Contributor - South America

Richard Pedicini

The proverbial light at the end of the tunnel went out for Avianca Brasil as Brazilian civil aviation agency ANAC redistributed its prized slots at São Paulo’s Congonhas Airport on Wednesday and a majority of appeals judges voted to liquidate the carrier, in bankruptcy protection since December. Even the name is gone, as Colombia’s Avianca did not renew the license.&nbsp;

 


ANAC announced on Wednesday the distribution of the 41 daily slots used by Avianca Brasil at Congonhas, awarding 15 to number-three carrier Azul, 12 to MAP Linhas Aéreas, and 14 to Passaredo, the last two being regional airlines that will have to prove their ability to use the slots. Two Flex, which operates Brazil’s largest Caravan fleet, also received 14 new slots--using the auxiliary runway due to the type of aircraft they operate--subject to approval by airspace control’s Center for Air Navigation Management (CGNA). Two Flex, run by International Business Aviation Council immediate past president Rui Aquino, has begun a transition from charter operator to regional airline, and the award of additional slots might result in implications for business aviation operators. Leading carriers Latam and Gol already control 95 percent of the slots at Congonhas and gained none of the former Avianca slots.

 


Meanwhile, a suit by creditor Swissair to nullify the recovery plan and liquidate Avianca Brasil has gained a majority of appellate judges’ votes, though the decision won’t become final until August 27. The suit says that the airline doesn't own and can’t sell the slots—also ANAC's position—and that the approved recovery plan was invalid due to a conflict of interest, as it called for Latam and Gol to each make direct $35 million payments to majority creditor Elliot Management, bypassing other creditors. An offer of $106 million by Azul in March would have taken on half the operations and employees and perhaps the aircraft leases, but creditors rejected it in favor of the Elliot plan, which promised more and garnered $147.3 million at auction on July 11. However, any value will evaporate with the rejection by the courts of Avianca Brasil’s right to sell the slots.

 


Fired workers retain extensive and expensive rights under Brazilian law, and Azul, Latam, and Gol all made debtor-in-possession loans in a vain attempt to keep Avianca Brasil flying. The mess could&nbsp;keep the courts busy for years given the long and arduous progression of past airline bankruptcies in the country. For example, the affairs of defunct Brazilian airline VASP, which ceased operations in 2005, remain unsettled.

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