Gol Linhas Aereas, Brazil's second-biggest airline, saw fourth-quarter net income tumble 58.9 percent from a year earlier as a spike in operating expenses ate into profit.
Total consolidated operating costs and expenses jumped 41 percent, with fuel costs rising 56.6 percent, personnel costs climbing 30.3 percent, and maintenance expenses increasing 147.8 percent.
"The company is fully aware that it is experiencing a scenario of new fuel cost and exchange rate levels, and adjusting the cost base to this new reality will be crucial in ensuring disciplined and sustainable growth in the years ahead," chief executive Constantino de Oliveira Junior said in a securities filing on Tuesday.
São Paulo-based Gol posted net income of BRR54.3 million reais (USD$29.89 million), down from BRR132.2 million a year ago, according to the filing.
Earnings before EBITDAR fell to BRR238.9 million reais from BRR475 million a year earlier.
Slowing air traffic growth and a bruising fare battle in the domestic market also hampered the airline's performance last year.
Oliveira has said Gol's focus this year is on profitability over market share, promising investors the airline will be more disciplined with its domestic fleet plans in order to boost profit margins.
Still, some analysts remain doubtful about Gol's ability to cut costs, especially as tensions in the Middle East threaten to send fuel prices up further.
Gol booked an adjusted loss of BRR710 million reais in 2011, compared with a profit of BRR214.2 million in 2010. The loss stemmed from the impact of the real's depreciation against the dollar, rising fuel costs, and non-recurring expenses such as the return of aircraft and contract termination fees, the company said.