Individual and consolidated

Quarterly Information Form (ITR) for the quarter ended September 30, 2018

Smiles Fidelidade S.A.

September 30, 2018

Review report on the quarterly information

Smiles Fidelidade S.A.

Individual and consolidated quarterly information (ITR) September 30, 2018

Contents

Comments on performance ............................................................................................................................ 01

Comments on business projection trends ........................................................................................................ 07

Audit Committee's Report ................................................................................................................................ 08

Declaration of the officers on the quarterly information form (ITR) .............................................................. 09

Declaration of the officers on the independent auditors' review report ........................................................ 10

Report on the review of the quarterly information ........................................................................................ 11

Statements of financial position ....................................................................................................................... 13

Statements of income ...................................................................................................................................... 14

Statements of comprehensive income ............................................................................................................. 16

Statements of changes in equity ...................................................................................................................... 17

Statements of cash flows ................................................................................................................................. 18

Statements of value added ............................................................................................................................... 19

Notes to the quarterly information form (ITR) ................................................................................................ 20

Comments on performance

Amid a challenging scenario of political and economic uncertainties, marked by a high exchange rate volatility, Smiles continued to deliver healthy operating and financial indicators, with strong growth and reaching records levels in all operational metrics. The highlight of operational indicators was the redemption, which reached the record of 22.9 billion of miles redeemed, an increase of 33.7% in comparison to 3Q17. Management´s commitment with business profitability is translated on an ample direct redemption margin of 42.5% in 3Q18, 0.4 p.p. higher than 2Q18.

We remain optimistic regarding the loyalty industry prospects and reaffirm our commitment in consolidating Smiles as Brazil´s most innovative business platform and a complete marketplace for the traveler. In order to conquest this, we are constantly evaluating new business partnerships and focus on enhancing customer experience.

The internationalization process towards Argentina continues to evolve on a satisfactory manner. We expect to conclude the documentation phase for the beginning of Smiles Argentina operation soon and start exploring the huge potential of this new market.

Supported by Accounting Standards Committee Pronouncement 47 (CPC 47) and Normative Instruction 1771 of the Brazilian Internal Revenue Service, the Company recorded extemporary tax credits on Breakage provision in the balance sheet amounting to R$ 259 million and R$ 59 million positive impact on net income, net of taxes, since tax collection should occur only at the time of miles expiration.

On October 14th, 2018, Gol Linhas Aéreas Inteligentes S.A (GLAI) communicated to the Company and the market that it is initiating proceedings aiming at a corporate reorganization of GLAI, and previously notified its intention to not renew the operating and backoffice services agreements. The terms of the Reorganization will be negotiated with GLAI and Company's Independent Committee and, where applicable, submitted for approval by GOL and SMILES' shareholders.

Our mission is to turn miles into smiles :)

Operating Performance

Operating Data 1

Unit

3Q18

2Q18

3Q17

3Q18 vs. 2Q18 (%)

3Q18 vs. 3Q17 (%)

Members

mn

14.8

14.6

12.8

1.8%

16.2%

Miles Accrual

bln

27.1

25.0

22.8

8.1%

18.8%

Gol

bln

2.7

2.3

2.4

17.7%

12.1%

Banks, retail and others

bln

20.9

19.7

17.2

5.9%

21.4%

Smiles & Money Gol

bln

3.5

3.0

3.2

16.7%

9.9%

Smiles' Program Redemptions

bln

22.9

19.1

17.1

20.1%

33.7%

Airline Redemptions

bln

21.2

17.2

15.7

22.8%

34.6%

Non-airline

bln

1.8

1.9

1.4

(5.1%)

28.6%

Breakage Rate

%

17.9%

18.3%

18.0%

(0.4 p.p.)

(0.1 p.p.)

1 All relevant miles amounts are net of reimbursement. The data in this table do not reflect financial information.

Members: The number of program members reached 14.8 million in 3Q18, up 16.2% in comparison to 3Q17.

Miles accrual: In 3Q18 miles accrued increased 18.8% compared with 3Q17, mainly boosted by the 21.4% expansion in miles accrual from banks, retail and services and an increase of 12.1% of miles accrued by Gol.

Miles redemption: In 3Q18 miles redeemed were 33.7% higher than in 3Q17, and totalled 22.9 billion miles. Miles redeemed evolution were largely explained by the 34.6% increase of airline tickets redemption, which account for around 92.3% of total miles redeemed. The burn/earn ratio was 84.7% in 3Q18, 8.5 p.p rise compared to 2Q18.

Operating data1

Unit

3Q18

2Q18

3Q17

3Q18 vs. 2Q18 (%)

3Q18 vs. 3Q17 (%)

Smiles' redemption program

bln

22.9

19.1

17.1

20.1%

33.7%

Gol + International Partners Tickets

bln

21.2

17.2

15.7

22.8%

34.6%

Non-airline

bln

1.8

1.9

1.4

(5.1%)

28.6%

% of miles redeemed

Gol + International Partners Tickets

%

92.3%

90.1%

91.7%

2.2 p.p.

0.6 p.p.

Non-airline

%

7.7%

9.9%

8.3%

(2.2 p.p.)

(0.6 p.p.)

1 All values corresponding to miles are net of reimbursement. Segregation among different redemption types were not reviewed by auditors.

Breakage: The breakage rate was 17.9% this quarter from 18.3% in 2Q18.

Business Model

Smiles started as a single loyalty program, but has evolved into its current coalition model, which features several unique characteristics that allow for the accrual and redemption of Miles from GOL flights and its international partner airlines, as well as Brazil's main commercial banks, including co-branded cards issued by Bradesco, Banco do Brasil and Santander, and a wide network of retail partners. The current model works through (i) the accrual of Miles by Members when they purchase airline tickets with GOL or other partner airlines, or products and services from Business and Financial Partners; Smiles Miles being acquired through the loyalty of these customers to those businesses, and (ii) Awards redemptions by Members when they exchange their Miles for flights on GOL and other partner airlines, or for products and services offered by Commercial and Financial Partners

The main sources of our revenues come from (i) redeemed miles revenues, represented by tickets and awards in its network of airline, commercial and financial partners, (ii) interest income between the date the miles were accrued and the date they were redeemed, and (iii) Breakage revenues if issued miles expire without being redeemed.

Glossary

Awards - Products or services provided to members by a commercial partner as the result of redeeming customer miles loyalty program.

Award Products - Product or service, excluding air tickets, provided to members by a commercial partner as the result of redeeming customer loyalty program points.

Breakage Estimate - Miles expired and not redeemed; it may be expressed as a number of miles, an amount in Brazilian reais or as a percentage of miles issued, depending on the context.

Burn/Earn Ratio - The ratio between the number of redeemed and accrued miles in a given period. Free Float - Shares owned by non-controlling shareholders.

Miles - The redemption rights of Smiles Program members sold to commercial partners. Smiles & Money - A means of issuing air tickets by combining money and miles.

Smiles Program - A multi-loyalty program for several companies, including GOL Linhas Aéreas Inteligentes S.A.

This release may contain forward-looking statements related to business prospects, estimates of operating and financial results, and growth prospects for Smiles. These are merely projections and, as such, are based exclusively on management's expectations for Smiles. Such forward-looking statements depend, substantially, on external factors and risks presented in the disclosure documents filed by Smiles, and are, therefore, subject to change without notice. Independent auditors did not review the Company's non-financial information. Some values from this report may differ from the financial statements due to rounding.

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Smiles Fidelidade SA published this content on 31 October 2018 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 31 October 2018 11:27:08 UTC