Avianca Brazil, the fourth largest giant in South America, has asked the Brazilian court to benefit from bankruptcy protection. If it was not granted, the company warned that by December 31, it could stop serving 77 thousand passengers who have already bought their tickets. The debt that the airline accumulates could lead, according to documents to which the Reuters agency agreed, in the embargo of up to 14 planes of its fleet. The lawsuit now passes into the hands of the First Chamber of Bankruptcy and Judicial Recovery of STheor Paul.
Avianca Brasil, formerly Oceanair, blames its bankruptcy for the high fuel costs and requirements that threaten some of its planes. Last week, the company was forced by Brazilian law to return 11 aircraft from its fleet to the Irish company Constitution Aircraft, a subsidiary of US Aircastle, after failing to pay the rent. Avianca Brasil's total debt is estimated at about US $ 125 million and its creditors include semi-state oil company Petrobras and Guarulhos, in sThePaulo. The airline covers domestic and international routes with about 60 aircraft. About 26 of them – and 52 engines – are litigating.
The airline is independent of the Colombian Avianca Holdings, although it belongs to the same owner, the Brazilian businessman German Efromovich and his group Synergy. After the bankruptcy petition became known, Avianca Holdings' shares reacted – in a matter of minutes – with a nearly 20% collapse on the Colombian Stock Exchange, but recovered throughout the day until closing at a close price for the opening.
Sources close to the Colombian airline told El Pais that the Avianca Brazil situation should not affect the Avianca Holdings operation, since they do not share airplanes or businesses, only the commercial use of the name under an agreement. "Oceanair is an independent company of Avianca Holdings and therefore does not consolidate financial statements with Avianca Holdings nor with any of AVH's subsidiaries," the company said in a statement shortly thereafter.
Avianca Holdings, the world's second-oldest airline after Dutch company KLM, has already experienced a debt restructuring chapter at the turn of the century before being acquired by Efromovich. Then he also underwent protection from Chapter 11 of the United States Bankruptcy Law. Then, after its merger with Taca of Central America, a period of strong growth began that allowed it to compete face-to-face with other Latin American giants like Latam or Aeromexico.
Earlier this month, US airline United Airlines announced an alliance with Avianca and the Panama Cup to integrate its services and distribute revenues. The agreement, subject to approval by the regulatory authorities, will allow passengers to fly in any of the companies as if they were a single airline.