On December 13, 2018, the Brazilian federal government issued the Provisional Measure No. 863/2018 (“MP 863/18”), which amended the Brazilian Aeronautical Code by removing longstanding limitations on foreign ownership of voting shares in Brazilian airlines.

Now approved by the Brazilian House of Representatives with a modification in the original text – forcing the airlines to check in luggage up to certain weight for free, and by the Brazilian Senate on May 22, MP 863/18 allows foreign shareholders to hold up to 100 percent of the voting stock in Brazilian airlines and air service companies and lifts the restriction on foreign management of domestic carriers. Previously, foreign investors could hold a maximum of only 20 percent of voting shares in local airline and air service companies.

In the new scenario of Brazilian civil aviation, foreign investors will be able to draw new investments, which should lead to a review of existing corporate agreements with national airlines and the creation of new airlines targeting national and regional operations.

MP 863/18 also streamlines the process for transferring shares in Brazilian airline companies by removing the requirement that entitled the Brazilian National Civil Aviation Agency (ANAC) to review and approve share transfer transactions as well as any amendments to the carriers’ corporate documents.

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MP 863/18 still needs to be sanctioned by the president before it becomes permanent law. For more information about the matter, please contact João Paulo Servera, partner of the Aviation & Aircraft Finance Practice at Cascione, at jpservera@cascione.com.br