UPDATE 1-Brazil's Gol could further cut domestic flights in 2014

Mon Nov 25, 2013 10:34am EST

SAO PAULO Nov 25 (Reuters) - Brazilian airline Gol Linhas Aereas could continue cutting its domestic network in 2014 if necessary, Chief Executive Paulo Kakinoff said on Monday, highlighting uncertainty about economic growth.

Gol has forecast a stable outlook for flights in Brazil next year after high jet fuel prices and weak demand forced it to slash its network by about 14 percent since 2011.

"The forecast of stability (in 2014) should be considered a ceiling. It does not mean we have ruled out future reductions," Kakinoff told investors in Sao Paulo. "A key factor that we are not in a good position to predict is GDP."

Economists are expecting growth of Brazil's gross domestic product to slow to 2.1 percent next year after expanding 2.5 percent in 2013, according to a central bank survey published on Monday.

Gol is one of many Brazilian companies bracing for a tough year ahead through layoffs, asset sales and other cutbacks aimed at restoring profitability and bolstering balance sheets.

The struggles for Gol have been magnified by a weaker currency driving up fuel costs and contributing to a net loss of more than 2.9 billion reais ($1.3 billion) since the start of 2011.

Gol's rocky earnings and glum outlook have reinforced concerns about the ability of Brazil's airlines to handle an onslaught of foreign fans during the 2014 World Cup. Shrinking domestic operations have led tourism officials to suggest allowing foreign carriers to run routes within Brazil during the tournament - a proposal opposed by the aviation minister.

Concerns about transporting an expected 600,000 international visitors to the soccer tournament are overblown, said Gol's Chief Financial Officer Edmar Lopes.

"During the World Cup you have an increase in leisure but a decrease in business travel," Lopes told Reuters in an interview. "The net effect is already reflected in our forecasts."

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