UPDATE 2-Brazil government to veto proposal on foreign airline ownership
(Adds result of Senate vote on Wednesday)
BRASILIA, June 29 (Reuters) - Brazil's interim government said on Wednesday it will veto an amendment to an aviation bill scrapping limits on foreign ownership of domestic airlines to save the rest of its air-transport legislation from Senate opposition.
Brazil's Chamber of Deputies, its lower house of Congress, amended the bill earlier this month to allow foreign companies to own up to 100 percent of Brazilian flag carriers. The original bill only raised the limit to 49 percent from the current 20 percent.
Some senators, though, are concerned unrestricted foreign investment will harm smaller regional airlines. On Wednesday, the upper house approved the bill, but only after Brazil's interim-President Michel Temer promised to veto all foreign ownership provisions in the bill before signing the rest, leaving Brazil's limit unchanged at 20 percent.
"The bill will be approved as it is and then the government will veto this proposal (on foreign ownership)," Presidential Chief of Staff Eliseu Padilha told reporters. "Afterwards, we will send this issue back for a deeper debate in the Senate."
Interim President Michel Temer, who has replaced suspended President Dilma Rousseff while she stands trial in the Senate for allegedly breaking fiscal rules, supports lifting limits on foreign ownership in a bid to help Brazilian carriers struggling with the deepest recession in decades in Latin America's largest economy.
Shares of local airline Gol Linhas Aéreas Inteligentes SA , partly owned by U.S. carrier Delta Airlines Inc , slipped after Padilha's comments and were down 5 percent in early afternoon trading. (Reporting by Maria Carolina Marcello; Writing by Caroline Stauffer and Daniel Flynn; Editing by Bernard Orr)
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