Lula wants strings attached to Brazil’s rescue plan for airlines

Brazil’s government has presented its aid plan for the airline industry to the three largest players in the country with an announcement expected in the second half of the year, according to people familiar with the matter. After setbacks and delays, talks with Azul SA, Gol Linhas Aereas Inteligentes SA and Santiago-based Latam Airlines Group are progressing but sticking points remain, the people said on condition they not be named discussing private matters. President Luiz Inacio Lula da Silva’s team wants something back from the airlines in return for the rescue package. Some sort of compensation makes sense, Treasury Secretary Rogerio Ceron said in an interview, given the companies would receive a form of “structural aid” to alleviate their financial burdens. Azul’s top executive acknowledged progress is being made. “We are working with the government on possibilities. We will have some news on the agreement in two weeks,” CEO John Peter Rodgerson said Monday by phone, adding that there’s no scheduled date for a full announcement of the rescue plan. Lula, who campaigned on a pledge to restore prosperity in Brazil, wants to cut fares enough to allow the poor to fly regularly. In exchange for aid, it’s possible the government will demand more flight offerings. But that would run up against production delays on new aircraft and supply chain bottlenecks, according to Carolina Chimenti, an analyst at Moody’s Ratings. “It’s hard to picture a scenario where supply goes up significantly and fares go down” she said.<br/>