Avianca Brazil files for bankruptcy; judge halts aircraft repossession

Avianca Brazil reportedly filed for bankruptcy protection Dec. 11, stemming from a potential repossession of 21% of its leased fleet.

On Dec. 10, US-based lessor Aircastle issued an SEC filing that it had terminated the lease and had begun repossession processes for 10 Airbus A320-200s and one A330-200 operated by Avianca Brazil.

Aviation Daily’s Fleet Discovery database lists Avianca Brazil as having 53 aircraft in service, all of which are leased-in. The airline largely serves domestic destinations in Brazil, as well as international services to Chile, Colombia and the US.

Avianca Brazil is owned by Synergy Aerospace Corp., but is independent of Colombia-based Avianca Holdings, which is also owned by Synergy.

Aircastle said it is “working through a delinquent receivables issue” with Avianca Brazil and has been in remarketing discussions with several potential customers for the aircraft. In its filing, Aircastle said the lease terminations for the 11 aircraft will have an impact on the lessor’s revenue for the fourth quarter of 2018. Subsequently, Aircastle revised its fourth-quarter 2018 lease rental revenue guidance downward to between $182 million-$184 million from $187 million-$191 million.

Reuters reported Avianca Brazil’s bankruptcy filing indicated the carrier faces three lawsuits from lessors totaling 14 aircraft, mentioning BOC Aviation and Aircastle subsidiary Constitution Aircraft as the lessors involved. Of the 11 aircraft mentioned in Aircastle’s filing, the 10 A320-200s average 3.5 years old and the A330-200 is 4.1 years old. Reuters reported the airline also cited high fuel prices and currency weakness as contributing to its filing.

In a statement distributed to several media outlets, Avianca Brazil said its bankruptcy request was filed to “protect its customers and passengers … due to the resistance of its aircraft lessors to an amicable agreement.” The airline said operations will not be affected.

Subsequently, Reuters reported Dec. 12 that a Brazilian bankruptcy judge had, late Dec. 11, granted Avianca Brazil’s request to suspend the lawsuits seeking repossession of the aircraft, citing the “evident harm” the suspension of Avianca Brazil’s service would cause to “a very large number of passengers.” Reuters reported a potential 77,000 passengers already booked for Avianca Brazil’s December flights would be affected if the lessors’ suits were not frozen.

Several days prior to Avianca Brazil’s bankruptcy announcement, on Dec. 7, Avianca Holdings released an SEC filing that indicated its owner Synergy Corp. had, on Nov. 29—the same day Avianca Holdings, Copa Airlines and Chicago-based United Airlines had entered into a revenue-sharing joint business deal—agreed to a $456 million term from United, to be repaid in full by Nov. 30, 2025.



Mark Nensel, mark.nensel@informa.com