Market conditions drive international airlines away from Brazil, Airbus says

LATAM Airlines

17/06/2024 22:28

By Rodrigo Viga Gaier
       RIO DE JANEIRO, June 17 (Reuters) - 
    Complicated market conditions have prevented foreign
airlines from launching local operations in Brazil, planemaker
Airbus'  AIR.PA  head in the country told Reuters.
    In 2018, rules which had limited the size of the stake a
foreign investor could hold in an airline were overturned in a
bid to open up competition among carriers in Latin America's
largest economy.
    Still, market share in Brazil is dominated by just three
companies: Azul  AZUL4.SA , Gol  GOLL4.SA  and LATAM  LTM.SN ,
the latter the result of a merger in the 2010s between local
airline TAM with Chile's LAN.
        Airbus executive Gilberto Peralta said in an interview
last week that the reluctance from international airlines to
enter Brazil was mainly due to judicial uncertainty, citing a
high number of legal actions taken by Brazilian customers
against airlines, as well as high fuel prices.
  
        "Capital barriers are gone, a foreigner could come and
set up a company in Brazil, but they don't... It's a lot of
trouble," he said.
  
        Brazil's strong consumer protections make it easy for
flyers to sue carriers for a range of issues, including delayed
or canceled flights.
  
    Late last year, airline lobby group IATA had urged state-run
oil company Petrobras  PETR4.SA  to reduce fuel costs, calling
kerosene prices in the South American nation "excessively high."
    Petrobras said earlier this month that jet fuel prices in
Brazil have already fallen 8.8% so far in 2024. 
    Airbus' global production capacity currently stands between
60 and 65 aircraft per month, while the company aims to increase
that figure to 75 planes per month by late-2025 or early 2026.
    Most Airbus orders come from customers in Asia, the U.S. and
Europe. In Brazil, orders from Azul and LATAM stand at more than
100 aircraft in the coming years.
    Asked about the impacts of the quality crisis faced by
fellow planemaker Boeing  BA.N , which has generated delays
in aircraft deliveries, Peralta said he hopes for stabilization
at the competitor.    
    "I'm sure they'll fix it... that's not good for the market,
as it creates insecurity and generates concern among users," he
said.

($1 = 5.4236 reais)

 (Reporting by Rodrigo Viga Gaier; Writing by Luana Maria
Benedito
Editing by Marguerita Choy)
 ((LuanaMaria.Benedito@thomsonreuters.com; +551156447723;))