On 13th December 2018, Provisional Measure No. 863/2018 was published in the Official Gazette, amending Law No. 7,565/1986 (best known as the Brazilian Aeronautical Code).

The change introduced by such Provisional Measure is the increase, from 20% to 100%, of the authorized voting equity that a foreign company can hold in a Brazilian airline company.

This change has the potential to boost M&A transactions involving existing Brazilian airlines companies, as well as to attract new airlines to the market, and also to  reduce fares for the consumer, and increase the number of routes and flights offered.

It is important to remember that although the Provisional Measure became immediately effective, the continuity of its existence in the Brazilian legal system depends on its approval by Congress. If such Provisional Measure is rejected by Congress, or is not converted into law within 120 days of its issuance, it will lose its effectiveness as from the day of its issuance. In this case, Congress is encumbered in regulating the legal relationships created during this 120-day period, and, if Congress does not issue such regulation, the legal relationships shall continue to be governed by the extinct Provisional Measure.