Panel SA: Latam defends expansion before the arrival of Azul in Congonhas

Son of French parents, Jerome Cadier, 50, is a Brazilian who has taken care of brands such as Brastemp and Consul. It was he who launched KitchenAid, a famous American brand of kitchen utensils, in the country.

Since 2013 at Latam, it has been up to the executive –an industrial engineer who has always worked with marketing and sales– to command the airline at its most crucial moment, the resumption after the end of a judicial recovery in the US.

Now, with lower costs and less debt, he says the company should go head-to-head with its competitors in search of leadership. “As long as we make a profit,” he said.

Cadier defends the revision of the price of fuel practiced by Petrobras and the maintenance of the ICMS reduction at the level of 17% implemented by some states.

How does Latam intend to compete now that it has emerged from recovery? We have all conditions from now on. We left Chapter 11 [processo de recuperação nos EUA] with a smaller debt – it fell from US$ 11 billion (about R$ 58 billion) to US$ 7.5 billion (R$ 39.6 billion). The advantage of having carried out this process abroad is that we were also able to renegotiate all of our contracts, which reduced our cost by 35%.

We will be able, from now on, to invest in new routes, bring more planes, we are hiring. Latam hasn’t led since 2015 and, you know, I don’t know if we want to keep the lead? (laughter)

Like this? Of course we want to be leaders. But not at any price. We will not, for example, open a new route or maintain a destination that is not profitable.

How to grow with the price of tickets in the heights? People say that we earn a lot of money, which we don’t pass on, even with high demand. Is not true. Here is 100% fuel price.
Our operation depends on its cost, which is very expensive due to the price of fuel, and on the growth of the economy. When GDP grows 1%, aviation grows somewhere between 2% and 3%.

Wouldn’t the ICMS reduction have helped? Yes, but it occurred through a decision by governors who reduced the rates to 17%, 18% [abrindo mão dessa receita para estimular a aviação]🇧🇷 Four or five states have done this. In São Paulo, the results were very positive. So much so that Governor Rodrigo Garcia (PSDB) assured that, before leaving office, he will sign a decree extending to maintain the reduction of ICMS on aviation kerosene at 13.5%.

Is this agreed with the governor-elect? I do not think so. But regardless of that, he wanted us to enjoy [do benefício] so that, afterwards, the new government decides [se mantém ou revoga]🇧🇷

Airlines complain about Petrobras pricing, which makes tickets more expensive. What is, after all, the weight of this policy? Petrobras supplies 90% of the market. It makes no sense that we are charged as if the fuel were imported, paying extra. A flight abroad is free of ICMS, not here. Through the Abear [associação que representa o setor], we had already been discussing a change in the Bolsonaro government. With the transitional government, we spoke superficially on the subject.

Our proposal is to charge the same price in the US. We accept the maintenance of ICMS on fuel, as long as Petrobras is similar to other countries [o setor diz que a petroleira cobra 40% a mais só para fornecer o insumo, como se ele estivesse sendo importado]🇧🇷 If that were done, we would have a 17% reduction in this cost, which would be passed on to tickets.

Azul will start to operate more strongly in Congonhas. Does this disrupt Latam’s plan? Latam competes on 93% of its routes. What I question is the way in which the expansion of Congonhas is being carried out. The airport needs investments to expand its capacity –mais fingers [as pontes de embarque]more check-in space, better access, more parking.

Infraero [estatal que administrava o aeroporto, recentemente privatizado] chose to do the opposite, expanding flights first. We expect an aviation that does not delay, without baggage problems, that works well. And I believe that will not happen. We are going to have a very bad experience to fly in Congonhas.