January 12, 2017 / 12:24 PM / 2 years ago

Brazil decree would allow 100 pct foreign ownership of airlines -newspaper

SAO PAULO, Jan 12 (Reuters) - The Brazilian government has drafted a decree allowing foreign companies to own 100 percent of airlines based in the country, newspaper Valor Econômico reported on Thursday.

Citing three unnamed aides to President Michel Temer, Valor said the presidential decree in the works would also boost regional aviation with subsidies favoring smaller planes like those made by domestic planemaker Embraer SA.

The decree may be published by the end of January, according to Valor. Media representatives for the president, civil aviation agency Anac and officials at Transportation Ministry were not immediately available for comment.

Foreign ownership of Brazilian airlines was the subject of intense debate last year, with legislative uncertainty leaving investors doubtful of whether the government would pass rules to boost the struggling industry in the face of a harsh recession.

In March, former President Dilma Rousseff issued a decree lifting the limit on foreign ownership of airlines from 20 percent to 49 percent. During congressional review of the measure, however, lawmakers lifted the limit from 49 percent to 100 percent, leading Temer to veto the provision altogether. This returned the limit to 20 percent.

Valor reported that the new decree’s language about foreign ownership was “quite simple” and provided far more details about proposed subsidies for regional routes.

The draft proposal calls for subsidies of about 1.2 million reais ($380,000) per route between select cities in less-populated northern states covering the Amazon rainforest, according to the report.

The measure would subsidize up to 60 seats per flight, Valor reported, giving Embraer regional jets with about 70 seats an economic advantage over larger planes from global heavyweights Boeing Co and Airbus Group SE.

Valor also reported a proposed investment of 300 million reais in 58 regional airports this year, down sharply from 7.2 billion reais in a plan announced by Rousseff in 2012 that got little traction.

$1 = 3.17 reais Writing by Ana Mano; Editing by Brad Haynes and Lisa Von Ahn

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