Brazil Raises Airline Foreign Ownership Limit

Brazil has lifted the legal limit on foreign ownership of local airlines to 49 percent, from 20 percent previously, opening the door to more help for troubled carriers.

Weak domestic demand and the sharp depreciation of Brazil's currency have caused deep operating losses, forcing airlines to cut routes and jobs and seek foreign partners.

The decision to let them deepen those partnerships reflects a major policy shift by President Dilma Rousseff, opening up one of the Western hemisphere's most-closed economies to badly needed capital to halt a severe economic recession.

Interim aviation minister, Guilherme Ramalho, told Reuters news agency that the government was working on the proposal to increase ownership in two stages.

Ramalho and other government officials want to allow foreign groups to have controlling stakes in local airlines.

Congress has debated the measure since last year, with anticipation of a presidential decree last week drove up Gol's share price.

Delta Air Lines threw Gol a lifeline last year with a USD$446 million stock and loan agreement. The US carrier currently owns 9.5 percent of Gol in preference shares.

Smaller Brazilian rival Azul also struck a deal in November to raise USD$450 million from China's HNA Group after repeatedly postponing a planned initial public offering since 2013.

Brazil's biggest airline, TAM, resorted to a complex two-tier ownership structure to pull off the 2012 merger forming Chile-based Latam Airlines Group.

The Efromovich family runs Avianca Brasil, the country's fourth-biggest airline, which is separate from Avianca Holdings, the Panama-based group operating Colombia's biggest airline.