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Airline Gol posts 7th quarterly loss; Brazil outlook flat

By Roberta Vilas Boas

SAO PAULO, Nov 13 (Reuters) - Shares of Gol Linhas Aereas tumbled to a two-month low on Wednesday after Brazil's second-largest airline posted its seventh straight quarterly loss and forecast no rebound in the domestic market next year.

Gol reported a net loss of 197 million reais ($85 million) in the third quarter, compared to a loss of 309 million reais a year earlier, according to a late Tuesday filing.

After slashing flights within Brazil by about 5 percent in 2012 and 9 percent this year due to weak demand and soaring fuel costs, Gol said in a separate filing it plans to keep the size of its domestic network unchanged next year.

"The adjustments made in the domestic market this year have led the company's supply to a size compatible with the economic scenario expected for 2014," Gol said in the filing.

Gol shares fell as much as 9 percent in Sao Paulo to their lowest since early September before recovering to a 7 percent drop in afternoon trading.

The rocky earnings and glum outlook 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.

Gol plans to continue its push into more profitable international routes, expanding foreign flights by 5 percent to 8 percent next year, chief executive Paulo Kakinoff told analysts on a conference call to discuss earnings.

By flying more internationally and keeping a lid on domestic capacity, Kakinoff said there was room for Gol to continue increasing its average ticket prices next year.

Earnings before interest and taxes, a gauge of operating profit known as EBIT, rose to 37 million reais in the third quarter, compared with an operating loss of 201 million reais a year ago. But analysts said the result was bolstered largely by new leasing arrangements.

"Excluding sale lease-back operations (on some planes), EBIT would have been negative 5.4 million reais in the third quarter," wrote Itau BBA analyst Renata Faber in a client note.