Fitch lowers Gol Linhas

Fitch Ratings said it downgraded Gol Linhas Aereas Inteligentes SA's foreign- and local-currency long-term issuer default ratings, $200 million perpetual notes and $200 million senior note due to 2017 to BB from BB+ and its long-term national rating to A+(bra) from AA-(bra).

The outlook has been revised to negative.

The agency said Gol's downgrade reflects the deterioration of the company's credit profile, the reduction in its historical solid liquidity position and negative pressure on its performance from the Brazilian airline sector problems experienced in 2007 coupled with competition, losses from recently acquired VRG Linhas Aereas SA and rising fuel prices.

The 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 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.

For the last 12 months ended March 31, the adjusted total-debt-to-EBITDAR ratio was 10.5 times.

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