in 1Q10, due to the reduction in sales volume (forward bookings effect) caused by the second quarter’s low seasonality, particularly in April and May, which is reflected in lower receivables, and increase in the volume of discounted trade notes.

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

On June 30, 2010, total loans and financings came to R$3,270.4mm. Long-term debt, excluding perpetual bonds that have no maturity date, had an average term of 8.2 years and an average rate of 11.5% for local-currency debt and 6.3% for Dollar-denominated debt. Excluding the perpetual bonds, debt stood at R$2,948.9mm, 1.0% up on 1Q10, due to: (i) the contracting of a R$101.5mm (US$53.3mm) Dollar-denominated working capital loan from Itaú BBA in order to reduce the funding cost of the Company’s debt used to settle the R$60mm working capital loan from Banco Pine, which was denominated in Reais; and (ii) the 1.2% appreciation of the Dollar against the Real between 1Q10 and 2Q10.

Total financial obligations, comprising the gross debt recorded in the balance sheet and projected operational leasing payments between 2010 and 2021 (based on June 30), came to R$5,859.3mm, 0.6% up on 1Q10 mainly as a result of the 1.2% period appreciation of the Dollar against the Real, and 5.0% down on 2Q09, chiefly due to the R$7.7% period appreciation of the Real against the Dollar.

Also on June 30, 2010, aircraft acquisition financing totaled R$1,767.1mm, mainly composed o:

§  A credit line for the prepayment of aircraft acquisitions (PDP Facility II), whose outstanding balance closed 2Q09 at R$106.0mm and which will be used for the prepayment of four aircraft out of the seven due for delivery in 2010. These lines are already refinanced through a combination of lease-back operations and long-term bank loans with financial institutions, backed by the U.S. Ex-Im Bank

§  Financial leasing operations, which totaled R$1,661.1mm, are financial expenses paid periodically to the aircraft lessors with the Company’s own operating cash flow or through long-term loans, also backed by the U.S. Ex-Im Bank. Compared to 1Q10, the number of aircraft classified as financial leasing remained the same and there was slight reduction of 0.5% due to period amortizations.

On July 13, 2010, GOL announced the conclusion of a R$300mm senior note issue yielding 9.25% and maturing in 2020. The operation was exempt from registration under the 1933 U.S. Securities Act.

The notes will be guaranteed by VRG Linhas Aéreas S.A., and constitute senior obligations unsecured by GOL with the option of a make-whole premium. GOL intends to use most of the proceeds to repay existing debt maturing within the next three years.  

¹Financial commitments (gross debt + operational leasing contracts, in accordance with note 25 of the financial statements) less cash and cash equivalents and short-term financial investments; ²Gross debt + LTM operational leasing expenses x 7; ³Adjusted gross debt less cash and cash equivalents and short-term financial investments;

³Price of R$ 22.30 per share.

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

Fleet and Fleet Plan

The Company is continuing with its plan to replace its Boeing 737-300 and 767-300/200 aircraft with 737-800NGs and 737-700NGs for operations on short and medium-haul domestic and international routes. The Company closed 2Q10 with an operational fleet of 122 aircraft, with an average age of 6.8 years. This quarter, GOL took delivery of two Boeing 737-800NG SFPs to replace one Boeing 737-300, one Boeing 737-700  and four Boeing 737-800s.

The Company leases its entire fleet through a combination of financial and operational leases. Out of the total of 122 aircraft, 87 were under operational leases and 35 under financial leases. GOL also has purchase options on 29 aircraft when their leasing contracts terminate.

* includes SFP (Short Field Performance) aircraft

* List prices

Ownership Breakdown

Summary: 2010 Guidance

GOL is maintaining its guidance for 2010. Additionally, following the conclusion of its operational fleet renovation process it estimates an increase in its operating margins to more than 13% in 2011 and 2012, based on expectations that both the Brazilian economy and air traffic in its operational area will continue to grow. The table below presents our revised macroeconomic assumptions in regard to the outlook for the Brazilian economy and domestic demand in 2010.

Contact		About GOL Linhas Aéreas Inteligentes S.A. GOL Linhas Aéreas Inteligentes S.A. (NYSE: GOL and BM&FBOVESPA: GOLL4), (S&P/Fitch: BB-/BB-, Moody`s: Ba3), the largest low-cost and low-fare airline in Latin America, offers more than 860 daily flights to 50 destinations that connect all the important cities in Brazil and 13 major destinations in South America and Caribbean. The Company operates a young, modern fleet of Boeing 737 Next Generation aircraft, the safest and most comfortable of its class, with high aircraft utilization and efficiency levels. Fully committed to seeking innovative solutions through the use of cutting-edge technology, the Company - via its GOL, VARIG, GOLLOG, SMILES and VoeFácil brands - offers its clients easy payment facilities, a wide range of complementary services and the best cost-benefit ratio in the market. This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of GOL. These are merely projections and, as such, are based exclusively on the expectations of GOL’s management concerning the future of the business and its continued access to capital to fund the Company’s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry, among other factors and risks disclosed in GOL’s filed disclosure documents and are, therefore, subject to change without prior notice.
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