Tax Payment Dents Gol's Quarterly Profit

February 23, 2011

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Gol, Brazil's second-largest airline, on Wednesday reported a fall of 67 percent in its fourth-quarter net income as a higher tax payment outweighed strong air travel growth in Latin America's largest economy.

Gol's net income fell to BRR132.2 million reais (USD$78 million) from BRR397.8 million for the same period a year earlier, it said in a securities filing.

The fall largely reflected a tax payment of BRR85.65 million compared with a tax credit of BRR351.4 million that helped inflate its net profit in the year-ago period. Net profit gained 20.2 percent from the third quarter of 2010.

EBITDAR, earnings before interest, tax, depreciation, amortisation and rental leases, rose 64 percent from a year ago to BRR475 million. Its net operating income jumped 15.6 percent to BRR1.87 billion.

Buoyed by a booming economy and rising wages, more Brazilians are hopping on planes for business and leisure travel, and air travel demand rose a record 23.5 percent last year.

Gol's net sales jumped 15.6 percent to BRR1.87 billion as the orange-bannered airline transported 8.96 million passengers, up 7 percent from the last quarter of 2009. A reduction of 10 planes to a fleet of 111 jets helped Gol's load factor, which rose to 67.1 percent from 63.6 percent in the year-ago period.

A 29.4 percent rise in fuel costs, reflecting a jump in global oil prices, also helped depress Gol's profits.

In January, Gol said it expected domestic air travel demand to rise 10 percent to 15 percent in 2011 and it would add four new aircraft to its fleet.