Brazil approves US $100mn AmericanAirlines maintenance center

REUTERS: Brazil’s government has approved a plan by American Airlines Group Inc to build a maintenance center at Sao Paulo’s Guarulhos airport, a US $100 million investment that will help the U.S. carrier consolidate its South American operations.

A resolution signed by Transportation Minister Maurício Quintella was published on Friday in the official gazette, approving an agreement between the airline and the firm operating the airport. It allows American to use land at the airport for up to 40 years.

Reuters first reported in March that the U.S. airline planned to set up its first aircraft maintenance center in South America at Sao Paulo’s international airport, where it will build a two-bay hangar at a cost of US $50 million plus another US $50 million for parts and tools.

On any given day, American has at least six wide-bodied aircraft parked in Sao Paulo for up to 12 hours, and the hangar will allow it to do maintenance work using the planes’ ground time, said Marta Pantin, a spokeswoman for the airline.

The approval is the latest example of President Michel Temer’s efforts to attract foreign investment to help build road, ports and railways and modernize Brazil’s airports.

Private concessions are now operating the main airports and the government plans to sell shares in public airport operator Infraero through an initial public offering, potentially surrendering control of the agency.

Temer’s government has also discussed ending a rule that restricts foreign ownership of Brazilian airlines to a 20 percent stake.

This week, Brazil’s antitrust agency recommended approval of a business agreement between American and LATAM Airlines Group SA, Latin America’s largest airline.

The agreement allows American to grow in South America by offering more connections and lower fares, but it still requires approval by the U.S. Department of Transportation and that will only happen when an Open Skies treaty between the United States and Brazil goes into effect.

That agreement ending limits on the number of flights between the two countries was signed in 2011 but has not yet been approved by Brazil’s Congress where it faces opposition.