cygnuschicago
Posts: 518
Joined: Wed Mar 21, 2007 3:34 am

Brazilian Airlines And Embraers

Sat Sep 22, 2007 5:16 am

I recall hearing that Brazilian airlines are at a disadvantage relative to foreign airlines when ordering Embraers. If this true, and if so why?
If you cannot do the math, your opinion means squat!
 
xtoler
Posts: 277
Joined: Tue Sep 18, 2007 8:10 am

RE: Brazilian Airlines And Embraers

Sat Sep 22, 2007 5:29 am

I'd be interested to read where you read that. It could be possible, but I thought they were doing pretty well, everywhere. Even Harbin in China had a contract to build a small number of 145's a few years ago and it seems the 170-195 market seemed to be taking off (no pun intended). Then again, EMBRAER products do not come cheap at all, and especially if Russia is really pushing for RJ's and/or the new improved turboprops are coming back into vogue, I can see their sales slowing a bit. Could it also be environmental concerns or having certification problems? Then again, Brazil is not exactly in the center of the populated world. Could be a number of factors. I'm certainly interested if anyone has more information on this subject.
EMB145 F/A, F/E, J41 F/A, F/E, because my wife clipped my wings, armchair captain
 
miner
Posts: 47
Joined: Fri Aug 10, 2007 12:23 am

RE: Brazilian Airlines And Embraers

Sat Sep 22, 2007 5:35 am

BRA just ordered 20 EMB 195s with 20 more options.
I'm not sure if there are disadvantages but if so could it be due to tax related issues?
Also, the brazilian airlines are growing rapidly so the choices of aircrafts are capacity driven.
I can see regionals going to smaller jets but TAM, GOL, ONE and VRG are playing catch up with the market.
 
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tavong
Posts: 688
Joined: Thu Jul 05, 2001 1:59 am

RE: Brazilian Airlines And Embraers

Sat Sep 22, 2007 5:39 am

if i remember correctly, the Brazilian planes are heavily taxed for brazilian airlines to buy them. But i think one of our brazilian a.netters sure can give u more detail .

Gus
SKBO
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LipeGIG
Posts: 5050
Joined: Tue May 03, 2005 7:33 am

RE: Brazilian Airlines And Embraers

Sat Sep 22, 2007 6:42 am

Quoting Tavong (Reply 3):
if i remember correctly, the Brazilian planes are heavily taxed for brazilian airlines to buy them. But i think one of our brazilian a.netters sure can give u more detail .

Correct. They need to use an off-shore company in order to buy them as export (without state and some federal taxes). After that the off-shore (Airline Brazil BVI Corp for example) lease them to the Brazilian Airline.

If a Brazilian Airline acquire them, they need to pay (IIRC) :

State Tax (ICMS): 18% to 25% (depending on the state)
COFINS: 9.25% (Federal)
Federal Tax on Industrialized Product (IPI): 25% (Federal)
Import Tax (on imported items): 20% (Federal)

And all of them in cascade (Aircraft price + II = Sub-total + IPI = sub-total + COFINS = sub-total + State Tax = Final Price) So... 100 x 20% = 120 x 25% = 150 x 9.25% = 163,87 x 25% = 204,84 (or 104% more)

And by the end... every banking debit transaction pays 0.38% flat to the government

Felipe
New York + Rio de Janeiro = One of the best combinations !
 
cygnuschicago
Posts: 518
Joined: Wed Mar 21, 2007 3:34 am

RE: Brazilian Airlines And Embraers

Sat Sep 22, 2007 8:13 am

Felipe,

Thanks for this info - very helpful! What is the rationale behind this? Which of these taxes would be incurred if the airline bought, say, Bomardiers? Would they pay the same in import duties?
If you cannot do the math, your opinion means squat!
 
LipeGIG
Posts: 5050
Joined: Tue May 03, 2005 7:33 am

RE: Brazilian Airlines And Embraers

Sat Sep 22, 2007 3:06 pm

Quoting CygnusChicago (Reply 5):
Thanks for this info - very helpful! What is the rationale behind this? Which of these taxes would be incurred if the airline bought, say, Bomardiers? Would they pay the same in import duties?

If you lease a plane, no taxes incurre. If you import one, only ICMS (state sales tax) could be suspended on some states. This is why Brazilian Airlines use to lease instead of buying aircrafts.

TAM use to do their imports thru MCP, Gol thru CNF and Varig thru GIG.

Felipe
New York + Rio de Janeiro = One of the best combinations !

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