So far, the Itapemirim group’s proposal to launch a new low-cost airline in Brazil causes more suspicion than certainty. Led by businessman Sidnei Piva de Jesus, who took over the group from founder Camilo Cola, Itapemirim has been in bankruptcy for years and has growing debts, according to a local newspaper.
In the article, the newspaper showed that the group continues to suffer losses year after year, according to a report by the consultancy appointed by the Justice to monitor the Itapemirim process. And that it owes about $ 500 million in unpaid taxes, which Itapemirim denies. Even in the face of a delicate situation, Sheikh Mohammed bin Rashid Al Maktoum’s private fund, Prime Minister and Vice President of the United Arab Emirates, would have agreed to invest US $ 500 million.
Founded in 1953, Itapemirim was one of the largest road transport companies in the country, but it has been ostracized since there was a huge increase in the number of domestic flights in Brazil.
Although it does not reveal details of the airline, Itapemirim has said that it is a low-cost company and that it will operate integrated into its road network, especially the cargo sector. It is precisely this differential that would have attracted investors. The investment contract, however, has not yet been signed, something that should happen in March, promised the executive.
The fleet issue is another mystery. There was some confusion in the generalist press reports, attributing an order for 35 planes to Bombardier, a manufacturer that no longer operates in the commercial segment. Speaking to another Brazilian newspaper, however, Piva reportedly commented that there will be 20 A220 jets and 15 “Q900”, an aircraft that does not actually exist. He may have referred to the CRJ900, variant of the regional jet that Bombardier sold to Mitsubishi Aircraft last year.
Itapemirim states that the planes were ordered, but so far neither Airbus nor Mitsubishi or Bombardier have cited the business in public statements. As I said the planes will start arriving in 2021, it is likely to be a lease, but that is still a confidentiality.
Another unclear factor involves the choice of two aircraft models, an uncommon practice in “low cost” companies, which need standardization to reduce costs. Although this is not an impediment, the alleged models chosen by Itapemirim do not offer elements favorable to an airline that needs to make the most of its planes. The CRJ900, for example, is a jet with a small cargo hold while an A220-100 has a higher operating cost than the more popular version 300 – until January, Airbus had 95 orders for the smaller A220 and 563 units for the bigger jet.
Similar initiatives have failed
As already said, this is not the first time that Itapemirim tries to launch an airline in the country. When it still had enormous relevance in the road sector, the company tried to operate a cargo company and even created a passenger subsidiary that was never started. The most recent investment in aviation took place in 2017 when Sidnei Piva closed an agreement to take over Passaredo Linhas Aéreas, a company created by another bus entrepreneur, José Luiz Felício.
At the time, the two companies were in bankruptcy, but Passaredo managed to settle its debts, in addition to canceling the deal due to non-compliance with clauses by Itapemirim. In July of that year, Piva made statements promising to take Passaredo to 80 destinations (four times more) and to buy 20 new planes in the following months.
The air transport sector in Brazil has seen several attempts to launch companies that have not been sustained, even supported by experienced groups. With its bureaucracy and exorbitant costs, in addition to a precarious airport infrastructure, the Brazilian market is a hostile environment even for well-structured initiatives. That is why Itapemirim’s airline company deserves to be viewed with suspicion. It is hoped that these uncertainties will in fact be clarified and that they will not become another chapter among airlines that failed in Brazil.