Court Orders Repossession of Aircraft Leased by Avianca Brasil

RIO DE JANEIRO, BRAZIL – An appellate court has ordered the repossession of seven aircraft leased by Oceanair Linhas Aéreas (Avianca Brasil).

The aircraft belong to Airbus Financial Services Limited and were leased since 2011. Since last year, however, according to the petition submitted by Airbus to the courts, the airline has ceased to pay the leases and other contractual burdens.

Avianca’s debt, according to Airbus, now exceeds US$40 million (R$160 million). In early September, a court ordered the company to return the aircraft within a period of up to five days.

As this has not occurred, Appellate Judge Ricardo Negrão, of the Second Chamber of Business Law, ordered the forced repossession of aircraft, which should happen in the coming weeks.

The aircraft have not operated since May, when the National Civil Aviation Agency (ANAC) suspended all flights of Avianca Brasil, claiming concerns over the company’s inability to operate safely.

The decision was taken in the midst of a judicial reorganization proceeding of the company, requested in December 2018 due to defaults in debt payment estimated at that time at R$494 million. Subsequently, the amount was corrected to approximately R$2.7 billion.

Judicial reorganization is a legal measure by which a company can attempt to avoid bankruptcy. Enforcement actions are suspended by the courts for 180 days, the period within which the company is required to submit a payment plan to creditors, who must approve it.

In late May, in a first action filed by Airbus, Avianca said that maintaining ownership of the aircraft was critical to the continuity of the airline.

Based on the argument, the injunction for restitution was not granted by the courts. In the new lawsuit, Airbus stated that, after the complete shutdown of the company‘s activities, there was no longer any reason for it to keep the equipment.

In the petition attempting to prevent the aircraft from being returned, the airline did not react on this point, only claiming that the request had not been made in the appropriate judicial forum.

Founded in 1998, Oceanair adopted the name Avianca 12 years later by means of an agreement signed with Avianca Holdings, of Colombia. Before ceasing operations, the company had 48 aircraft in operation and was the fourth-largest airline in Brazil.

Source: Folhapress