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UPDATE 4-Brazil's Azul cuts international flights; carriers expect government aid

Marcelo Rochabrun and Jake Spring

aid@ (Updates with expected announcement on Brazilian government aid)

SAO PAULO/BRASILIA, March 16 (Reuters) - Brazilian airline Azul said on Monday it will cut all international flights out of its main hub in Sao Paulo state, while the country's government is likely to roll out a relief package as the sector struggles with the coronavirus pandemic.

The speed of cancellations is accelerating from what airlines said they expected last week. Latin American airlines, including Azul, had announced last week they would cut no more than 30% of their international flights.

Shares in Azul were down almost 20% on the news in trading in Sao Paulo.

Brazil's government is expected to announce a relief package later on Monday for the civil aviation sector that would include tax deferrals, but no tax cuts, a spokesman for Brazil's Infrastructure Ministry told Reuters.

The details still must be finalized and agreed to with the Economy Ministry and office of the president's chief of staff, the spokesman said.

The civil aviation industry has been asking for government aid in recent days through its main lobbying arm, trade group Abear.

Abear had asked for a list of six items mostly focused on the removal of taxes, including on airline ticket sales and payroll.

Airline industry groups around the world have asked for significant government help, especially in the United States and Europe.

CANCELLATIONS

South America's largest carrier, LATAM Airlines Group , on Monday reiterated its guidance from last week, when it announced it was cutting 30% of its international flights.

"We will maintain the flexibility to take additional measures, if necessary, due to the speed at which events are unfolding," the company said in a statement.

LATAM shares were down almost 16% in trading in Santiago.

Other carriers have also been canceling flights to Latin America. American Airlines said over the weekend it would cut all of its flights to Brazil and to much of the rest of South America.

As Azul ratchets up cancellations, it is unclear what, if any, international flights it will keep. Azul flies mainly to the United States and Portugal.

The airline added it would cut up to 50% of its capacity by next month and adopt measures to cut costs, including cutting executive salaries by 25%, significantly lower than the cuts taken by airline executives in the United States.

Brazil's Gol Linhas Aereas Inteligentes has not made specific announcements yet, but it only operates international flights within Latin America.

Shares in Gol were down 20% on Monday.

(Reporting by Marcelo Rochabrun and Jake Spring; Additional reporting by Ana Mano; Editing by Nick Zieminski, Grant McCool and Paul Simao)