S&P puts Gol Linhas Aereas on watch

Standard & Poor's said it placed the B+ corporate credit rating on Gol Linhas Aereas Inteligentes SA on CreditWatch with negative implications.

The CreditWatch is based on a view that the company's financial risk profile may deteriorate beyond assumptions for the current rating because of its weaker-than-expected performance during the first half of 2012 and tepid recovery prospects for the remainder of the year, S&P said.

The CreditWatch placement follows the company's results for the second quarter of 2012 and its revised performance guidance for the whole year, the agency said.

While domestic demand is still growing, the passenger air transportation industry in Brazil suffers from overcapacity and a significant increase in operating costs due to higher fuel and lease costs, S&P said.

These factors have hurt the company's profitability and cash generation further in the second quarter of 2012, weakening its credit metrics, the agency said.

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