According to recent company statements and ongoing negotiations, LATAM Airlines is actively considering incorporating smaller aircraft into its fleet to bolster regional growth. This potential shift comes as the airline grapples with the limited availability of larger aircraft from major manufacturers Airbus and Boeing, coupled with increasing pressures from the Brazilian government.
During the presentation of LATAM’s second-quarter results for 2024, which saw a net profit of $146 million, the airline’s CEO for Brazil, Jerome Cadier, acknowledged the rumors surrounding the potential acquisition of Embraer regional jets. Cadier confirmed that LATAM is evaluating multiple options to expand its capacity, including introducing smaller aircraft like the Embraer E195-E2 or Airbus A220, to maintain its growth momentum amid global supply chain disruptions affecting larger aircraft.
“LATAM has the capacity and the financial strength to continue growing, but for that, we need airplanes,” Cadier stated. He pointed out that Airbus and Boeing have faced significant challenges in meeting delivery schedules, exacerbated by ongoing issues with aircraft engines. As a result, LATAM is exploring alternatives, including smaller jets that could be sourced more quickly to meet the airline’s needs.
Government Incentives and Strategic Shifts
In parallel, the Brazilian government, led by President Luiz Inácio Lula da Silva, is reportedly encouraging LATAM to purchase Embraer jets to boost the national aerospace industry and enhance regional air connectivity. The government has offered fiscal incentives to LATAM, including potential tax benefits, if the airline commits to flying regional routes with Embraer aircraft.
This government push aligns with LATAM’s ongoing evaluation of smaller aircraft to enhance its regional operations, particularly in underserved markets. Although LATAM has traditionally operated a standardized fleet of Airbus A320 family aircraft for its domestic routes, the introduction of Embraer jets could significantly shift the airline’s fleet strategy.
Besides, the age of LATAM’s A319 fleet is not getting any younger, and there is no natural replacement within the A320neo catalog: there’s no point in ordering 319neos that will struggle to find a place in an eternal backlog.
This move would also mirror the recent actions of competitors like Azul, which has a strong presence in the regional market with its fleet of Embraer aircraft.
Addressing Operational and Economic Needs
The potential acquisition of Embraer aircraft is also seen as a response to operational needs. Embraer’s E195-E2 jets, which can accommodate between 100 and 140 passengers, are well-suited for regional markets. Moreover, with fewer global orders compared to Airbus and Boeing, Embraer has greater flexibility to deliver these aircraft within a shorter timeframe, a factor that LATAM is likely considering as it aims to expand its capacity quickly.
In addition to operational flexibility, the Brazilian government’s involvement provides a significant economic incentive for LATAM. Reports suggest that President Lula might personally lobby LATAM’s Group CEO, Roberto Alvo, to secure the purchase of up to nine Embraer jets, highlighting the political and economic stakes involved in this potential deal.
