(Adds minister confirming decree, quote from executive)
By Brad Haynes and Paula Laier
SAO PAULO, April 11 Brazilian airline stocks
surged on Tuesday as an end to limits on foreign capital and the
sector's first new listing in more than a decade opened the door
to more investment in the industry amid an incipient recovery
and a wave of airport privatizations.
Shares of Azul SA jumped as much as 9 percent in
their market debut after a bigger-than-expected dual initial
public offering in New York and Sao Paulo raised 2 billion reais
($636 million) for the market's No. 3 carrier.
Larger rival Gol Linhas Aereas Inteligentes SA
also gained nearly 8 percent on news that President Michel Temer
planned to allow full foreign ownership of the country's
carriers, expanding funding options for the debt-laden sector.
Temer will sign an executive order on Tuesday allowing
foreign owners to hold as much as 100 percent of Brazilian
airlines, up from the current 20 percent limit, said Tourism
Minister Marx Beltrão, confirming a Reuters report.
The measure removes a barrier to foreigners who have poured
millions into Brazilian airlines this decade, from Gol partner
Delta Air Lines to Chinese Azul investor HNA Group and
Chile-based LATAM Airlines Group SA, which controls the biggest
carrier in Brazil.
Foreign capital restrictions led to the complex structure of
a 2012 tie-up between the Chilean and Brazilian airlines then
known as LAN and TAM, one of several factors that produced
disappointing returns from the blockbuster merger.
Brazil's air travel industry has also suffered for the past
four years from a severe economic downturn that sapped demand
and weakened the local currency, driving up the cost of
dollar-denominated fuel and aircraft leasing contracts.
That slump has shown signs of ending this year, as deep cuts
to domestic fleets have helped to fill planes and lift prices,
while Temer has kicked off a national infrastructure program by
privatizing four airports and eyeing ten more.
The good news culminated for Azul with a successful IPO on
Monday after years of false starts, valuing the company at $2.4
billion, according to a source familiar with the deal. It was
the biggest new listing in Brazil since April 2013 and the first
airline to go public since Gol's 2005 IPO.
"It shows you the confidence of investors in the economic
recovery," Azul President Antonoaldo Neves told journalists at
the Sao Paulo Stock Exchange. He declined to discuss the
airline's plans for the cash.
($1 = 3.14 reais)
(Reporting by Brad Haynes and Paula Laier; Additional reporting
by Bruno Federowski and Alberto Alerigi Jr.; Editing by Meredith
Mazzilli and Chizu Nomiyama)