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SAO PAULO, Nov 10 (Reuters) - Brazil's third-biggest airline will cancel or postpone deliveries of Embraer regional jets if lawmakers do not drop a change in a new aviation law, the chief executive of Azul Linhas Aereas told Reuters on Monday.
The proposed change to a bill drawn up by President Dilma Rousseff would remove the competitive advantage of jets made by Brazilian planemaker Embraer SA on less profitable regional routes the government wants to expand.
"What's happening is a distortion of the plan so that it's more attractive to fly bigger planes," said Azul Chief Executive Officer Antonoaldo Neves in a telephone interview.
He said he would look to add bigger aircraft made by Boeing Co or Airbus Group NV.
Neves said an order for 30 of Embraer's next-generation E195-E2 aircraft, which enter service in 2019, hangs in the balance. He would also have no need for eight of the current generation E195s due for delivery in 2015.
The regional aviation plan is turning into one of the first big legislative fights since Rousseff's narrow reelection last month, as she confronts lawmakers emboldened by opposition victories.
Senator Fernando de Souza Flexa Ribeiro, the opposition lawmaker overseeing the bill, will meet ministers on Tuesday ahead of a key committee vote.
Flexa Ribeiro told Reuters he was pushing to remove a limit of 60 subsidized seats on regional flights and instead subsidize 50 percent of passengers on flights to smaller cities.
Neves complained that would tilt the playing field toward larger aircraft and discourage airlines from adding more routes to Brazil's most under-served airports.
"If the plan is approved without a seat limit, I'll pull out of 20 cities next year," he said. "I'll take those resources and put them into cities where I can fly bigger planes."
Embraer CEO Frederico Curado also expressed concerns last week.
"We are hoping that, in Congress, they do not distort the bill sent by the executive branch, but now it's really down to the basic politics in Congress," he said on an earnings call on Thursday.
Rivals Gol Linhas Aereas Inteligentes SA and the TAM unit of Latam Airlines Group SA have said they were considering buying Embraer jets under the new regional aviation plan. Neither airline responded immediately to requests for comment. (Reporting by Brad Haynes. Editing by Andre Grenon)