An article published in the Folha de São Paulo newspaper column shows the current situation of Avianca Brasil:

Indebted, Avianca Brasil could lose aircrafts in court

At least two companies that lease aircraft to Avianca Brasil have filed a lawsuit against the airline to request the resumption of the aircrafts for lack of payment.

In the most recent case, the Irish subsidiary of BOC Aviation won, in the first instance, a case against the airline to recover two Airbus A320-351N. Avianca appealed the sentence.

The order, dated November 26th, authorizes "the requisition of police reinforcement and burglary order, if necessary".

We found with people familiar with the lawsuit that the payment had not been made for at least two months. The amount of the case is R$3.5 million (US$0.9 million).

In June, the company had R$1.168 billion (US$300 million) in debt maturing within a year, according to the financial statements presented to Anac (Civil Aviation regulatory agency). [...]

People related to the aeronautical sector told that the airline is considering asking for a judicial reorganization in the next few days.

Avianca Brasil denied that it will ask for a JR. The company states that "negotiations are part of any company's routine for optimization of results and [...] that processes are evolving within expectations''


Source (paywall): https://www1.folha.uol.com.br/colunas/mercadoaberto/2018/12/endividada-avianca-brasil-pode-perder-avioes-na-justica.shtml?utm_campaign=uol&utm_content=geral&utm_source=twitter&utm_medium=social-media

I wonder how this could effect the merger between AV Holdings and AV Brasil, I had also heard of AV Brasil joining the United/AV JV so that could either be really good or really bad for the Brazilian airline

Sad news. I've seen this movie in Brazil with VP, TR, RG and many others.
TAM just survived due it's selling (or JV, whatever) with the former LanChile.
Now this.
Hope they find a way out of this. Brazilian market need AV to keep rates/services in a reasonable level due competition.

ojjunior wrote:

Sad news. I've seen this movie in Brazil with VP, TR, RG and many others.
TAM just survived due it's selling (or JV, whatever) with the former LanChile.
Now this.
Hope they find a way out of this. Brazilian market need AV to keep rates/services in a reasonable level due competition.

In a country where the domestic market is largely LATAM, Azul, and Gol, Avianca Brasil is a distant fourth: LATAM has the large international market.

Rumours that Avianca has grounded five aircrafts to avoid being seized

VEJA reports that the court ordered 13 aircrafts to return to the lessors (24% of O6 fleet). There is still room for appeal

Source: https://veja.abril.com.br/economia/just ... implencia/

I thought AV Brasil is a major part of the strategy and growth plan of Avianca? Without Brazil, Avianca cannot rival LATAM. Would Avianca Holdings pump capital to save AV Brasil?

raylee67 wrote:

I thought AV Brasil is a major part of the strategy and growth plan of Avianca? Without Brazil, Avianca cannot rival LATAM. Would Avianca Holdings pump capital to save AV Brasil?

Officially no since AV Brasil in reality has little direct connection with mainline Avianca. There are talks for a merger which would officialize your statement however they have stalled since mainline AV has been mostly focusing on stablishing JVs with United and Lufthansa, with a merger with AV Brasil deep in their priorities list

pipeafcr wrote:

I wonder how this could effect the merger between AV Holdings and AV Brasil, I had also heard of AV Brasil joining the United/AV JV so that could either be really good or really bad for the Brazilian airline

I think medium term sustentabilty of O6 (Avianca Brasil) is what have been keeping AV away all these years.

So O6 was busy getting the A350 for nothing, since they're pretty much getting their other planes taken back .. heh

I've seen the same movie back in 2007 when Avianca Brazil used to be called as OceanAir ... They brought some 767 and 757 that allowed O6 to expand its network and launch their first Internacional destination : MEX ....

https://www.airliners.net/photo/OceanAir/Boeing-767-322-ER/2513024?qsp=eJwtjEEKwkAMRe%2BStRspuOiuXqAuvEBIPjq0doZMQIfSuxsHd4/34O0keXN8/N4KaKQKNnnSiQobvyqNOy1o72waTLOAtylZ9JrNry2csmMSQXHo38%2BmsF9Clb56xPocALt1puESXlMtK/cHnNNKx/EFuyIvnQ%3D%3D

https://www.airliners.net/photo/OceanAir/Boeing-757-2K2/1676335?qsp=eJwtjUEKwjAURO/y165azKI7PYAKeoFvMmogacPPD7SU3t00ups3PGZWstOomPWxJNBAGSz2QwdKLBwzDStFHsuLrRaB3CGew6XEJ6TanTH9scp5Ej0vtXCsOFmLpHD//iquuQ7Ztt33/tPtEXL7UW8qOp9T4LYCZR9o277DjTRE

A coupled of months after they realized the struggle , returned the aircrafts for the lessor , cabin crew were laid off and several flights were cut and the company sticked with a small fleet of MK28 ( Fokker 100 )....
If the company is currently struggling that way there is nothing but a hazy scenario ahead ....

The merger never happened, because the Efromovich brothers wanted to use it to dilute the other AV shareholders. The issue is that O6 never reached the point in which that became attractive for them to pursue.

The following aircraft have been stored, in an attempt that a deal can be reached and that they don't get repossessed.

PR-AVJ 318
PR-OBB 320
PR-OBQ A20
PR-OBR A20
PR-OCP 320
PR-ONR 318
PR-ONZ 320

asuflyer wrote:

The following aircraft have been stored, in an attempt that a deal can be reached and that they don't get repossessed.

PR-AVJ 318
PR-OBB 320
PR-OBQ A20
PR-OBR A20
PR-OCP 320
PR-ONR 318
PR-ONZ 320

The 318s have been out of service and stored for a good while now, IIRC, @ BSB. PR-ONZ is at Sao Jose dos Campos awaiting delivery to Avianca Argentina. It has not flown for a while.

dcajet wrote:

The 318s have been out of service and stored for a good while now, IIRC, @ BSB. PR-ONZ is at Sao Jose dos Campos awaiting delivery to Avianca Argentina. It has not flown for a while.

They have some A318 flying mostly SDU-BSB, SDU-CGH BSB-IOS and BSB-JDO routes.

aemoreira1981 wrote:

ojjunior wrote:

Sad news. I've seen this movie in Brazil with VP, TR, RG and many others.
TAM just survived due it's selling (or JV, whatever) with the former LanChile.
Now this.
Hope they find a way out of this. Brazilian market need AV to keep rates/services in a reasonable level due competition.

In a country where the domestic market is largely LATAM, Azul, and Gol, Avianca Brasil is a distant fourth: LATAM has the large international market.

They might be a "distant fourth" due to their absence in some major markets (they only recently launched flight to Belem) but where they do operate they offer a vastly superior product with competitive prices. Domestic fares in Brasil are ridiculousely high. G3 and AD are nowhere near the LCLF that they pretend to be.

Brazilian sites are reporting that United Continental Holdings agreed to lend 456 millions USD to the Synergy Group, who owns 100% of Avianca Brasil and 60% of the Avianca Holding.

https://www.aeroflap.com.br/united-forn ... ca-brasil/

Thibault973 wrote:

Domestic fares in Brasil are ridiculousely high.

They aren't. G3 average fare for 2017 was lower than 80 USD.

winGl3t wrote:

Thibault973 wrote:

Domestic fares in Brasil are ridiculousely high.

They aren't. G3 average fare for 2017 was lower than 80 USD.

Which is not really telling since most of the traffic is concentrated on the 227 mi Sao Paulo to Rio route. Now try to fly to the Northeast or the North. Only in Canada and China I've I seen such high fares for under 2-3 hours flights.

winGl3t wrote:

Thibault973 wrote:

Domestic fares in Brasil are ridiculousely high.

They aren't. G3 average fare for 2017 was lower than 80 USD.

Can you please give us a single flight example with this rate please?
C'mon, don't use the lowest rate, for the most unwanted flying times, for the most common route.
Check G3 prices in high periods and then we discuss, they charge CGH-CWB up to BRL 1.700 sometimes, which means around USD 450 for a 50mins/180nm flight.

Thibault973 wrote:

Brazilian sites are reporting that United Continental Holdings agreed to lend 456 millions USD to the Synergy Group, who owns 100% of Avianca Brasil and 60% of the Avianca Holding.

https://www.aeroflap.com.br/united-forn ... ca-brasil/

That loan is not related directly to Avianca Brazil. It is part of the proposed JBA agreement with Avianca Holdings, COPA and United Continental Holdings. The money is for Synergy to cancel some substantial debt that matures within a year. Mr Efromovich had to put down his participation (not sure if partial or total) as collateral for the loan. So if he defaults on it, United Continental Holdings will become a shareholder at Avianca Holdings NOT Av Brazil.

That's it: Avianca Brasil has just filed a request for a judicial reorganization

They have filed for bankruptcy. Very sad news. I was just reading yesterday an old article on Oceanair’s succes story:

https://www.reuters.com/article/us-braz ... SKBN1OA29J

Maybe the title of the thread should be changed accordingly ?

Does someone have knowledge on Brazilian bankruptcy law ? What does this mean for the airlines, are they shutting down or is this something à la chapter 11 ?

They have filed for the equivalent of a Chapter 11 protection.

Looks like that Avianca Brasil (O6 - Oceanair) has filed for "recuperação judicial", equivalent of the US Chapter 11 Bankruptcy protection.
https://www.valor.com.br/empresas/60213 ... 938-mihoes

This is rather interesting considering all the ongoing negotiations that German Efromovich is doing between Avianca Internacional - United - COPA, essentially United would keep a controlling stake....but they kept Avianca Brasil (O6 - controlled by Jose Efromovich) out of the negotiations. .
Perhaps they are considering in selling O6? Azul would be a good candidate, considering that they already have agreements with United, COPA and TAP

Thibault973 wrote:

They might be a "distant fourth" due to their absence in some major markets (they only recently launched flight to Belem) but where they do operate they offer a vastly superior product with competitive prices. Domestic fares in Brasil are ridiculousely high. G3 and AD are nowhere near the LCLF that they pretend to be.

I understand you are looking at Avianca as a passenger, one concerned with some product attributes and price. But step back and look at the situation of the company: If they are in dire financial straights, the price/service proposition they have had in the market is not sustainable. They were careless to expand at a fast pace with price points that were below what they needed to be viable.

incitatus wrote:

Thibault973 wrote:

They might be a "distant fourth" due to their absence in some major markets (they only recently launched flight to Belem) but where they do operate they offer a vastly superior product with competitive prices. Domestic fares in Brasil are ridiculousely high. G3 and AD are nowhere near the LCLF that they pretend to be.

I understand you are looking at Avianca as a passenger, one concerned with some product attributes and price. But step back and look at the situation of the company: If they are in dire financial straights, the price/service proposition they have had in the market is not sustainable. They were careless to expand at a fast pace with price points that were below what they needed to be viable.

I think you nailed it. Well said.

What could happen to their cargo division? There is only one freighter aircraft flying as O6 (PR-ONV).

Thibault973 wrote:

Domestic fares in Brasil are ridiculousely high. G3 and AD are nowhere near the LCLF that they pretend to be.

Balderdash! Airlines operating in Brasil are no different than airlines in any other part of the world in the sense that:

1. They must be operated efficiently. Is this the case?
2. They need to collect sufficient revenue to enable them to operate at a profit. Is this the case?

The $$$ is going somewhere. Just sayin'...

There goes another A318 operator. All there is left now are AF, BA (BA1/2), AV and TAROM.

Because of the name confusion, AVH stocks plummeted both in Wall Street and Bogota

VTCIE wrote:

There goes another A318 operator. All there is left now are AF, BA (BA1/2), AV and TAROM.

Except Avianca Brazil isn't gone...its just reorganizing. Could it lead to them shutting down? Yes. But right now, its operating.

pipeafcr wrote:

Because of the name confusion, AVH stocks plummeted both in Wall Street and Bogota

Im sure thats no confusion at all.

Etheereal wrote:

pipeafcr wrote:

Because of the name confusion, AVH stocks plummeted both in Wall Street and Bogota

Im sure thats no confusion at all.

Irony or are you also confused?

pipeafcr wrote:

Because of the name confusion, AVH stocks plummeted both in Wall Street and Bogota

Plummeted may be a bit of a strong word. At the end of the trading day, AVH only lost 7,600 shares, at a $3.6 price, which is around US$25,000...

Avianca Brasil started returning their A320neo.

Airbus A320-251N MSN 7918 2-ROBQ BOC Aviation Ferried 28 Nov 18 GRU-BSB, PR-reg on return to lessor, seen regd 12dec18 (+ 8086 2-ROBR 01dec18 GRU-BSB ex PR-OBR) ex PR-OBQ
Source: https://www.skyliner-aviation.de/regdb. ... av4&page=1

Currently their fleet stands at:
5 A318
4 A319
37 A320 (10 neo, rest ceo)
6 A332

I heard that Azul were considering the possibility of joining the AV-UA joint venture. Are they preparing for the worst?

Airbus A330-243 1492 PR-OCJ Avianca Brasil ferried 15dec18 GRU-PBM-SBD on return to lessor ex N941AV

Airbus A320-214 6651 PH-IAI Aviation Capital Group Avianca Brasil cs, ferried 14dec18 CGH-NAT ex PR-OCP

I am going to bet the stock price dip is caused by automated systems that scan the newswire for negative stories and buy/sell based on that.

Lessors are now taking back their fleet aggressively. Nearly all their fleet are leased.

https://www.flightglobal.com/news/artic ... io-454278/

Someone83 wrote:

juliuswong wrote:

Lessors are now taking back their fleet aggressively. Nearly all their fleet are leased.

https://www.flightglobal.com/news/artic ... io-454278/

That article is from before they filed for bankruptcy protection.

When they are in bankruptcy it is much harder for creditors to get their assets, so it is not that easy for the leasing companies to just taking back their aircraft, without a court approval

Thanks for the insight. Indeed, many of the lessors do not want the same KF bankruptcy situation to happen again to them.

Azul Linhas Aereas has taken delivery of both the above A320neo.

A320-251N 7918 PR-YYA Azul Linhas Aereas for delivery feb19 ex AMA (+ 8086 PR-YYB ex 2-ROBR) ex 2-ROBQ
Source: https://www.skyliner-aviation.de/regdb. ... av4&page=1

juliuswong wrote:

Someone83 wrote:

juliuswong wrote:

Lessors are now taking back their fleet aggressively. Nearly all their fleet are leased.

https://www.flightglobal.com/news/artic ... io-454278/

That article is from before they filed for bankruptcy protection.

When they are in bankruptcy it is much harder for creditors to get their assets, so it is not that easy for the leasing companies to just taking back their aircraft, without a court approval

Thanks for the insight. Indeed, many of the lessors do not want the same KF bankruptcy situation to happen again to them.

Azul Linhas Aereas has taken delivery of both the above A320neo.

A320-251N 7918 PR-YYA Azul Linhas Aereas for delivery feb19 ex AMA (+ 8086 PR-YYB ex 2-ROBR) ex 2-ROBQ
Source: https://www.skyliner-aviation.de/regdb. ... av4&page=1

What is interesting is if Azul is paying less or more, since AD has a lot better credit than O6. I'm actually surprised that they didn't make a play for the repossessed A332. All but a handful of O6's fleet is leased.

If O6 were to collapse, would AD be likely to be admitted to Star Alliance at least as a connecting partner? AD has its immense domestic Brazil network to offer the alliance.

xiaotung wrote:

I heard that Azul were considering the possibility of joining the AV-UA joint venture. Are they preparing for the worst?

No, Azul wants grow in the US Market and hás the advantage United's 8% in the Company.

PR- OBL & M A320NEOs, have been stored since mid December. I hear that 140 employees have been laid off.


Photo credit: Twitter

It appears that next Monday (14/1) will be a key date for the future of Avianca Brazil. On that day a judge has to rule on whether the airline can proceed with its reorganization plans or else. Not sure if a worst case scenario would include a potential liquidation of the airline.

Perhaps someone from Brazil and more familiar with the due legal process there may be able to expand on the topic.

2 more NEOS ...

3 A320NEOs (PR-OBL/M/O) flew from GIG to MVD today for what I'd imagine is a return to the lessor/s.

Avianca Brazil's fleet is down to 6 NEOs.

dcajet wrote:

3 A320NEOs (PR-OBL/M/O) flew from GIG to MVD today for what I'd imagine is a return to the lessor/s.

Avianca Brazil's fleet is down to 6 NEOs.

Previously: 2 A320neo's and 1 A320ceo's are returned, now 3 A320neo's are following to be returned to lessors.

dcajet wrote:

3 A320NEOs (PR-OBL/M/O) flew from GIG to MVD today for what I'd imagine is a return to the lessor/s.

Avianca Brazil's fleet is down to 6 NEOs.

A trio of ex-O6 A320NEOs at MVD/SUMU awaiting their next assignment.



Photo: SUMU Spotters