Avianca Brasil Files For Bankruptcy Protection

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Avianca Brasil that is owned by the same company that controls the other Avianca based in Colombia (also operations in other countries) filed for bankruptcy protection on Monday according to Brazilian media.

Avianca Brazil Plane

The reason for the filing was that the lessors were starting to repossess planes and Avianca Brasil wanted more time to negotiate and perhaps voluntarily terminate some leases.

Here’s an excerpt from Reuters (access their piece here):

Brazil’s fourth-largest airline, Avianca Brasil, filed for bankruptcy protection on Monday, saying its operations had been threatened by potential repossession of aircraft, which could prevent the carrier from continuing to operate.

The unlisted airline said in its bankruptcy filing that leasing companies seeking to take back some 30 percent of its all-Airbus fleet threatened its ability to fly some 77,000 passengers in December.

The aircraft are still under Avianca Brasil’s control for now and it remains unclear what their fate will be as the carrier is asking a Brazilian court to allow it to keep the planes for now.

The airline said in the filing it largely blamed high fuel prices and a strong dollar for its troubles.

Conclusion

The problem that many of these airlines in Latin America face is that their income is mostly in local highly volatile currencies while aircraft lease and fuel expenses are usually in dollars.

Avianca Brasil (yes with an S instead of Z) started its life as an OceanAir (still its official name) and became part of Star Alliance in July 2015.

The former Star Alliance member and Brazil’s flag carrier Varig went bust back in 2006 (flew with them few times).

Let’s hope that Avianca Brasil can get its house in order. I have flown with them few times and like their long/medium-haul widebody business class service in 1-2-1 configuration compared to LATAM’s 2-2-2 and 2-3-2.

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