NEW YORK, Nov 14 (Reuters) - Decades-old regulations barring foreigners from owning Brazil’s airlines are outdated and “might make no sense anymore,” the top executive of Brazil’s largest airline, Gol Linhas Aereas Inteligentes SA, said on Wednesday.
Foreigners are limited by law to a 20 percent stake in any Brazilian airline’s voting stock. But while Brazil may be entering an economic liberalization phase - far-right President-elect Jair Bolsonaro has vowed to cut spending and privatize state companies - Gol Chief Executive Officer Paulo Kakinoff said it is unclear whether the new administration will seek to loosen the existing regulations.
“Our company has always been in favor of bringing to our country all the conditions to have access to foreign capital without any kind of restriction,” Kakinoff told Reuters in an interview. “This should be one of the positive effects of having some change in the current legislation.”
Outgoing President Michel Temer has said he is in favor of allowing full foreign ownership. In 2017, he said he would enact this change through executive action, only to change his mind and submit a bill to Congress, where the plan has stalled.
Kakinoff added that Gol is not currently in talks with Delta Air Lines Inc, which owns a 9.5 percent stake in Gol preferred shares, or any other entity, about taking a bigger stake in the Brazilian carrier.
In October, Gol said it planned to acquire full control of its listed loyalty program, a subsidiary called Smiles Fidelidade SA.
Gol’s stock surged in response, while Smiles’ plummeted almost 40 percent in one day.
Gol Chief Financial Officer Richard Lark said the airline needed to incorporate Smiles to avoid “competitive disadvantages,” especially with its largest local rival, Latam Airlines Group SA, which earlier this year decided to gobble up its loyalty program company, called Multiplus SA.
A key difference in the transactions, however, is that Latam offered cash to investors, while Gol is offering only its own preferred stock, with the exchange ratio yet to be defined.
Some minority shareholders have criticized the transaction, saying they will lose voter rights if their Smiles shares are exchanged for Gol shares, a charge the airline disputes.
“Although the company owns preferred shares in the operational company, decisions about the airline and the loyalty program will continue to be taken at the board of Gol. It won’t be a shell company,” Lark said. (Additional reporting by Marcelo Rochabrun; Editing by Dan Grebler)