Mail Stop 3561
April 19, 2006
Via U.S. Mail and Facsimile
Richard F. Lark, Jr.
Chief Financial Officer
GOL Linhas Aereas Inteligentes S.A.
Rua Tamoios 246
Jardim Aeroporto
04630-000 Sao Paulo, Sao Paulo
Federative Republic of Brazil
RE: GOL Linhas Aereas Inteligentes S.A. (the Company)
Form 20-F for the Fiscal Year Ended December 31, 2005
File No. 1-32221
Dear Mr. Lark:
Based upon an examination restricted solely to
considerations
of the Financial Statements, Management`s Discussion and Analysis,
and Selected Financial Data, the staff has the following comments
on
the above-referenced documents. We think you should revise all
future filings in response to these comments. If you disagree, we
will consider your explanation as to why our comments are
inapplicable or a revision is unnecessary. Please be as detailed
as
necessary in your response. In some of our comments, we may ask
you
to provide us with supplemental information so we may better
understand your disclosure. After reviewing this information, we
may
or may not raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Please respond to confirm that such comments will be complied
with,
or, if certain of the comments are deemed inappropriate by the
Company, advise the staff of the reason thereof.
Pursuant to Rule 101(a)(3) of Regulation S-T, your response
should be submitted in electronic form, under the label "corresp"
with a copy to the staff. Please respond within ten (10) business
days.
Form 20-F for the Fiscal Year ended December 31, 2005
Selected Financial Data, page 6
1. You present EBITDA because you believe it is a useful indicator
of
your operating performance and it is useful in comparing your
operating performance with other companies in the airline
industry.
We understand from note 10 that you have firm purchase orders for
aircraft deliveries beginning in 2006. Given that you will own
and
lease portions of your fleet, it is not clear why eliminating the
cost of certain aircraft, but not of others, will be useful to
investors when evaluating your operating performance. In
addition,
we understand that many airlines lease their aircraft. In this
regard, it is not clear why it will be useful to investors to
ignore
the costs of your owned aircraft when comparing your operating
performance to that of competitors that lease their aircraft.
Therefore, please tell us and revise to disclose the substantive
reason specific to you that demonstrates the usefulness to
investors
of EBITDA when evaluating your performance, or in the alternative,
revise to eliminate presentation of this measure.
Item 4.B. Business Overview, page 17
2. You state that you have one of the lowest operating costs in
the
airline industry worldwide. For each major cost category in which
you believe you have an advantage compared to the industry, please
tell us and revise to disclose your belief as to the underlying
reasons why this is the case. Please also disclose whether you
expect the cost advantages to continue for the foreseeable future
or
whether you are aware of any conditions that may cause your cost
advantage to diminish over time. For example, we note from page
47
that you incur lower maintenance expenses because most of the
parts
on your aircraft are covered under multi-year warranties. In this
case, please disclose when your aircraft warranties expire and, if
determinable, your best estimate of the approximate amount of
additional costs you will then bear.
Item 5. Operating and Financial Review and Prospectus, page 43
Results of Operations, page 52
3. Where changes in results are attributed to more than one
factor,
please revise to quantify the impact of each factor. For example,
you state aircraft rent increased 23% due to a 54% increase in the
average size of your fleet, which was partially offset by the 12%
appreciation of the real against the U.S. dollar. Please quantify
each of these items. In addition, please consider the use of
tables
to present and tabulate the various factors.
4. Please expand to provide further analysis of the underlying
business reasons for changes in your results of operations. For
example, maintenance expenses increased 7% while the number of
airframe checks and engine repairs increased 27%. You state that
this is because of lower average repair costs, but you do not
explain
the underlying reason why repair costs were lower on average.
F. Tabular Disclosure of Contractual Obligations, page 58
5. Please revise the contractual obligations table in future
filings
to also include purchase obligations of the Company such as the
firm
purchase orders for the Boeing aircraft. Also, given your
disclosures on page 57 under the liquidity and capital resources
section of MD&A that "the firm orders represent a significant
financial commitment" and that you expect to obtain low cost
financing for the majority of the purchase of the firm order
aircraft, you should also discuss the impact the acquisition of
the
additional aircraft is expected to have on the Company. Your
discussion should address, at a minimum, the impact the
incremental
debt financing management believes will have on the Company`s cash
position, liquidity, future results of operations and financial
statements as a whole.
Note 5. Deposits, page F-10
6. We note you capitalize the aircraft and engine maintenance
payments required by your lease agreements and that you can apply
excess payments against the final lease payment. Please tell us
why
you concluded capitalization of these payments was appropriate.
In
this regard, please tell us whether excess payments are refundable
to
you, whether the lessor reduces future payments if amounts paid
have
exceeded actual maintenance costs, and whether you expect
cumulative
excess payments to exist at the end of the lease term. Also,
please
clarify for us whether the term `final lease payment` encompasses
any
amounts other than the ordinary final monthly lease payment. If
maintenance payments required under your leases are nonrefundable,
it
would appear that your leases are similar, in substance, to
leasing
maintained aircraft and engines, in which case you should
recognize
both stated rent and stated maintenance expense over the term of
the
lease similar to rental expense.
Exhibits
7. Please amend your Form 20-F to include certifications pursuant
to
section 906 of the U.S. Sarbanes Oxley Act of 2002 from your chief
executive officer and chief financial officer which reference the
fiscal year ended December 31, 2005 rather than December 31, 2004.
Other
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the company and its management are in
possession of all facts relating to a company`s disclosure, they
are
responsible for the accuracy and adequacy of the disclosures they
have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that:
* the company is responsible for the adequacy and accuracy of the
disclosure in the filing;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Jean Yu at (202) 551-3305 or Lyn Shenk
at
(202) 551-3380 if you have questions regarding the comments above.
Sincerely,
Linda Cvrkel
Branch Chief
Richard F. Lark, Jr.
GOL Linhas Aereas Inteligentes S.A.
April 19, 2006
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