Gol, LATAM in advanced talks to add Embraer planes, says BNDES head

By Gabriel Araujo

SAO JOSE DOS CAMPOS, Brazil (Reuters) -Gol and LATAM Airlines (OTC:) are in advanced talks to add Embraer aircraft to their fleets, the head of Brazil’s state development bank BNDES said on Friday, as the country urges them to buy planes from the local manufacturer.

Gol and the local unit of Chile-based LATAM are two of Brazil’s largest carriers, dominating the country’s airline industry alongside Azul. However, unlike Azul, they do not fly Embraer jets.

“They are already well advanced in these talks,” BNDES head Aloizio Mercadante told reporters on the sidelines of an event at Embraer’s headquarters, where the bank announced funding to some of the firm’s aircraft exports.

“Obviously there is a commercial secrecy, we cannot go into details, but the companies are well advanced in the prospect of flying Embraer.”

LATAM declined to comment, while Gol in a statement reiterated it flies Boeing (NYSE:) airplanes but is “always evaluating options of other models to grow its operations.”

Gol’s fleet is made up entirely of Boeing 737 planes, while LATAM’s fleet of single-aisle aircraft is comprised of Airbus aircraft and it also flies Boeing widebodies.

Embraer’s chief executive Francisco Gomes Neto revealed in an interview with Reuters last month the planemaker was in talks with Gol and LATAM.

Global carriers have been facing extended delivery deadlines from Boeing and Airbus, limiting their ability to add capacity and giving Embraer’s smaller aircraft a push as the Brazilian firm has production slots available from 2026.

President Luiz Inacio Lula da Silva’s government has also been pushing LATAM and Gol to add Embraer planes to their fleets as a way to boost regional aviation in the country and strengthen the local manufacturer.

Only 12% of Brazil’s commercial aircraft fleet is comprised of Embraer planes, according to the government.

Mercadante said getting the carriers to buy Embraer aircraft may be a government requirement to support them financially, as BNDES and the finance ministry discuss a package to aid airlines still struggling in the wake of the COVID-19 pandemic.

Gol filed for bankruptcy protection in the United States earlier this year, while LATAM came out of bankruptcy proceedings with an $8 billion reorganization plan in late 2022. Azul had to conclude a broad debt restructuring last year.