Brazil says airline bailout settled, but carriers say talks ongoing

By Rodrigo Viga Gaier and Marcelo Rochabrun

RIO DE JANEIRO/SAO PAULO (Reuters) – Brazil’s state development bank BNDES said on Friday that the country’s top three airlines had accepted a $680 million aid package, but two carriers said they were still discussing terms.

Brazilian airlines are clamoring for help as the COVID-19 pandemic ravages the travel industry, but negotiations were deadlocked for over a month until a formal proposal was issued by the Brazilian government this week.

“What we can say is true: We sent a proposal to the airlines this week and yesterday they all accepted,” BNDES President Gustavo Montezano told reporters on Friday.

However, airlines Azul SA (N:AZUL) and LATAM Airlines Group (SN:LTM) denied that they had accepted the proposal and were still negotiating.

“LATAM Airlines Brasil confirms it is interested in the BNDES proposal,” the company said in a statement. “However, negotiations continue.”

Brazil’s largest domestic airline, Gol Linhas Aereas Inteligentes (SA:GOLL4) declined to comment on Friday.

The government’s latest offer totals 4 billion reais ($683 million) and is a mix of state loans through the BNDES, loans from private banks and funding raised in capital markets.

Brazil’s three airlines have said in the past that they are interested but they have balked at outright accepting the terms because BNDES was asking for potential equity ownership in the companies.

Azul expressed disappointment on Thursday at the size of the rescue package, after initial reports that it would be more than twice as large.

Still, the airlines agree they want to benefit from aid. Azul said it has enough cash to run for a year under the current scenario, while Gol said it could run for 10 months.

The airlines have cut capacity by over 90% in Brazil and put tens of thousands of workers on unpaid leave to preserve cash.