Economic and political upheaval in Brazil during the past couple of years has essentially isolated many of the country’s companies, including airlines, from credit markets. Some of the country’s legislators made a bold move earlier in 2016 to lift all foreign ownership restrictions on airlines; but that specific element of legislation was vetoed by the country’s interim government in order ensure other pieces of a larger bill were ratified.
The push for 100% foreign ownership still appears to have some momentum in Brazil’s uncertain political climate. The country’s transportation minister has reportedly stated that the debate over foreign ownership is not over, and he aims to push for re-opening the discussion about ownership caps in the country’s Senate.
In the meantime, Brazil’s 20% foreign ownership cap remains at status quo in a fast-changing Latin American aviation landscape where Avianca is courting foreign investors and Qatar has just tabled its plans to take a 10% share in LATAM. It would be an unprecedented move for Brazil to allow for 100% foreign ownership of its airlines but raising the cap to 49% seems reasonable, and could possibly help Brazil’s largest airline Gol as it works to restructure billions in debt. But changes in ownership laws may not result in investors flocking to Gol when other Latin American airlines offer less risk to investors.
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