Brazil airline Gol fails to reach deal to incorporate loyalty subsidiary Smiles


SAO PAULO, June 19 (Reuters) - Brazil's largest domestic airline, Gol Linhas Aereas Inteligentes SA , said on Wednesday it had failed to reach an agreement to buy out its independently listed loyalty program, Smiles Fidelidade SA , after five months of negotiations.

The failure of the talks, set up late last year after Smiles minority shareholders resisted efforts to do the deal outright, was a setback for Gol, which said it needed an in-house loyalty program to be competitive.

Gol shares were down 1.75% in early afternoon trading. Smiles shares lost as much as 11% before trading down 5%.

Smiles' generous dividends had attracted minority investors, but its outlook is now unclear, given that its contract with Gol, its only associated airline, expires in 2032.

Gol affirmed again on Wednesday that it did not plan to renew its operating agreement with Smiles, adding that the airline continues to "evaluate alternatives" to improve efficiency and competitiveness.

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