November 1, 2018 / 12:01 PM / in 9 months

UPDATE 2-Brazilian airline Gol posts steep loss on oil prices, currency

(Adds details from call with analysts)

By Marcelo Rochabrun

SAO PAULO, Nov 1 (Reuters) - Gol Linhas Aereas Inteligentes SA (Gol), Brazil’s largest airline, reported a third-quarter net loss of 409 million reais ($110 million) on Thursday, due to a depreciating local currency and higher oil prices.

The loss was much deeper than a forecast by three analysts for a net loss of $33 million, according to IBES data from Refinitiv, and prompted Gol to revise down its estimates for the entire year.

The company now expects shareholders to lose between 1.8 and 2 reais per share in 2018, compared with a previous estimated loss of between 1 and 1.2 reais per share.

In the third quarter, usually profitable for Brazilian airlines, Gol reversed the net 328 million reais profit it earned in the same period last year.

Gol is particularly sensitive to currency fluctuations because 77 percent of the airline’s debt is in dollars. Foreign exchange swings also affect the purchasing power of Brazilians and the cost of buying oil, priced in U.S. dollars. At the current exchange rate, Gol’s total debt amounts to 8 billion reais.

Gol Chief Financial Officer Richard Lark said in a call with analysts that the airline predicted the real would appreciate in 2019.

According to 30 estimates in Reuters poll published on Wednesday, the real is likely to weaken slightly.

Overall for 2018, the company expects that the depreciation of the real will cost the airline 600 million reais in losses.

Still, the company brought in higher revenue in the quarter than in 2017. Of Gol’s 2.8 billion reais in revenue, 37 percent went towards the cost of fuel, against 26 percent in 2017.

In the nine months so far this year, Gol has posted an accumulated loss of 1.6 billion reais.

$1 = 3.7219 reais Reporting by Marcelo Rochabrun; Editing by Susan Fenton, Bernadette Baum and Susan Thomas

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