Thu May 29, 2014 11:18am EDT

May 29 (Reuters) – Gol Linhas Aereas SA has approved a capital increase of up to 185.8 million reais ($82.9 million), opening the door for an investment by Air France KLM SA as Brazil’s No. 2 airline bolsters its international connections.

Gol’s board approved the deal late on Wednesday, finalizing the terms of an accord struck in February, when Air France pledged to invest $100 million in a partnership with the Brazilian airline.

Gol said it would sell up to 6.78 million new preferred shares at 27.40 reais each, a 96 percent premium over Tuesday’s closing price. Air France will subscribe 116 million reais of the capital increase and current shareholders will have the first rights to the rest of the new shares.

Shares of Gol rose 1.5 percent in Sao Paulo trading to 14.21 reais, among the biggest gainers on the benchmark Bovespa stock index, which slid 0.1 percent.

About half of Air France’s investment will go toward the capital increase, giving it a 1.5 percent stake in Gol, with the rest coming in the form of commercial agreements and a bonus based on cost savings.

The deal highlights the hefty premium that Gol can attract with foreign partnerships, as it did with a $100 million investment from Delta Air Lines Inc agreed in 2011.

Unlike Brazil’s biggest airline – the TAM division of Latam Airlines Group SA, which is a member of the Oneworld alliance – Gol is not part of a global airline alliance, giving it more flexibility in the partners it chooses.

The capital injections negotiated by Gol have helped finance its push into foreign routes, helping with a turnaround strategy after two years of heavy losses due to high fuel costs and slowing domestic passenger growth.

($1 = 2.24 Brazilian reais)