Brazil’s chamber of deputies has approved a proposal modifying the national civil aviation fund (Fundo Nacional de Aviação Civil - FNAC) law, which now includes the possibility of offering airlines up to BRL5 billion Brazilian reais (USD888 million) in credit.
CNN Brasil says the long-sought adjustment is now subject to presidential approval, which allows the fund to be used as a guarantee for financing needed by carriers.
Bloomberg reported the plan is to use the funds to back loans from the country’s development bank, BNDES. Additionally, it may be used for new purposes, such as financing and developing renewable aviation fuel production projects in Brazil.
LATAM Airlines Brasil declined to comment on the matter. Meanwhile, GOL Linhas Aéreas Inteligentes, through the local airlines association in Brazil (Associação Brasileira das Empresas Aéreas - ABEAR) said that it views the approval of the law project as positive, "as it allows the release of funds from FNAC to Brazilian airlines. A credit line in this direction could contribute to the economic sustainability of the airlines, benefiting the entire national tourism chain."
In a separate statement, Azul Linhas Aéreas Brasileiras said the Brazilian congress approved the bill allowing carriers to access recurring credit lines backed by FNAC and that it as an airline expects to have up to USD300 million available in incremental liquidity.
Brazilian carriers have faced intense financial pressure over the last few years. LATAM Airlines Group and GOL Linhas Aéreas filed for Chapter 11 bankruptcy protection in 2020 and 2024, respectively, and Azul is currently negotiating with stakeholders to improve its financial position, and a possible Chapter 11 is not out of the realm of possibilities, Bloomberg reported.
