Brazil weighs bailout for troubled airlines as fares skyrocket

Brazil’s development bank is considering granting loans to the country’s airlines as part of a government plan aimed at alleviating financial pressures at Gol Linhas Aereas Inteligentes SA, Azul SA and other carriers that have caused sharp increases in fares. BNDES, as the bank is known, is looking for options to help the airlines come up with sufficient collateral, according to three people with knowledge of the matter. One idea is to turn a public aviation fund into a guarantee fund for those loans, which still needs congressional approval, the people said, asking not to be named because the discussions are private. Azul and Gol need roughly 4b reais ($817m), but BNDES is unlikely to provide the full amount due to how much collateral the airlines can offer, said one of the people. The companies, which weathered the pandemic without filing for Chapter 11 or government aid, are finding themselves in a more challenging position than Latam Airlines Group, which went through bankruptcy. Leftist President Luiz Inacio Lula da Silva has instructed his cabinet to find solutions to lower prices, part of his pledge to restore prosperity to Latin America’s largest economy. “I want more people traveling by plane. I want more poor people traveling,” Lula said in an October interview with a Minas Gerais state TV station. Yet fares have surged nearly 50% since the beginning of 2023, according to government data. They jumped more than 23% in the first-half of December alone versus the prior-year period, which was the main reason why inflation remained above estimates. The government is also launching a new program known as Voa Brasil that will see major airlines offer discounted tickets to students and retired workers. Lula is separately negotiating cuts in aviation fuel prices with state-owned energy major Petroleo Brasileiro SA.<br/>