Brazilian airline seeks to buy planes from China’s COMAC By Reuters

By Luciana Magalhaes and Gabriel Araujo

SAO PAULO (Reuters) – Brazil’s Total Linhas Aereas, a small cargo and charter airline, aims to become the first firm outside Asia to buy planes from China’s state-owned planemaker as it seeks to break into a global market of passenger aircraft dominated by the west. producers.

Total and the Commercial Aircraft Corporation of China (COMAC) have been in talks for months, said the airline’s controlling partner Paulo Almada, who will visit COMAC in October to discuss a potential order of up to four C919s.

Brazil’s Minister of Ports and Airports, Silvio Costa Filho, said Total had sought to share its intentions with the government, but had not presented any official plans so far.

An agreement could boost closer ties between Brazil and China in the aviation sector ahead of Chinese President Xi Jinping’s state visit in November. However, some industry observers have expressed skepticism about Total’s business plan for Chinese aircraft.

“Even though Total is getting a lot of aircraft, its unproven reliability record and lack of support network in Brazil make it a very risky choice,” said PA Consulting Aviation partner Carlos Ozores.

Total’s Almada said the airline had been forced to look beyond traditional Western manufacturers such as Airbus and Boeing (NYSE: ) because they could not meet demand for new planes as they faced supply chain constraints of supply.

Brazil’s Embraer has production slots available from 2026, but only offers passenger jets with less than 150 seats.

“The industry is facing supply shortages, but COMAC told us they could deliver the aircraft by next March,” said Almada, who declined to share documents from the negotiation, citing a confidentiality agreement.

A deal could be a “milestone” for Brazil, said Senator Rogerio Carvalho of the Workers’ Party, who attended the meetings with Total. Brazil would expect reciprocity, he added, with an increase in Chinese demand for Embraer jets.

Embraer considers China a key market but has struggled to find new business there since closing a joint venture in Harbin in 2016.

After Brazilian President Luiz Inacio Lula da Silva visited Beijing last year, Embraer struck a deal to convert 20 of its planes into cargo planes with a partner in Lanzhou, dashing hopes of passenger jet sales to a Chinese airline .

FINANCING, CERTIFICATION

Discussions between Total and COMAC included the possibility of financing from the China Development Bank for 80 percent of the total value over up to 10 or 12 years, Almada said, adding that each C919 has a list price of about $90 million.

COMAC and China Development Bank did not immediately respond to requests for comment.

Total’s existing fleet consists of ATR 42-500 turboprops and Boeing 737-400 freighters. The C919 seats up to 192 people and competes in a similar category to the Boeing 737 and Airbus A320.

Only nine C919s are currently in service since commercial operations began in May 2023, all with Chinese airlines.

Outside of China, the only carrier operating a COMAC aircraft is Indonesian low-cost carrier TransNusa, which flies the smaller ARJ21 regional jet, which was certified a decade ago. A startup airline from Brunei, GallopAir, has ordered the ARJ21 and C919.

COMAC increased its sales and production plans this year and marketed the C919 outside of China.

Almada said Total will fly the C919 on charter flights booked by other airlines on an aircraft, crew, maintenance and insurance (ACMI) basis, which the industry uses to meet urgent or seasonal demand. Pilots and mechanics will be trained in China by COMAC, he said.

A major hurdle for the C919 is that it lacks certification outside of China, specifically the US and European Union benchmark certifications. The European Union Aviation Safety Agency (EASA) is currently evaluating the plane.

Total will also make efforts to get the Chinese planes certified in Brazil, Almada said.

Brazil’s civil aviation agency, ANAC, said a formal application for certification has yet to be submitted.