Fitch lowers Gol Linhas Aereas

Fitch Ratings said it downgraded Gol Linhas Aereas Inteligentes SA's foreign- and local-currency long-term issuer default ratings to B- from B+, long-term national rating to BBB-(bra) from BBB(bra) and $200 million perpetual bonds to B- with a recovery rating of RR4 from B with a recovery rating of RR5.

Also downgraded was subsidiary VRG Linhas Aereas SA's foreign- and local-currency long-term issuer default ratings to B- from B+, long-term national rating to BBB-(bra) from BBB(bra) and $200 million of senior notes due 2023 to B- with a recovery rating of RR4 from B with a recovery rating of RR5.

The agency also downgraded GOL Finance's foreign- and local-currency long-term issuer default ratings to B- from B+, $225 million of senior notes due 2017 to B- with a recovery rating of RR4 from B with a recovery rating of RR5 and $300 million of senior notes due 2020 to B- with a recovery rating of RR4 from B with a recovery rating of RR5.

Fitch also affirmed VRG's R$500 million of senior notes due 2017 at BBB-(bra).

The outlook is negative.

The downgrades reflect continued deterioration in Gol's credit profile, driven by poor operational results and the expectation of limited recovery in the company's cash flow generation during 2013, the agency said.

High fuel prices, which represent about 40% of the company's operating costs, hurt the company's profitability, as did the depreciation of the Brazilian real relative to the dollar, Fitch said.

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