Latam signs order for up to 74 Embraer E2 jets

Latam Brasil CEO Jerome Cadier told Valor that the decision represents the group’s biggest strategic move since the merger of LAN and TAM.

The deal includes firm orders for 24 aircraft, with a list price of $2.1 billion, plus 50 purchase options. Deliveries are scheduled to begin in the second half of 2026, with the initial focus on Brazil.

The group is now rushing to define, within six months, the routes that will be operated with the new aircraft. Mr. Cadier said routes connecting the company’s hubs in São Paulo, Rio de Janeiro, Brasília, Fortaleza, and Porto Alegre are among the priorities.

The group estimates that adding the E2 to its fleet will open the door to 35 new destinations worldwide, most of them in Brazil.

“This is Latam’s biggest strategic move since the merger [between LAN and TAM],” Mr. Cadier said. The deal between the companies, announced in mid-2010, created Latam, now Brazil’s largest domestic airline and the main carrier linking the country internationally.

According to the executive, the choice of the E2 was commercial and technical. “We realized how well an Embraer jet fit into our network strategy. It is smaller than the A320 family, which allows us to keep growing our routes,” he said.

Passenger traffic on domestic flights in Brazil reached 8.7 million in August, up 8.5% year over year and a record for the month, according to data from the National Civil Aviation Agency of Brazil (ANAC).

Mr. Cadier noted that since the group’s emergence from Chapter 11 in 2022, the Brazilian market has gained increasing weight in Latam’s portfolio, with more aircraft being allocated to the country.

Before the pandemic, Latam operated 44 destinations in Brazil. That number is expected to reach 59 by year-end. “We could probably reach around 70 destinations [with the A320], but that would be hard,” he said, noting that some routes were already proving less suited to larger aircraft.

The airline is now finalizing its network for the E2. “We have simulated a network with some destinations, but we know these routes are sensitive to ICMS tax incentives. We will be talking to state governments,” he said. Details are expected in the coming months.

Operations are expected to begin in about a year, requiring the company to make route decisions within six months. The airline will also need to recruit additional staff, set up maintenance support, and obtain certifications at certain airports.

Mr. Cadier stressed that the scale of the partnership with Embraer will also depend on structural factors in Brazil, such as tax reform. “How many of these options [for 50 additional aircraft] we will exercise depends on how much aviation is penalized by the reform,” he said. According to him, the industry has not managed to make Congress understand how negative the reform could be for the sector.

“We are not asking for a tax cut. We are seeking to maintain the current tax burden,” he pointed out.

Currently, domestic tickets in Brazil are taxed at 9%, a rate that is expected to rise under the current reform model—possibly to around 27%. International tickets, currently exempt, would also be taxed.

According to calculations by the International Air Transport Association (IATA), if a 26.5% tax rate is applied, the average domestic fare in Brazil would increase from $130 to $160, while the average international ticket would rise from $740 to $935.

Latam’s E2 aircraft will seat 136 passengers, 38 fewer than the Airbus A320, and will also feature a premium economy cabin, but without a middle seat.

The addition of the E2 also supports the group after the crisis of regional carrier Voepass, which had partnered with Latam for regional operations using ATR turboprops with fewer than 100 seats. While Embraer’s jets are not regional aircraft in the same way as ATRs, Latam will now be able to serve areas that its A320s could not reach.

Sources said the agreement foresees the delivery of 11 to 16 aircraft as early as next year.

The acquisition is a win for Embraer, which has long sought to expand its fleet presence in Brazil. Recently, President Lula visited Latam executives in Chile. The group had been considering both the E2 and Airbus’s A220, the former Bombardier CSeries.

In June, Embraer lost a competition against the A220 for a contract of up to 40 jets with LOT Polish Airlines, citing geopolitical hurdles at the time.

Still, Embraer has secured a number of campaigns in recent months, showing that despite fierce competition, the Brazilian manufacturer remains a strong contender.

The E195-E2s will join Latam’s fleet of 362 aircraft, 283 of them Airbus single-aisle jets, a factor that had played in Airbus’s favor.

The deal was well received, with Embraer shares rising 4.63% to R$80.30, the biggest gainer on the benchmark stock index Ibovespa on Monday (22).

According to Santander analysts, the firm order should boost Embraer’s commercial backlog by 6.4%. XP said the deal helps reduce investment risks in the Brazilian manufacturer.