Brazil's Total Linhas Aereas Set to Pioneer Chinese C919 Aircraft Purchase: A Game-Changer in Aviation?
By Luciana Magalhaes and Gabriel Araujo
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SAO PAULO (Multibagger) - Brazil's Total Linhas Aereas, a boutique cargo and charter airline, is on the brink of becoming the first company outside Asia to acquire aircraft from China's state-owned planemaker, COMAC (Commercial Aircraft Corporation of China). This groundbreaking move aims to disrupt a global passenger jet market long dominated by Western giants like Boeing and Airbus.
The Deal: A Strategic Shift
Total Linhas Aereas and COMAC have been in negotiations for several months, revealed Paulo Almada, Total's controlling partner. Almada is scheduled to visit COMAC in October to discuss the potential order of up to four C919 aircraft. This decision comes as Western manufacturers struggle with supply chain constraints, forcing Total to explore new avenues.
Government & Industry Reactions
Brazilian Ports and Airports Minister, Silvio Costa Filho, confirmed that Total has shared its intentions with the government but has yet to present a formal plan. The potential deal could strengthen Brazil-China ties in the aviation sector ahead of Chinese President Xi Jinping's state visit in November. However, industry experts remain skeptical about Total’s business strategy for the Chinese jets.
Industry Skepticism
"Even if Total is getting a great deal on the aircraft, its unproven reliability record and lack of support network in Brazil make it a very risky choice," commented Carlos Ozores, Aviation Partner at PA Consulting.
Supply Chain Constraints
Traditional manufacturers like Airbus and Boeing have been slow to meet new plane demands. Brazil's own Embraer offers production slots from 2026 but only for jets with fewer than 150 seats. COMAC, however, has assured Total of aircraft delivery by next March, though Almada declined to share negotiation documents due to a non-disclosure agreement.
Economic and Diplomatic Implications
Senator Rogerio Carvalho of Brazil's ruling Workers Party termed the potential deal a "milestone" for the country. Brazil would expect reciprocity, particularly an increase in Chinese demand for Embraer jets. Embraer has identified China as a key market but has struggled to secure new business since the closure of a joint venture in Harbin in 2016.
Financing and Certification Challenges
The discussions between Total and COMAC include financing options from the China Development Bank, covering 80% of the aircraft's total value over 10-12 years. Each C919 has a list price of about $90 million. Despite this, the C919 lacks certification outside China, including crucial approvals from the U.S. and European Union. The European Union Aviation Safety Agency (EASA) is currently evaluating the plane.
Operational Plans
Total plans to operate the C919s on an Aircraft, Crew, Maintenance, and Insurance (ACMI) basis, meeting urgent or seasonal demand. Pilots and mechanics would undergo training in China by COMAC. However, Brazil's civil aviation agency, ANAC, stated that no formal request for certification has been filed yet.
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Breaking It Down: What This Means for You
Understanding the Deal:
- Who? Total Linhas Aereas, a Brazilian airline.
- What? They are negotiating to buy up to four C919 aircraft from Chinese manufacturer COMAC.
- Why? Supply chain issues with Western manufacturers like Boeing and Airbus.
- When? Potential delivery by March next year.
Impacts:
- Economic Ties: Strengthening Brazil-China relations, potentially affecting trade and aviation sectors.
- Risk Factors: The reliability of the C919 is unproven outside China, posing potential operational risks.
- Market Dynamics: This move could introduce new competition in the global aviation market, possibly driving down costs.
For Investors:
- Opportunities: Potential for growth in Brazil-China aviation collaborations.
- Risks: Regulatory hurdles and the untested reliability of the C919 outside China.
Understanding these dynamics can help you make informed decisions about investments in the aviation sector, and keep an eye on emerging markets like Brazil and China for future opportunities.