UPDATE 1-Brasil Travel to cut IPO price tag - sources

* Company may seek price tag cut to lure IPO buyers

* If priced, this would be first IPO in Brazil this year

By Guillermo Parra-Bernal and Joan Magee

SAO PAULO/NEW YORK, Feb 8 (Reuters) - Tourism company Brasil Travel and its shareholders agreed to reduce on Wednesday the price tag for an initial public offering in Brazil that would be the first in the nation this year, five sources said on Wednesday.

The company plans to cut the suggested price per share to 1,000 reais ($578) from a prior range of 1,250 reais to 1,650 reais, said the sources, who are not allowed to speak about the deal publicly. The transaction is expected to price later on Wednesday.

Brasil Travel, the by-product of 35 mergers over the past year, and shareholders said in a securities filing last month that they planed to offer as many as 878,255 common shares. At the new price tag, the offering could raise up to 878.3 million reais ($508 million).

The company, which describes itself as Latin America's largest travel operator by sales volume, sells airline tickets, hotel reservations and foreign exchange services.

According to its IPO prospectus, sales reached 316 million reais in the first nine months of last year, compared with 250 million reais in the same period of 2010.

Earnings before interest, tax, depreciation and amortization, a gauge of operational profitability known as EBITDA, rose 28 percent to 118 million reais in the same period, representing 37.2 percent of revenue.

With proceeds from the IPO, Brasil Travel will create a single online sales platform, boost points of sale and offers more products under its Stella Barros and Vaivoando tourism agency brands.

Brasil Travel hired the investment banking units of Credit Suisse Group, Barclays Plc, brokerage Flow Corretora and Banco Santander to manage the transaction.

Among shareholders of Brasil Travel are an investment vehicle controlled by Rio de Janeiro-based consultancy firm Dalty Assessoria, Banco Modal, and the founding partners of the 35 companies that merged to create Brasil Travel.

Last week, the Brazilian unit of Norway's Seadrill postponed plans to sell up to $1 billion of new shares in an IPO, citing the need to rework contractual terms with state-controlled oil company Petrobras.