Brazil sees American Airlines investment as show of confidence

BRASILIA (Reuters) - American Airlines Inc AAL.O plans to invest $100 million in an aircraft maintenance center in Sao Paulo, a Brazilian minister said on Thursday, touting it as a sign of confidence in Latin America's largest economy despite Brazil's recession and latest political turmoil.

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Investment Partnerships Minister Wellington Moreira Franco said the U.S. airline would set up its first maintenance center in South America at Sao Paulo’s Guarulhos international airport.

“An American Airlines executive told me today the company does not share the pessimistic view of Brazil in the media and believes Brazil’s market will grow strongly,” he told Reuters.

Moreira Franco said road shows in the United States, Britain, France and Japan revealed investor interest in Brazil’s changing business climate since conservative President Michel Temer took power following the removal of impeached leftist Dilma Rousseff last year.

American Airlines spokesman Josh Freed said the No. 1 U.S. airline by passenger traffic has plans to invest in Brazil but that he could not immediately confirm the amount.

Moreira Franco said services to other airlines could eventually be offered at the maintenance center, but Freed said any work done in Sao Paulo would only be on American Airlines aircraft.

Private concessions are being decided according to market supply and demand and not by ideological criteria used by Rousseff that discouraged investors from building roads and railways or upgrading airports, Moreira Franco said in an interview.

The Temer government plans to end a 20 percent restriction on foreign stakes in Brazil’s airlines and allow open participation by investors from other countries, though a bill must still be sent to Congress.

“You don’t need a percentage for ownership stakes. This is a new reality,” he said.

Four airports will be auctioned to private concessionaires on March 16, and the state company that manages Brazil’s airports will not take part for the first time.

Temer launched a plan for further infrastructure concessions on Tuesday aiming to raise 45 billion reais ($14.43 billion) in investment to build and operate roads, port terminals, railways and power transmission lines. [nL2N1GK1TQ]

The plan is at the heart of Temer’s efforts to restore Brazil’s credibility and pull Latin America’s largest economy out of its worst-ever recession after the end of a commodities boom and a decade of rule by the leftist Workers Party.

Temer is betting on private investment to revive the economy despite political turbulence from a massive scandal involving bribery and political kickbacks on government contracts.

Moreira Franco, and the president himself, have been named in plea bargain testimony by defendants as beneficiaries of graft money, along with other cabinet ministers and leaders of his PMDB party. They deny any wrongdoing.

“That has nothing to do with the business world,” he said. “Our only concerns are to lower inflation, interest rates, unemployment and restore growth.”

Moreira Franco said the government’s main challenge was to ensure a majority in Congress to push through a pensions reform bill that is key to bringing a widening budget deficit under control.

Additional reporting by Lisandra Paraguassu and Alana Wise in New York; Editing by Daniel Flynn and Tom Brown