Itapemirim announces plans to launch its own airline

Brazilian bus company Itapemirim is launching a new airline in June, betting it can avoid the financial ruin that has grounded many rival airlines, despite the fact that the land transport company has just been reorganized under bankruptcy protection for five years. The airline expects to have a fleet of 50 Airbus A320 aircraft by next year, all painted in Itapemirim's signature bright yellow paint, and is trying to beat the odds that eleven airlines in Brazil have so far this century Failed. "We intend to become the largest airline in Brazil, with all due respect to our competitors," said Sidnei Piva, president of Grupo Itapemirim, which will emerge from bankruptcy this month. "We're not going to stop at those 50 planes, we're planning to increase that number many times over." The key to his business concept is selling tickets that combine air and bus travel, thus reducing travel time between Brazil's smaller cities without increasing costs. The idea of ​​a bus company starting an airline is not as uncommon in Brazil as it may seem, given that the founders of Brazil's largest airline, Gol Linhas Aereas Inteligentes, made their first fortune in bus transportation as well. But Gol and the other major Brazilian domestic airlines, Azul SA (NYSE: AZUL) and LATAM Airlines (OTC: LTMAQ) Group, are struggling with high levels of debt and low liquidity - made worse by the pandemic's heavy blow on demand . LATAM filed for bankruptcy in May last year, while Gol and Azul combined carry around 33 billion reais ($ 6.27 billion) in accumulated losses. Still, a competitor with clean balance sheets could turn the market upside down, analysts say. Piva said Itapemirim has no debt to pay for the next four years and is working on a $ 500 million investment from a UAE sovereign wealth fund, the name of which he refused to reveal. Piva added that Itapemirim will not follow the ultra-low-cost model that is currently in vogue but instead will focus on high quality in-flight service, generous legroom and free checked baggage. Competitors in Brazil and the rest of the world have generally moved away from this model by lowering ticket prices but then selling other services as additional benefits.