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Gol Rises to Five-Month High on Profitability: Sao Paulo Mover

Oct. 22 (Bloomberg) -- Gol Linhas Aereas Inteligentes SA, Brazil’s second-biggest air carrier, advanced to a five-month high after profitability rose last month.

The shares climbed 6.5 percent to 11.96 reais at the close of trading in Sao Paulo, the highest since May 14. It was the second biggest gainer on the Ibovespa stock gauge, which added 0.7 percent.

Net passenger income per available seat-kilometer, a measure of profitability known as Prask, rose 23 percent in September from a year earlier, the 18th consecutive increase, Gol said in a regulatory filing yesterday after the market closed. Domestic flights dropped 8.5 percent from a year ago as the carrier seeks to better align capacity with demand.

The “rationalization strategy” is bolstering results, Renato Mimica, Felipe Nussli and Samuel Alves, analysts at Grupo BTG Pactual, wrote in a note to clients today. Sao Paulo-based Gol is cutting costs, reducing its workforce as of June by 13 percent from a year earlier.

The shares have tumbled 7.3 percent this year as a falling Brazilian real drove up costs for dollar-denominated expenses such as fuel, plane leases and debt payments. The Ibovespa is down 7.4 percent and the currency has weakened 5.5 percent.

TAM Linhas Aereas SA, the Brazilian unit of Latam Airlines Group SA, is Brazil’s largest air carrier by market share.

To contact the reporter on this story: Denyse Godoy in Sao Paulo at dgodoy2@bloomberg.net

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

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