BRAZILIAN GOVERNMENT ANNOUNCES AIRPORT MODERNIZATION PLAN

BRASÍLIA (20 December 2012) – Brazilian President Dilma Rousseff announced today the Logistics Investment Program -- Airports, a program to improve the infrastructure and quality of airport services and to increase access to air transportation for the Brazilian population. The measures are part of the Logistics Investment Program announced earlier this year to improve Brazil’s national infrastructure, including a plan launched in August for Brazil’s roads and railway sector and in early December for the nation’s ports.

"I'm sure 2013 will be a year for growth and advancement in our economy," said President Rousseff today at an event to announce the plan. "In 2013, we will reap the fruits of 2012, when we instituted a policy for logistics - now complete with today’s milestone for airports and aviation."

The main components of the Logistics Investment Program - Airports include:

The concession of management for two of Brazil’s major airports: Galeão Airport in Rio de Janeiro and Confins Airport in Minas Gerais

Creation of INFRAERO Services, a subsidiary of INFRAERO (Brazil’s National Airport Infrastructure Company), which, in partnership with an international operator, will offer planning services, consulting, management, operation support, personnel training and other services related to the operation of airports in Brazil and abroad

Investments and incentives to strengthen and expand regional aviation

Improvement in regulations regarding arrival and departure time slots at airports already operating at full capacity

A decree to regulate the authorization of airports dedicated to general aviation

Galeão and Confins Airport Concessions

The concessions of airport management aim to expand and improve the Brazilian airport infrastructure and to improve the quality of service for air travelers in Brazil. As occurred in the concessions for the Guarulhos and Congonhas airports in São Paulo and the Brasilia airport earlier this year, INFRAERO will retain a 49 percent shareholding in each concession. In addition, INFRAERO will receive dividends arising from such participation and resources from the National Fund of Civil Aviation (FNAC) for investments in other airports.

The process conducted by the government will include the following stages: feasibility studies; submission of preliminary technical, economic and environmental assessments to the Brazilian Court of Audit (TCU); preparation of bidding documents, consultation and public hearing; auction and signature of contracts. During the concession period, the airports will be supervised by the National Civil Aviation Agency (ANAC), which is also managing the contracts.

The consortia interested in the concessions must include an operator with experience in managing airports with over 35 million passengers per year. In addition, the winning operator must retain a minimum of 25 percent shareholding in the consortium. The auction is expected to occur in the second half of 2013.

The Galeão airport received 14.9 million passengers in 2011 and has a capacity of 17.4 million passengers per year. The work currently underway on both terminals of Galeão by INFRAERO should be finished by the 2014 FIFA World Cup and will expand its capacity to 44 million passengers per year.

The Confins airport currently has a capacity of 10.3 million passengers per year and in 2011, received 9.5 million passengers. In December 2013, after completion of work being carried out by INFRAERO, the airport’s annual capacity will be increased to 17.5 million passengers. The projected demand for 2014 is 13 million passengers.

Regional Aviation Plan to Widen and Improve Service

The Federal Government will invest R$ 7.3 billion (US$ 3.5 billion) in 270 airports during the first stage of the regional aviation plan to strengthen and expand the network of regional airports. These measures will improve the quality of service for passengers, add new airports to the regular air transportation network and increase the number of routes operated by airlines. The planned investments aim to achieve that 96 percent of the population will be within 100 kilometers of an airport capable of receiving regular flights. The resources for the investments will come from the National Fund of Civil Aviation (FNAC).

General Aviation Plan to Support Other Forms of Civil Aviation

A decree to regulate the authorization of public civil airports and airfields dedicated exclusively to general aviation will be published on December 21, 2012. This decree will establish protocols for other forms of civil aviation services such as executive aviation, air taxi, training (flying clubs and flight schools), specialized services (agricultural, advertising, firefighting), test flights, as well as marketing and maintenance.

The regulation aims to increase the supply of airport infrastructure dedicated to general aviation. According to the Brazilian Association of General Aviation (ABAG), in 2011, the Brazilian fleet in this segment reached a total of 13,094 aircrafts, an increase of 6.3 percent over 2010.

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