By Brazil Stock Guide – Brazil’s government on Monday (6) announced a package of measures aimed at supporting the country’s airline sector amid rising fuel costs, including up to 9 billion reais ($1.8 billion) in credit lines, tax exemptions and delayed fee payments.
The plan allocates as much as 7.5 billion reais from the National Civil Aviation Fund (FNAC) to the country’s three largest carriers — Gol Linhas Aéreas (GOLL4 BZ), Azul (AZUL4 BZ) and Latam Airlines (LTM US) — with each eligible for up to 2.5 billion reais. The funds are intended to support financial restructuring efforts as airlines face mounting operational pressures.
Loans will be structured through Brazil’s development bank BNDES or other authorized financial institutions. In addition, the government will offer a separate 1.5 billion reais working capital credit line with a six-month tenor. Final conditions, including eligibility and pricing, will be determined by the National Monetary Council, with the federal government assuming the credit risk.
Authorities also announced a tax exemption on aviation fuel, eliminating PIS and Cofins levies. The move is expected to lower costs by approximately 0.07 reais per liter, providing incremental relief to airlines heavily exposed to fuel price volatility.
In a further liquidity measure, airlines will be allowed to defer payments of air navigation fees. Charges related to April, May and June will only be due in December, easing short-term cash flow constraints.