* Brazil airline creates separate structure for Smiles unit
* Decision on potential Smiles IPO slated for April or May
* Operating loss widened in third quarter from year ago
By Brad Haynes and Asher Levine
SAO PAULO, Nov 14 Brazilian airline Gol Linhas
Aereas will structure its Smiles customer
loyalty program as a separate business unit by the end of the
year and decide on a possible public listing of the division in
April or May, executives said on Wednesday.
An initial public offering of the loyalty program would
provide a welcome burst of new capital for Gol as it struggles
to reverse operating losses this year due to softer domestic
demand and high fuel prices.
"We expect to discuss the possible capitalization of
Smiles," Chief Executive Paulo Kakinoff told analysts on a
conference call. "We estimate between April and May we'll be
ready to bring that discussion to the board and evaluate the
market prospects for an IPO, which would be the most interesting
strategy for the company at the moment."
Gol's shares rose 2.5 percent to 10.35 reais, reverting
early losses after the company posted its fifth quarterly loss
in a year and a half.
The airline lost a net 309 million reais ($150 million) in
the third quarter due to rising fuel costs and airport fees,
compared with a 517 million-reais loss a year earlier.
The loss before interest and taxes widened to 201 million
reais from 75 million reais a year ago, according to a
securities filing late on Tuesday.
Last quarter, Gol said it expected a 2012 loss before
interest and taxes, scrapping a prior forecast for a profit
equal to between 4 percent and 7 percent of revenue.
A 26 percent increase in fuel costs and 62 percent rise in
aircraft rental costs continued to erode profitability. But a
more stable exchange rate led to just 6 million reais in
currency-related losses on the company's debt, down from 476
million reais a year earlier.
A weaker currency still hurt Gol's operations as Brazil's
real fell nearly 8 percent in the year through September,
driving up the cost of dollar-denominated expenses such as
leasing, fuel and maintenance.
Earnings before interest, taxes, depreciation, amortization
and aircraft leasing fell 23 percent to 96 million reais.