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Brazil leader moves to fully open airlines to foreign capital

media President Michel Temer's provisional order lifting limits on foreign ownership of Brazilian airlines comes one day after Avianca Brasil, overwhelmed by debt, filed for bankruptcy AFP/File

Brazil's President Michel Temer on Thursday signed a provisional order that would lift limits on foreign ownership of airlines in the country, his chief of staff said.

The measure gets rid of a 20 percent cap on the proportion of an airline that can be in foreign hands, allowing up to 100 percent foreign ownership.

"This resolves one of the principal problems in Brazilian aviation, which is the source of financing for airlines," said chief of staff Eliseu Padilha, who briefly headed the civil aeronautics department in the previous government and previously served as transport minister.

Padilha said the order will take effect immediately but required congressional approval in 2019 to be fixed in place.

He predicted it would stimulate competition in the Brazilian market by attracting new companies and opening new routes.

Temer's government, which steps down at the end of December, is also hoping the measure will boost tourism.

Embratur, the Brazilian state tourism promotion agency, hailed the move and said it would help increase air travel connections.

Padilha said Temer's order was agreed to by the team who will run a new economy superministry under incoming President Jair Bolsonaro, who takes office on January 1.

Bolsonaro has appointed a free-market economist, Paulo Guedes, to head up that ministry.

The announcement came a day after Avianca Brasil, the fourth-ranked airline in the country, declared bankruptcy.

Padilha said Temer's order was not aimed at helping Avianca Brasil, though added that "some international company could be interested" in rescuing the airline.

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