OREANDA-NEWS. November 03, 2015. Fitch Ratings expects Brazil's challenging macro and business environment to result in a flat-to-negative revenue growth and negative EBIT margin for Gol Linhas Aereas Inteligentes S.A. (GOL) in 2015. Yields should remain under pressure, reaching a year over year decline during 2015. Fitch expects GOL's gross adjusted leverage (measured as total gross adjusted debt/EBITDAR ratio) to be in the 11.5x-13x range by year-end 2015.

Fitch also expects GOL to maintain adequate liquidity with cash/LTM revenues around 15% during 2015-2016. GOL's liquidity position as of June 30, 2015 represents 15% of the company's LTM June 2015 revenues. The company has taken several actions to maintain adequate liquidity. The following actions occurred, or are expected to have been fully executed, during the second-half of 2015: the issuance of local debentures (private placement) for a total of approximately BRL1.1 billion, the issuance of a USD300 million term loan issuance, and a capital increase of up to USD146 million.

Brazil's current negative economic climate is expected to limit demand growth. GOL's demand, measured as revenue passenger kilometers (RPK), in the domestic and international segments, increased 4.8% and 11.3%, respectively, during the first-half of 2015. Fitch estimates GOL's 2015 demand growth in the low-single digits.

High foreign exchange (FX) exposure is one of Fitch's main credit concerns for GOL. The company's operational results are highly correlated with the domestic economy. GOL's business model has a limited product and geographic diversification. It is primarily oriented to Brazil's domestic passenger market. Due to its limited geographic diversification, the company's FX exposure is high. GOL generates about 90% of its revenues in Brazilian reais while about 60% of its total costs and 80% of its total debt are denominated in U.S. dollars.

Fitch expects GOL to maintain a rational capacity management during 2015, resulting in negative 1% variation in capacity in Brazil's domestic market this year. GOL's 2015 consolidated capacity increase including the international segment is forecasted to be positive around 1%.

Fitch currently rates GOL and its fully owned subsidiaries as follows:

Gol Linhas Aereas Inteligentes S.A. (GOL):
--Long-term foreign and local currency Issuer Default Ratings (IDRs) 'B-';
--Long-term national rating 'BBB-(bra)';
--USD200 million perpetual bonds 'B-/RR4'.

VRG Linhas Aereas S.A. (VRG):
--Long-term foreign and local currency IDRs 'B-';
--Long-term national rating 'BBB-(bra)';
--BRL500 million of local debentures due 2017 'BBB-(bra)'.

GOL Finance, a company incorporated with limited liability in the Cayman Islands:
--USD225 million (USD84 million outstanding) of senior unsecured notes due 2017 'B-/RR4';
--USD300 million (USD154 million outstanding) of senior unsecured notes due 2020 'B-/RR4'.

GOL LuxCo S.A.:
--USD200 million (USD35 million outstanding) of senior unsecured notes due 2023 'B-/RR4'; -
-USD325 million of senior unsecured notes due 2022 'B-/RR4'.

The Rating Outlook is Stable.