Brazil Approves BRL 5 Billion Credit Support for Airlines
Brazil’s Chamber of Deputies has approved a crucial amendment to the National Civil Aviation Fund (Fundo Nacional de Aviação Civil – FNAC) law, a decision that could significantly impact the country’s aviation industry. The revised legislation opens the door for Brazilian airlines to access up to BRL 5 billion (USD 888 million) in credit, marking a major financial lifeline for the sector, reported ch-aviation.com.
The proposal, which has been under discussion for a considerable time, is now awaiting presidential approval. This step is critical as it allows the FNAC to be utilized as a guarantee for financing that airlines desperately need. The legislative change is seen as a strategic move to bolster the financial stability of Brazil’s aviation industry, which has been under severe strain in recent years.
According to reports by CNN Brasil, the revised law will enable the FNAC to serve as a guarantee for loans facilitated by Brazil’s development bank, BNDES. Beyond this, the fund could also be used to support new initiatives such as the financing and development of renewable aviation fuel production projects, a sector that is increasingly important as the world shifts toward more sustainable energy sources.
The aviation industry has responded cautiously but optimistically to the legislative change. LATAM Airlines Brasil has chosen not to comment publicly on the matter at this stage. However, GOL Linhas Aéreas Inteligentes, speaking through the Associação Brasileira das Empresas Aéreas (ABEAR), expressed support for the amendment. GOL highlighted that the release of funds from FNAC could provide critical economic sustainability for Brazilian airlines, which in turn would benefit the entire national tourism sector.
Azul Linhas Aéreas Brasileiras also issued a statement, noting that the approval of the bill allows airlines to access recurring credit lines backed by FNAC. The airline expects to see up to USD 300 million in additional liquidity, which could be a game-changer in terms of maintaining operational stability during challenging times.
The backdrop to this development is the ongoing financial challenges faced by Brazil’s major airlines. The industry has been grappling with significant economic pressures, leading to LATAM Airlines Group and GOL Linhas Aéreas filing for Chapter 11 bankruptcy protection in 2020 and 2024, respectively. Azul, while not yet in bankruptcy, is actively negotiating with stakeholders to strengthen its financial position, with some analysts speculating that a Chapter 11 filing might still be on the table.
The approval of this legislation could be a turning point for Brazilian airlines, providing much-needed financial relief and helping to stabilize the industry. As the bill moves towards presidential approval, the aviation sector is watching closely, hopeful that this amendment could be the key to weathering the economic storm that has battered the industry in recent years. The potential access to BRL 5 billion in credit, underpinned by the FNAC, represents not just a financial opportunity but a critical step towards the long-term sustainability and growth of Brazil’s aviation industry.
Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com