February 17, 2017 / 10:25 AM / a year ago

Brazil's Gol posts smaller than expected loss as financial expenses slump

* Net loss of 30.2 mln reais smaller than estimates

* Net revenue climbs 0.5 pct, beat mkt expectations

* Financial expenses fall 77 pct to 163.6 mln reais

SAO PAULO, Feb 17 (Reuters) - Gol Linhas Aéreas Inteligentes SA, Brazil’s No. 2 airline, posted a smaller than expected fourth-quarter net loss as declining borrowing costs and a strengthening real helped offset the impact of stagnant revenue growth.

São Paulo-based Gol, which ranks second by fleet size after LATAM Airlines Group, said in a Friday securities filing that it lost a net 30.2 million reais ($9.8 million) the past quarter, down 97 percent from a shortfall of 1.13 billion reais a year before.

The number also came in below the average loss estimate of 213.07 million reais in a poll of analysts compiled by Thomson Reuters.

While net revenue rose a higher than expected 0.5 percent, net financial expenses shrank about 77 percent to 163.6 million reais, less than analysts expected.

Behind that decline was a 42 percent reduction in debt-servicing costs and an 89 percent tumble in currency-related financial expenses, the filing said. Net debt fell to 12.20 billion reais at the end of December from 14.71 billion reais at the end of 2015.

The results show how confidence on President Michel Temer’s ability to fix an economy hobbled by a three-year recession is already helping companies. Since Temer took office in April, the currency has rallied 15 percent and the benchmark interbank lending rate has fallen to a two-year low of 12.8 percent.

Gol is targeting net revenue of around 10 billion reais for the year, slightly above Thomson Reuters a consensus estimate of 9.73 billion reais. Cost per available seat is seen around 0.14 reais per kilometer, while earnings before interest, tax, depreciation and amortization (EBITDA) could come between 11 percent and 13 percent of revenue for this year.

Over the past three years, Gol has struggled with a heavy debt load and fallout from the recession and political instability that weighed on ticket sales and the price of key inputs like fuel. Chief Executive Paulo Kakinoff has implemented strict cost controls and a reduction of available capacity to offset those headwinds.

Management is slated to discuss fourth-quarter results with investors at a conference call later in the day.

Gol’s cost of goods sold fell 10 percent, in line with estimates, while sales, general and administrative expenses totaled 2.469 billion reais, down 10 percent from a year earlier and slightly below estimates.

EBITDA before plane lease costs, a gauge known as EBITDAR, came in at 440.5 million reais, missing a consensus estimate of 482 million reais for the quarter. EBITDAR rose 10 percent from the same quarter of 2015, the filing said.

$1 = 3.0889 reais Reporting by Guillermo Parra-Bernal; Editing by David Holmes

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