Avianca’s Plan to Sell Airport Slots May be Vetoed by Brazil’s CADE

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The new plan approved by Avianca Brasil’s creditors on Friday has displeased Brazil’s anti-trust agency, CADE. Depending on which competitors buy out Avianca’s main airport slots, the operation may not be approved, says the anti-trust agency.

“CADE remains attentive to the issue and expects the agents involved to find the best possible solution to suit the private interests of Avianca’s shareholders and its creditors and the public interests of Brazilian consumers,” CADE said.

The approved plan includes the partition of the company’s assets into seven parts, called Individual Productive Units (UPIs).

Of this total, six will be made up of slots (airport landing and take-off times), employees and aircraft, while the seventh will hold Avianca’s loyalty program, Amigo.

According to Avianca, each UPI will contain the registration and authorizations of routes and the right to use slots at the Congonhas (SP), Guarulhos (SP), and Santos Dumont (RJ) airports.

Also included in the UPIs are the temporary right of use of the Avianca Brasil brand and the Air Operator Certificate, approved by the National Civil Aviation Agency (ANAC).

When analyzing possible scenarios of Avianca UPIs, CADE concluded that the solution with the least potential to generate concern would be for a new company to assume the operation of the units. In this case, says the entity, there would be no change in the concentration level of the sector.

On the other hand, if the UPIs are acquired by Gol or Latam, the entity sees problems due to the fact that these two companies already have high market shares in the main routes in which Avianca operates.

Last week, before Avianca’s new plan was revealed, Latam Airlines Brazil and Gol had announced, separately, their interest in purchasing some of its ailing competitor’s assets.

Their announcement came a month after Azul Airlines announced it had made an offer to acquire Avianca Brasil assets, including airplanes and airport slots for US$105 million.

Avianca, the fourth largest airline in Brazil, has been in judicial recovery since December, with debts of approximately R$500 million.