Brazil’s Azul to Buy Part of Avianca’s Assets for US$105 Million

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Brazilian airline Azul announced Monday it had made a proposal to buy part of Avianca Brasil’s operations for US$105 million.

“The proposal will include assets selected by Azul such as Avianca Brasil air operator certificate, 70 pairs of slots and approximately 30 Airbus A320 aircraft,” stated the note released to investors on Monday morning.

With the purchase, Azul will increase the slots it holds in São Paulo’s domestic Congonhas Aiport, one of the busiest in the country, from 13 to 34, say analysts.

According to Azul officials the agreement is non-binding and the acquisition process is subject to a number of conditions ‘such as the conclusion of a due diligence process, the approval of regulatory bodies and creditors, as well as the completion of the Judicial Recovery process’.

The acquisition process is expected to last up to three months. The companies, however, did not say whether the proposal includes the transfer of Avianca’s debts.

Avianca, Brazil’s fourth-largest airline, has been in judicial recovery since December of last year with debts totaling almost R$500 million.

According to Reuters, since filing for bankruptcy, Avianca Brasil has secured a $75 million loan from hedge fund Elliot Management.

In mid-January Avianca, announced it was cancelling most of its international routes as of March 31st, 2019. The decision was expected to affect approximately 40,000 passengers.

Among the international destinations to be cancelled at the end of the month are Santiago (Chile), Miami and New York (United States), on flights departing from Guarulhos International Airport in São Paulo.

Avianca Brasil is separate from Avianca Holdings, based in Colombia. Both companies, however, belong to the same group owned by Bolivian-born businessman German Efromovich.

In December, 2018, amidst Avianca’s financial woes, Azul’s chief executive, John Rodgerson, had stated that his company had no plans for an offer for Avianca Brazil.