Brazil's monetary council expands airlines' access to public aviation fund

SAO PAULO, Feb 26 (Reuters) - Brazil's National Monetary Council (CMN) decided on Thursday to loosen conditions on loans to airlines ‌backed by the National Civil Aviation Fund (FNAC), a public ‌fund expected to release 4 billion reais ($778.66 million) starting in 2026.

The council is the ​country's top economic policy body and is formed by three members: the finance minister, the planning and budget minister, and the central bank chief.

Brazil's finance ministry said the changes include expanding how airlines ‌can access FNAC to ⁠cover services such as training for pilots and aviation workers, instead of using it only for acquiring ⁠domestically manufactured aircraft and components.

The changes also raise the financing cap for eligible items to 30% of an aircraft's value from 10%, and ​explicitly ​allow loan proceeds to be used ​to secure contractual guarantees, ‌the ministry added in a statement.

"The changes approved aim to make credit lines more in line with the operational reality of airlines, without increasing subsidies or altering the financial conditions of financing," it said.

Government documents seen by Reuters last week had anticipated the changes, ‌which were requests from Brazil's Ports ​and Airports Minister Silvio Costa Filho ​to the finance ministry.

The government ​has argued that carriers need support after the ‌pandemic to purchase aircraft, conduct maintenance ​and buy sustainable ​aviation fuel.

Embraer, the country's largest aircraft manufacturer, could benefit from the higher financing cap.

The largest airlines operating in Brazil ​by market share, Gol, ‌LATAM and Azul, are also poised to benefit.

($1 = 5.1370 ​reais)

(Reporting by Fernando Cardoso, additional reporting by Marcela Ayres ​in Brasilia; Editing by Rod Nickel)