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Montevideo, September 23rd 2018 - 02:49 UTC

Brazil airline shares soar as regulator admits opening to foreign capital

Wednesday, February 3rd 2016 - 06:15 UTC
Full article 8 comments
Rousseff may propose legislation giving her discretion to let foreign groups own as much as 100% of local airlines, up from 20%, Valor Econômico reported. Rousseff may propose legislation giving her discretion to let foreign groups own as much as 100% of local airlines, up from 20%, Valor Econômico reported.
Gol shares jumped as much as 42% in São Paulo trading before settling to a 29% gain from Friday’s close. Gol shares jumped as much as 42% in São Paulo trading before settling to a 29% gain from Friday’s close.
Delta threw a lifeline to Gol last year with a US$446 million stock and loan agreement. The US carrier owns 9.5% of Gol Delta threw a lifeline to Gol last year with a US$446 million stock and loan agreement. The US carrier owns 9.5% of Gol
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 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

Brazilian airline shares soared nearly 30% on Monday after a newspaper report said the government may scrap limits on foreign ownership of domestic airlines to attract investment to the struggling sector. President Dilma Rousseff may propose legislation giving her discretion to let foreign groups own as much as 100% of local airlines, up from 20%, Valor Econômico reported.

 Market’s confidence was also lifted by higher ticket prices leading to improved quarterly results.

A spokesman for Brazil’s civil aviation regulator said the government is considering opening up airlines to foreign capital, but the matter would have to be approved by Congress. Last year Congress debated a proposal to lift the foreign ownership limit to 49%.

Gol shares jumped as much as 42% in São Paulo trading before settling to a 29% gain from Friday’s close. The stock hit all-time lows last week amid falling demand and a strong dollar, which has driven up fuel and aircraft leasing costs, adding to four years of deep losses.

Separately Gol’s fourth-quarter operating results showed a 6.8% rise in a pricing gauge known as passenger yield, as the company raised prices to restore profitability in the middle of a severe economic recession.

Bradesco analysts Victor Mizusaki and Leandro Fontanesi said in a report that the stronger operating results and possible end of foreign ownership restrictions were triggers for a rally, citing the possibility of a takeover by Delta Air Lines.

Delta threw a lifeline to Gol last year with a US$446 million stock and loan agreement that expanded a 4-year-old strategic partnership. The US carrier owns 9.5% of Gol, entirely concentrated in preferred shares.

Smaller Brazilian rival Azul SA also struck a deal in November to raise US$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, reducing cost savings and contributing to analysts’ concerns with the deal.

The Efromovich family runs Avianca Brasil, the country’s No. 4 airline, separately from Avianca Holdings SA, the Panama-based group operating Colombia’s biggest airline.

A spokesman for Brazil’s civil aviation regulator said the government is considering opening up airlines to foreign capital, but the matter would have to be approved by Congress. Last year Congress debated a proposal to lift the foreign ownership limit to 49%.

Categories: Economy, Politics, Brazil.

Top Comments

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  • Brasileiro

    Open Skies should only be signed with the BRICS countries.

    Feb 03rd, 2016 - 10:19 am 0
  • yankeeboy

    Brazil and Russia are dumping assets as fast as they can.

    I wonder if there will be any buyers out there now..

    Feb 03rd, 2016 - 06:04 pm 0
  • ChrisR

    DumbAss Dilma only MAY do this!

    Any foreign investor with half-a-brain will look at the actions of the patron saint of thieves, St Lula of Shit, and his grab back of Petrobras. THAT will stop it in it's tracks.

    Feb 03rd, 2016 - 06:10 pm 0
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