By Brazil Stock Guide – Latam Airlines’ CEO in Brazil, Jerome Cadier, said the company’s decision to order up to 74 Embraer SA (NYSE: ERJ) E195-E2 aircraft marks “the biggest strategic move by Latam since the LAN-TAM merger in 2010.” Cadier stressed the deal will reshape the carrier’s domestic network over the coming years.
“We realized how well an Embraer aircraft fits our network strategy. It has fewer seats than the Airbus A320 family, and with that we can continue expanding routes,” Cadier said, speaking to Valor Econômico. He noted that the jets could allow Latam to open as many as 35 new destinations in Brazil. The airline expects to announce the first routes within six months, with the new fleet entering service in about a year.
Cadier underlined that talks with state governments over ICMS tax incentives will be central to the rollout. He also said Latam Brasil has grown in importance within the group after emerging from Chapter 11 in 2022. The carrier now serves 59 domestic destinations, compared with 44 before the pandemic, and aims to reach 70 by the end of 2025. “We could reach about 70 destinations with the A320, but that would be stretching it,” he added.
The CEO also voiced concern about Brazil’s proposed tax reform, which could raise the effective burden on domestic tickets from about 9% to nearly 27%. “How much of this option [for 50 additional jets] we exercise will depend on how penalized aviation will be by the tax reform,” he warned. “We are not asking for tax cuts. We are asking to maintain the current tax burden. The reform would increase collections four to five times and misalign Brazil with other countries.”
Cadier stressed that the E195-E2 order was “purely commercial and technical,” consolidating Embraer as a strategic partner in Latam’s next phase of growth.
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