Gol Linhas Aereas, Brazil's second-biggest airline, reported a second-quarter net loss seven times deeper than a year earlier as fuel costs soared and passenger revenue slipped.

The Sao Paulo-based company, controlled by the Constantino family, reported a net loss of 359 million reais (US$220 million) in a security filing late on Thursday, compared with a year-earlier loss of 52 million reais.

"The loss was chiefly due to the highly competitive scenario in the Brazilian market, which led to a 2.3 percent decline in passenger revenue in the second quarter and pressured operating costs," the airline said in the filing.

Gol shares were down 3.2 percent in early Friday trading at 10.01 reais per share.

The company's shares have fallen 34 percent since July 28, when management cut its 2011 operating margin estimate as fuel prices climbed, offsetting the benefits of a stronger Brazilian currency and strong demand for air travel.

Gol announced in the filing a plan to buy back 10 percent of its preferred shares outstanding over the next 12 months.

"The purpose of the buyback is the purchase of preferred shares to be held in treasury and subsequently resold or canceled, without reducing Gol's capital," the company said in the statement.

Chief Executive Constantino de Oliveira Junior said in a Friday conference call that he expected yields, a gauge of ticket prices, to recover 4 percent to 5 percent by the end of the year after missing Gol's target by 2 percent in the quarter.

Earnings before interest, taxes, depreciation, amortization and lease rentals, a gauge of operating profit in the industry known as EBITDAR, dropped to a loss of 68 million reais from a profit of 274 million reais a year earlier.