Fitch Downgrades GOL's IDRs to 'BB'; Revises Outlook to Negative

NEW YORK & RIO DE JANEIRO, Brazil--(Business Wire)--
Fitch has downgraded the following credit ratings of Gol Linhas
Aereas Inteligentes S .A (GOL):

--Foreign and Local Currency long-term Issuer Default Ratings
(IDRs) to 'BB' from 'BB+';

--USD200 million of perpetual notes to 'BB' from 'BB+;

--USD200 million seniors note due to 2017 to 'BB' from 'BB+;

--Long-term National rating to 'A+(bra)' from 'AA-(bra).

The Rating Outlook has been revised to Negative.

GOL ratings downgrades reflect the deterioration of the company's
credit profile, as well as the reduction in its historical solid
liquidity position. The Brazilian airline sector problems experienced
in 2007 coupled with competition, losses from recently acquired VRG
Linhas Aereas S.A (VRG) and rising fuel prices have resulted in
negative pressure in GOL's performance. The negative outlook reflects
Fitch's concerns regarding the challenges that the company is expected
to face in the near-term to turn VRG into a positive cash flow
generator while implementing countermeasures to mitigate cost
pressures due to higher oil prices. In order to maintain its current
ratings, the company will need to improve its operating performance
and improve its profitability in order to more adequately align GOL's
credit ratios with that of the rating category.

GOL's current ratings contemplate Fitch's expectation that the
company will continue to maintain a competitive cost structure
vis-a-vis the global industry and its significant market share
position in the Brazilian airline sector. The ratings also incorporate
the company's exposure to fuel cost volatility and other
industry-related risks, such as revenue volatility, high correlation
with the domestic economy, high operating leverage and competitive
threats.

Management's expectation of strengthening its business with the
acquisition of Varig has yet to materialize including to have VRG
achieve positive earnings. Restrictions at Congonhas Airport, lower
than expected feeder traffic on long-haul international route to
Europe, high fuel prices, the lack of approval from the Brazilian
anti-trust authorities for the integration of the two companies and
the still ongoing replacement of VRG's less fuel efficient 737-300s
and 767-300s with more efficient aircrafts frustrated management's
initial objectives at the time of the acquisition.

In 2008, the escalation of oil prices is expected to pressure more
intensely the cost structure of the airlines companies globally and
Brazil will not be an exception. GOL's ability to reduce fuel
consumption through more efficient aircrafts, operate efficient hedge
instruments and pass-through higher costs to customers will be the
predominant factors for improved profitability and credit metrics. Now
that the company reports that VRG's CASK have recently reached the
level of GOL's, for the success of the operations acquired an increase
in yields and low factor will be key for VRG's profitability.

Recent measures taken by GOL in the strategic repositioning of
VRG, continued growth of demand in the Brazilian airline sector and a
more rational environment in terms of competition could favor a
moderate recovery in GOL's profitability. Margin recovery, increased
cash generation, preservation of liquidity and improvements in its
main credit metrics will be fundamental to avoid additional rating
downgrade.

During the past 15 months an imbalance between supply and demand
impacted consolidated GOL's load factors and the strong competitive
environment pressured its yields, translating to a fall in margins and
cash generation. Besides the difficulties faced by the global and
Brazilian airline industry, the growth in operations with the
acquisition of VRG impacted substantially GOL's historical
profitability track-record. In 2007, flight delays, cancellations and
restrictions in one of Brazil's most important airports (Congonhas)
restricted GOL's ability to maximize aircraft utilization and the
advantages of operating with a much interconnected air transportation
network. The spread between RASK and CASK was a negative BRL0.1 in
2007 and remained a negative BRL0.2 in the first quarter of 2008,
compared with a historic average of BRL4,1 up to 2006.

In 2007, cash generation measured by EBITDAR totaled BRL600
million compared with BRL985 million in 2006, while Funds From
Operations (FFO) decreased to BRL21 million in 2007 versus BRL583
million in 2006. GOL continued to report weak performance during the
first quarter of 2008. For the 12 months ended March 31, 2008, EBITDAR
was BRL565 million and FFO was a negative BRL80 million. During this
period, the company reported EBITDAR margin of 10.2% compared with
12.1% in 2007 and very robust figures of 25.9% and 29.5%, respectively
in 2006 and 2005.

GOL's liquidity position has deteriorated somewhat in the last 18
months but remains satisfactory. Cash and marketable securities were
equivalent to BRL 1.0 billion at the end of March 2008, reaching 19%
of its total revenue, compared with a historical level close to 35%.
The company's iquidity position still represents 2.5 times (x) its
short-term obligations. Fitch expects that GOL will preserve its
liquidity at least close to its current level in order to mitigate
short-term risks and sector volatility. Managements considers that the
company has access to additionally liquidity with the discount of its
large receivables portfolio (BRL 354 million), bank credit lines not
yet drawn (some BRL 550 million), and the replacement of aircraft
prepayments with letters of credit.

The company's current credit metrics remain weak for the BB rating
category. For the last-twelve-months ended March 31, 2008, the company
recorded an adjusted total-debt-to-EBITDAR ratio of 10.5x, adjusted
net debt-to-EBITDAR of 8.7x. At the end of March, the company
registered adjusted total debt of BRL5.9 billion, a growth of 92%
compared to 2006 due to aircraft fleet expansion. Around BRL4.4
billion consists of aircraft lease obligations. The company's
principal debts are perpetual bonds (BRL 345 million), bonds due 2017
(BRL 388 million) and pre-delivery deposits (BRL 455 million).

GOL is a holding company that controls a low cost airline, GOL
Transportes Aereos S.A. (GTA), and VRG, providing frequent service on
routes linking the main cities of Brazil and South America. In May
2008, GTA operated 78 Boeing 737 aircrafts with an average age of 6.8
years, and VRG, 32 aircrafts (21 Boeing 737s and 11 Boeing 767 ) with
an average age of 13 years.

Fitch's rating definitions and the terms of use of such ratings
are available on the agency's public site, www.fitchratings.com.
Published ratings, criteria and methodologies are available from this
site, at all times. Fitch's code of conduct, confidentiality,
conflicts of interest, affiliate firewall, compliance and other
relevant policies and procedures are also available from the 'Code of
Conduct' section of this site.

Fitch Ratings
Debora Jalles, +55-21-4503-2600 (Rio de Janeiro, Brazil)
Revisson Bonfim, +1-212-908-0898 (New York)
Media Relations:
Christopher Kimble, +1 212-908-0226 (New York)

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