About Gol Linhas Aéreas Inteligentes

GOL Linhas Aereas Inteligentes S.A. (GOL) provides scheduled and non-scheduled air transportation services for passengers and cargo, maintenance services for aircraft and components, develops frequent-flyer programs, among others. Airline Business Routes and Schedules The company’s operating model is based on a highly integrated route network that is a combination of the point-to-point, hub and spoke and multiple-stop models. This combination increases the connectivity of its network, permitting travelers to fly from a given point of origin to more destinations, while maintaining a low-cost structure, improving aircraft and crew scheduling efficiency and reducing its carbon emissions. The high level of integration of flights at selected airports allows it to offer frequent, non-stop flights at competitive fares between Brazil’s most important cities. The company’s network also allows it to increase its load factors on its strongest city pair routes by using the airports in those cities to connect its customers onwards to their final destinations. The company’s operating model allows it to build its flight routes to add destinations to cities that would not be feasible to serve in the traditional point-to-point model individually, but that are feasible to serve when simply added as additional points on its multiple-stop flights. The company focuses on the Brazilian and South American markets, with hubs in São Paulo, Rio de Janeiro, Brasília and Fortaleza, and carefully evaluate opportunities for continued growth. The company seeks to increase the frequency of its flights to existing high-demand markets and add new routes to its network to destinations that can be reached with its Boeing 737 Next Generation aircraft (for example, destinations in the Caribbean). The company’s Boeing (The Boeing Company) 737 MAX aircraft permit it to offer reduced flight times to passengers that make connections in South American hubs on their route to the United States, Europe and Africa. As a low-cost carrier operating a single fleet type, the company works through alliances and codeshare arrangements with large international carriers and regional carriers in order to serve destinations that cannot be served by its Boeing 737 aircraft due to airport infrastructure or local market conditions. The company maintains its position as the leading airline in number of passengers transported in Brazil. In 2022, the company transported over 27.9 million passengers in the domestic market. Together with its regional partners, including VoePass Linhas Aereas and MAP Linhas Aereas, the company serves the largest regional network in Brazil. Because regional carriers feed traffic to the company’s hubs and routes from low-density markets it does not directly serve, they are integral to its operating network. The company uses its dominant market position at its main hubs to support traffic by offering connecting flights to its customers throughout its network. Under its business model and route network, the company has flexibility to increase direct flights during the high season because it has a dominant position in main high density airports, and to increase connecting flights during the low travel season to increase load factors. Services Passenger Transportation In order to offer high-quality and consistent value-proposition services to its corporate and leisure customers, the company pays particular attention to the details that provide for a pleasant, complication-free flying experience, including convenient online sales, check-in, seat assignment and flight change and cancellation services; high frequency of flights between Brazil’s most important airports; low cancellation and high on-time performance rates of the company’s flights; self-check-in at kiosks at designated airports; friendly and efficient in-flight service; free shuttle services between airports; buy on-board services on certain flights; free healthy snacks for all passengers, including options for kids; mobile check-in for paperless boarding pass and smartphone application for Smiles account management; more legroom and greater comfort (GOL+Conforto in the domestic flights and GOL Premium Class in the international flights); complete platform of in-flight entertainment with Wi-Fi access, live television, movies and series; premium domestic and international lounges for business class and premium Smiles passengers in the Guarulhos and Galeão airports; and expansion of Smiles’ loyalty program to promotional fares. The company is constantly evaluating opportunities to generate additional ancillary revenue, such as from sales of travel insurance, marketing activities and other services that allow it to capitalize on the large number of passengers on its flights and the high volumes of customers using its website. As of December 31, 2022, all of the company’s aircraft had Wi-Fi installed, which is an additional and increasing source of revenue. Mileage Program, Cargo and Other Revenues Mileage program, cargo and other revenues include revenues from the company’s GOLLOG services, as well as from its Smiles loyalty program. The company makes efficient use of extra capacity in its aircraft by carrying cargo, through GOLLOG. The company’s 85 flight destinations throughout Brazil, South America, the Caribbean and the United States provides it access to multiple locations in each region. With its capacity of approximately 554 daily flights, the company can ensure quick and reliable cargo delivery for its customers. GOLLOG has developed an extensive portfolio of express services to meet the growing demand for door-to-door deliveries, fixed deadlines and additional optional services. The company intends to increase its efforts in express delivery services by further strengthening its logistics capability, mainly by expanding its ground distribution network, increasing the company’s commercial efforts and using innovation and technology to facilitate the boarding and tracking of cargo and to provide automatic updates to order status. Following is an overview of GOLLOG’s portfolio of services: GOLLOG Animais provides what the best solution for the transportation of live animals, including all of the care required by live animals in transport and real-time information about the animal’s journey for customers to monitor. GOLLOG Saúde was designed to serve the healthcare industry. To enhance GOLLOG Saúde’s services, the company invested in a cold storage warehouse at the Guarulhos airport to maintain temperature-controlled cargo prior to boarding. GOLLOG Urgente provides the fastest delivery option within Brazil, offering same-day deliveries for short routes, and has been an important component in GOLLOG maintaining its revenue yield. GOLLOG Rápido, CHEGOL and CHEGOL Mini provide a range of cost-effective express delivery solutions for customers. The company’s Smiles loyalty program, with 20.5 million members as of December 31, 2021, provides it with significant revenues derived from the redemption and expiration of miles. In addition, the company’s Smiles loyalty program provides an incentive for customer air travel bookings, thereby boosting ticket sales and its number of repeat customers. Aircraft Fleet In 2022, the company advanced its fleet transformation plan to replace Boeing 737 Next Generation aircraft with Boeing 737 MAX aircraft. As of the date of this annual report, the company’s fleet comprises 108 Boeing 737 Next Generation aircraft and 38 Boeing 737-8 MAX aircraft. The company is able to adjust its capacity to match demand, which has been a competitive advantage for many years. The company’s fleet structure and operational flexibility makes it the Brazilian airline best positioned to take advantage of the recovery in Brazilian domestic air travel. As of December 31, 2022, the company’s 142 leases without purchase options had an average remaining term of 67 months. Under the company’s lease agreements without purchase options, it is required to maintain maintenance reserve payments or pay maintenance deposits and to return the aircraft and engine in the agreed condition at the end of the lease term. Title to the aircraft remains with the lessor. The company is responsible for the maintenance, servicing, insurance, repair and overhaul of the aircraft during the term of the lease. The average age of its operating fleet as of December 31, 2022, was 10.4 years, and the company expects that, as part of its accelerated fleet transformation plan, it will be reduced to approximately six years by 2025. The average daily utilization rate of its fleet was 9.6 block hours in 2020, 10.0 block hours in 2021 and 11.0 block hours in 2022. The company’s configuration permits it to add up to nine additional seats to the Boeing 737 MAX’s configuration while maintaining the aircraft’s pitch that provides the most comfort to passengers in Brazil. As of December 31, 2022, the company had an order book of 66 Boeing 737-8 MAX and 25 Boeing 737-10 MAX aircraft for delivery through 2026. The company is the main client of Boeing 737 MAX aircraft in South America and one of the eight largest in the world. As a result of its order book, the average age of the company’s operating fleet, 10.4 years as of December 31, 2022, will be reduced to approximately six years by 2025, leading to lower maintenance costs and fuel consumption and, as a result, reduced greenhouse gas emissions. Sales and Distribution The company’s customers can purchase tickets directly from it through a number of different channels, including its website through its booking web services, its call center, at airport ticket counters and, to a lesser extent, global distribution systems (GDS). In August 2021, the company’s switched its passenger service system to Sabre, which is one of the most used by airlines. The company’s business model utilizes internet ticket sales as the primary distribution channel, especially in the local market. In 2022, approximately 95% of the company’s passenger revenue, whether directly from customers or through travel agents, were booked online, making it a global leader in this area. In addition, the company’s customers can purchase tickets indirectly through travel agents, which are a widely used travel service resource. In 2022, travel agents provided it with distribution outlets in approximately 50 different countries. GDS allows the company access to a large number of tourism professionals who are able to sell its tickets to customers around the world and enables it to enter into interline agreements with other airlines to offer more flights and connection options to its passengers, which adds incremental international passenger traffic. Maintenance By ANAC (National Civil Aviation Agency (Agência Nacional de Aviação Civil)) regulation, the company is directly responsible for the execution and control of all maintenance services performed on its aircraft. Maintenance performed on the company’s aircraft can be divided into two general categories: line and heavy maintenance. Line maintenance comprises routine, scheduled maintenance checks on the company’s aircraft, including pre-flight, daily and overnight checks and any diagnostics and routine repairs. All of the company’s line maintenance is performed by its highly experienced technicians at its line maintenance service bases throughout Brazil and South America. The company’s practice of performing daily preventative maintenance helps to maintain a high aircraft utilization rate, reduces maintenance costs and ensures a high level of safety. Heavy maintenance comprises more complex inspections and servicing of aircraft that cannot be accomplished overnight. Heavy maintenance checks are performed following a pre-scheduled agenda of major overhauls defined by the aircraft’s manufacturer, based on the number of hours and flights flown by the aircraft. In addition, engine maintenance services are rendered in different MRO facilities. The company has entered into two strategic maintenance, repair and operations (MRO) partnership agreements in order to provide maintenance services for its CFM 56-7, maintenance for parts and components on its fleet of Boeing 737 Next Generation and 737 MAX aircraft, as well as consulting services related to maintenance workflow planning, materials and facility optimization and tooling support. The company holds the FAA 145 Repair Station certification for C-checks, which are performed approximately every 20-24 months or based on a specific number of actual flight hours, at the company’s maintenance center in Confins (GOL Aerotech) and certification by the European Aviation Safety Agency, or EASA, which is the European Union’s aeronautical authority. In 2020, the company was certified by the National Civil Aviation Administration of Argentina to perform maintenance, preventive maintenance and alterations, which allows it to expand its GOL Aerotech coverage in the Latin American MRO market; the CAA Cayman aviation authority, expanding its coverage to perform maintenance on aircraft and components operating under the rules of this authority; and the FAA to work on CFM56-7 and Leap-1B engines at its engine shop in Confins and repairs in composite materials in the Composite Shop at the same location. The company’s engine shop, part of GOL Aerotech, certified by ANAC, the European Aviation Safety Agency (EASA), FAA, ANAC Argentina, 2-REG and CAA Cayman for low-complexity services and repairs on CFM56-7 and Leap-1B engines, which power the Boeing 737 Next Generation and 737 MAX aircraft it operates, has the latest infrastructure and tools to conduct maintenance services that were formerly performed by third parties. Among the benefits of insourcing these services are reduced repair and logistics costs and reduced engine off-time and replacement time, as well as an improvement in environmental sustainability as a result of not having to transport aircraft to third-party maintenance facilities. The company also has the capacity to expand the services offered by its engine shop. Partnerships and Alliances The company has incomparable relationships with important players in the industry, including American Airlines and Air France – KLM. The company is one of Boeing’s most important 737 aircraft customers. The company’s strong market positioning enables it to successfully negotiate a number of partnerships with supplementary major carriers worldwide, mostly in the form of codeshare agreements and interline agreements. Additional passenger inflows generated by these strategic partnerships help improve revenues at low incremental costs. As of December 31, 2022, the company had 14 codeshare agreements with Aerolíneas Argentinas, AeroMexico, Air Canada, Air Europa, Air France, American Airlines, Avianca, Copa Airlines, Emirates, Ethiopian Airlines, KLM, TAP, Turkish Airlines and VoePass Linhas Aereas, 15 frequent flyer agreements and 38 interline agreements. American Airlines In February 2020, the company announced its new codeshare agreement with American Airlines, which provided more daily flights between South America and the United States than any other airline partnership. This codeshare agreement represents the largest route network in the Americas, enabling its customers to travel seamlessly to more than 30 destinations in the United States. The company’s codeshare flights operate in its international hubs in São Paulo (Guarulhos) and Rio de Janeiro (Galeão), integrating 34 Brazilian and international routes. In September 2021, the company announced the expansion of its commercial cooperation with American Airlines, through an exclusive codeshare agreement for three years that has strengthened the relationship between the two airlines. The company’s Smiles and American Airlines’ AAdvantage loyalty programs are partners in the largest frequent flyer program in the Americas with enhanced benefits that began in the first half of 2022. Air France – KLM The company has a long-term strategic partnership for commercial cooperation with Air France – KLM, which held 1.0% of its total capital stock as of December 31, 2022. The agreement, which is in place through 2024. In addition, Air France – KLM is an important MRO service provider for the company’s operations. VoePass Linhas Aereas The company maintains a strong cooperation with VoePass Linhas Aereas to serve 35 destinations on Brazilian regional routes through a codeshare and interline partnership. Strategy The company’s strategy and business model allow it to adapt its supply to fluctuations in demand. Competition Domestic: The company’s main competitors in Brazil are LATAM Brasil and Azul Airlines. Loyalty Program: Smiles Smiles was one of the largest coalition loyalty programs in Brazil, with 20.5 million members as of December 31, 2022. The company’s Smiles business model is based on a pure coalition loyalty program comprising a single platform for accumulating and redeeming miles through a broad network of commercial and financial partners. The Smiles loyalty program allows members to accumulate miles through flights with GOL and its international partners, all the significant Brazilian commercial banks that issue credit cards, including through co-branded cards issued by Banco Bradesco, Banco do Brasil and Santander, a broad network of retail partners, including Localiza, the largest car rental agency in Brazil, global hotel chain Accor Hotels and Rocketmiles, among others, direct customer purchases of miles and purchases of miles and benefits through Clube Smiles (Smiles Club). The company is Smiles’ primary redemption partner but members may also redeem miles for products and services from commercial partners. Cargo: GOLLOG The company was Brazil’s third largest cargo airline with a 27.8% market share in 2022. Through GOLLOG, the company generates cargo revenue through the use of cargo space on regularly scheduled passenger aircraft. The company’s cargo business has grown at higher rates than its passenger travel business, in large part because it counts with an excellent and diversified base of clients in the B2B segment and e-commerce markets, and are well-positioned to support this market’s expected growth as it forges and strengthens its client relationships. The company is committed to delivering quality logistics solutions and its cargo business will be an increasingly important contributor to its financial performance. Additionally, in the second half of 2022, the company began cargo operations under a ten-year commercial agreement with Mercado Livre, which operates marketplaces for e-commerce and online auctions. These cargo operations, which are part of the company’s investment to serve the needs of the growing Brazilian e-commerce market, will rely on a dedicated freighter fleet of six Boeing 737-800 BCF, two of which it received and began operating in 2022 and the other four it will receive and expect to begin operating in 2023, with the option to add additional six cargo aircraft by 2025. MRO: GOL Aerotech GOL Aerotech is the company’s business unit dedicated to providing MRO services, including to third parties. The company provides maintenance, preventive maintenance and modifications on its aircraft. GOL Aerotech represents an important cost saving source for the company as it is able to rely on local workforce instead of relying on other maintenance providers that would expose it to exchange rate variations and higher market pricing. The company’s local maintenance services also reduce its repair and logistics costs, as well as engine off-time and replacement time, and support its sustainability efforts as it does not have to transport aircraft to third-party maintenance facilities. The company has expanded its MRO services to other airlines and what began as a cost-saving initiative has become a revenue generating opportunity. The company operates the largest MRO facility in Brazil, with over 145,000 square meters of hangar and ramp areas, six shops, more than 6,100 square meters of parts storage area. In February 2022, the company renewed its maintenance hangar lease in Confins and converted its Brasília hangar to support maintenance services. As of the date of this annual report, the company has three maintenance units (Confins, Brasília and Congonhas) and continue to seek expansion opportunities for its GOL Aerotech business. Innovation: GOLLabs GOLLabs is the company’s innovation business dedicated to researching and developing new technologies and services to generate new revenues and reduce costs, including by optimizing its pricing and route strategies and enhancing its customer experience through initiatives, such as face recognition technology to facilitate check-in and boarding procedures, media streaming partnerships to provide enhanced entertainment options and a customer service platform through mobile chat applications, among others. GOLLabs is responsible for the entire lifecycle of the development of an innovative concept, including market testing and analytics and implementation and training, and plays a key role in creating value in its other businesses. History GOL Linhas Aereas Inteligentes S.A. was founded in 2000. The company was incorporated in 2004 as a stock corporation (sociedade anÔnima) duly incorporated under the laws of Brazil with unlimited duration.