Brazil Raises Foreign Ownership Limit on Airlines to 49%
Brazil has a population of over 200 million people. Yet despite its size, it has been extremely cautious of foreign investment. For years, laws have prevented foreign investors from diluting Brazil’s economy with restrictions on land purchases and operations in certain pivotal industries. But the recent drop in the value of Brazil’s currency has now created an impetus for the government to loosen the restrictions placed on foreign investments.
New, more relaxed restrictions are creating investment opportunities that have never existed before for non-Brazilians. Foreign investors are primed to move quickly because they know that when the Brazilian economy rebounds, restrictions on foreign investment may tighten again.
The aviation industry is a prime example of the new economic opportunities for foreign investors in Brazil. According to an article published by Reuters:
Brazil has lifted the legal limit on foreign ownership of local airlines to 49 percent, from 20 percent previously, according to a presidential decree…opening the door to more help for troubled carriers.
The unprecedented news that Brazil has raised the foreign ownership limit in airline companies is bound to make waves within the aviation industry. International airlines co-exist in a competitive industry that normally has to look at acquisitions as a way of expanding market share. The opportunity to invest in Brazil’s airline industry will have large, corporate investors scurrying to broker a deal.
Some airlines in Brazil already partner with larger, international airlines. For instance, Gol Linhas Aéreas Inteligentes has an existing relationship with Delta Airlines, and the Brazilian airline company Azul Linhas Aéreas has received funds from China’s HNA Group. However, there are still airlines in Brazil that are not currently funded by foreign interests.
International airlines will see the new investment opportunity as a way to expand the services they offer to their customers while maintaining competitive ticket prices for passengers.
Relaxed investment restrictions in Brazilian airlines may be a sign of more investment opportunities in other Brazilian industries on the horizon for savvy foreign investors that are poised to move quickly. So stay tuned…