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Gol Surges Most This Year on Fuel Tax Outlook: Sao Paulo Mover

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April 18 (Bloomberg) -- Gol Linhas Aereas Inteligentes SA, Brazil’s second-biggest air carrier by market share, surged the most this year as investors speculated a reduction in fuel taxes could help the company reduce costs.

Shares surged 11 percent to 12.79 reais at the close of trading in Sao Paulo, the steepest one-day gain since Dec. 26. Trading volume on the shares was 3.3 times the three-month daily average, according to data compiled by Bloomberg. It was the best performance on the benchmark Bovespa index, which advanced 0.5 percent.

Distrito Federal, the district where Brazil’s government is seated, is lowering a tax on airline fuel to 12 percent from 25 percent, Agencia Estado reported today. The news service cited the head of the country’s association of airlines, Eduardo Sanovicz. The reduction could save airlines 131 million reais ($65 million) a year, Agencia Estado reported. The state of Rio de Janeiro already has a 12 percent tax on airline fuel.

“This is beneficial for the company,” Pedro Galdi, the chief strategist at Sao Paulo-based brokerage SLW Corretora, said in a telephone interview. “The company’s capital structure is in a very complicated spot right now, and a reduction of costs is in line with what the company is trying to do.”

In the fourth quarter, fuel accounted for 38 percent of Gol’s operational expenses, according to a company filing. The airline said it would pay bonuses to pilots for saving fuel, Folha de Sao Paulo reported on April 15.

Gol is reducing domestic capacity by 7 percent in 2013 as it tries to improve margins. The airline posted a net loss of 447.1 million reais in the last three months of 2012, exceeding the average analyst estimate of 210.8 million reais, data compiled by Bloomberg show.

The company is also conducting an initial public offering of its frequent-flier unit, Smiles SA, to raise cash and reduce debt.

To contact the reporter on this story: Julia Leite in New York at jleite3@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net