By Paulo Winterstein
SAO PAULO--Brazil's Secretary of Civil Aviation asked the
country's national development bank BNDES and civil aviation agency
Anac to carry out an extensive study of the financial health of
Brazil's airlines to determine what aid, if any, the government can
provide, the secretary said Tuesday.
Brazil's airlines have seen costs rise in recent years as the
price of jet fuel climbs and the government raises taxes on air
travel. The government agreed last year to suspend another planned
increase in taxes which would have almost doubled taxes that
airlines pay to use airports, after an increase of 150% in taxes
the previous year.
Brazil wants to ensure that it has healthy airlines to make use
of the airports it is handing over to private operators. The
government has already signed over four airports to private hands,
and plans to auction operating licenses for two more airports this
year. The government has also promised billions of dollars in help
to build and expand regional airports to bolster air travel between
mid-sized cities.
"We can't make an effort to improve our airport infrastructure,
both at the large terminals as well as in regional aviation, if we
don't have robust airlines," Wellington Moreira Franco, the
secretary of civil aviation, told O Estado de S Paulo
newspaper.
In addition to the studies, which the secretary's press office
said has no deadline for completion, the government is considering
changing rules to allow for more foreign investment in the
country's airlines. Foreign investors are limited to holding a
stake of 20% in airlines, but Mr. Moreira has said he is open to
changing those rules.
The country's leading airlines are also rethinking their market
strategy after rapid expansion in supply led to falling
profitability. Although Brazilian air travel had been expanding at
double-digit rates for the past decade, growth slowed last year to
6.8%. Brazil's biggest carriers, Tam SA, which merged with Chile's
Lan SA last year to form Latam Airlines Group (LAN.SN), and Gol
Linhas Aereas Inteligentes (GOLL4.BR) have both committed to
cutting back on supply by almost 10% in the first half of this
year.
To help with the turnaround, Gol--which last year reported a
loss of BRL1.5 billion, doubling the previous year's loss of
BRL751.5 million--announced this week it planned to spin off its
frequent-flyer program, Smiles, and raise BRL1.35 billion which
would be used to pay down part of Gol's BRL3.6 billion in net
debt.
Write to Paulo Winterstein at paulo.winterstein@dowjones.com
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