Avianca Brazil files for bankruptcy protection

Lauren Eldershaw
By Lauren Eldershaw December 11, 2018 15:04

Avianca Brazil files for bankruptcy protection

Brazil’s fourth-largest airline, Avianca Brasil, has filed for bankruptcy protection – similar to Chapter 11 in the United States – in the face of lawsuits from leasing companies seeking the return of their aircraft for non-payment of dues. The airline said that some 30% of its fleet was being requested back, which would threaten its ability to operate. Avianca Brasil has sought the court’s permission to retain the aircraft to enable it to keep flying while it restructures its finances and lease arrangements. The airline also highlighted the concern that Brazil’s aviation regulator, ANAC, could force it to stop issuing tickets to passengers while it restructures. However, for now, ANAC has only requested clarification on Avianca Brasil current position and any possible impact on passengers.

Aircastle announced on December 10 that it had terminated the leases for ten A320-200 and one A330-200 aircraft on lease to Avianca Brazil and had initiated steps for repossession of the aircraft. The A320-200 aircraft average 3.5 years old, while the A330-200 is 4.1 years old. Aircastle confirmed that it had been working through a “delinquent receivables issue” with Avianca Brazil and has been in “remarketing discussions with several potential customers”.

BOC Aviation and GECAS are reported to be the other leasing companies to have requested their aircraft back from the troubled carrier.

Avianca Brasil now has 60 days to present a restructuring plan to its creditors.

Meanwhile, Avianca Holdings is also in the news this week after CEO Hernan Rincon confirmed that the carrier was about to enter renegotiations with Airbus for the cancellation of part of its 2015 order for 100 A320neos. Rincon told reporters that the carrier would likely take only between 50 and 80 of those aircraft.

In November 2018, Avianca and its subsidiaries carried 2,584,551 passengers, a 19.2% increase over the same period in 2017. Capacity, measured in ASKs (available seat kilometers), increased 26.7%, while passenger traffic, measured in RPKs (revenue passenger kilometers), increased 21.8%. The load factor for the month was 82.1%, a decrease of 330 bps compared to the same period of 2017.

In November, the subsidiary airlines of Avianca Holdings transported within each of these markets a total of 1,469,407 travellers, up 22.6% when compared to the same period of 2017. Capacity (ASKs) increased 29.0% while passenger traffic (RPKs) increased 22.5%. The load factor for the month was 83.6%, a decrease of 449 bps compared to the same month of 2017.
In November, the affiliated airlines of Avianca Holdings transported 1,115,144 passengers on international routes, up 15.1% when compared to the same period of 2017. Capacity (ASKs) increased 26.2%, while passenger traffic (RPKs) increased 22.5%. The load factor for the month was 81.7%, a decrease of 307 bps when compared to November 2017.

Lauren Eldershaw
By Lauren Eldershaw December 11, 2018 15:04