Gol posts 3Q net loss as currency hit adds fresh pain

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Brazilian low-cost carrier Gol slipped to a net loss of 516.5 million Brazilian reais ($292.3 million) in the third quarter, as a hit on currency changes compounded increased fuel costs and intense price competition.

While Gol increased revenues 3% to 1.84 billion reais for the three months ending September, total operating costs were up nearly a fifth to 1.92 billion reais over the same period. This in part reflects fuel costs up more than a quarter, higher operational volumes and costs related to the repositioning of regional partner Passaredo.

Gol slipped to an operating loss of 75 million reais for the third quarter, compared to a profit of 187.2 million reais at the same stage last year.

Losses widened at a net level for the quarter to 516.5 million reais, sharply down on the 110 million reais profit it made in the third quarter of 2010. Gol said the loss was mainly due to the appreciation of the US dollar, noting the depreciation of the Brazilian currency resulted in a net foreign exchange hit of 476 million reais.

Gol chief executive Constantino de Oliveira Jr said the result, while falling short of its expectations at the start of the year, marked the start of a gradual recovery in operating margins. "In this quarter the Company´s revenues were impacted due to the low prices that prevailed in the first half of the year due to an extremely competitive scenario. Following a period of fierce competition that had a significant adverse impact on Company´s margins, the industry is showing signs of greater rationality going forward," he said.