UPDATE 1-Brazil to propose raising foreign stake in local airlines -minister
(Adds minister and lawmaker comments and context)
By Alonso Soto and Leonardo Goy
BRASILIA Feb 29 (Reuters) - Brazil plans in the first half of the year to propose to Congress an increase in the foreign ownership of local airlines, Interim Aviation Minister Guilherme Ramalho told Reuters on Monday, in a market-friendly move to help the struggling sector.
The government continues to discuss the percentage increase in foreign ownership, but believes an increase from the current 20-percent limit is key to bolster investment in local airlines, Ramalho said.
"This is a very favorable moment to attract foreign investment... we should not restrict the access of capital of these companies," said Ramalho. "The government has a joint position on this matter and that is key for its approval."
The proposal reflects President Dilma Rousseff's major shift in policy to open up one of the Western Hemisphere's most-closed economies and bring in badly needed capital to halt a recession entering its second year.
Ramalho said it is "very possible" that the government will propose an initial increase in the foreign ownership stake to be followed by another depending on market reaction and foreign interest.
The Finance Ministry is working on a proposal to raise the ownership stake cap to 49 percent from 20 percent with the option of acquiring a controlling stake if approved by local aviation and competition authorities, a government official told Reuters.
Brazilian airlines such as Tam and Gol Linhas Aéreas Inteligentes SA have cut flights and fired staff to cope with what is expected to be the country's worst recession in a century. The sharp depreciation of Brazilian real has exacerbated the crisis in the country's aviation sector. Continuación...