The move follows the repossession of much of its leased fleet, hitting air services in a huge market Norwegian is starting to break into.
Avianca Brazil has filed for bankruptcy protection, following a disastrous move by a lessor to repossess 21% of its fleet, Air Transport World reports.
Earlier this week, the US-based lessor Aircastle issued a Securities and Exchange Commission filing saying it had terminated its lease contract with Avianca Brazil and launched the repossession for ten Airbus A320-200s and one A330-200.
The airline subsequently explained in a statement that it was seeking bankruptcy to “protect its customers and passengers […] due to the resistance of its aircraft lessors to an amicable agreement.”
Avianca Brazil’s bankruptcy means the airline faces lawsuits from multiple lessors. High fuel prices and currency weakness also added to the decision to file for bankruptcy, the news agency Reuters reports.
However, operations will continue. A bankruptcy judge in Brazil has accepted the airline’s request to suspend repossession lawsuits due to the harm that stopping services would cause to so many passengers.
Reuters says that 77,000 passengers are already booked on Avianca Brazil flights in December, reflecting the size of the market Norwegian is just starting to break into.
Avianca Brazil is owned by Synergy Aerospace Corp., a South American conglomerate created and owned by Germán Efromovich, an entrepreneur with citizenship of Brazil, Colombia and Poland.
The São Paulo-based carrier is independent from Colombia-based Avianca Holdings, which is also owned by Synergy.
Avianca Brazil flies to 39 destinations, all of which are in Brazil except for Miami, New York, Santiago and Bogota. It has 53 aircraft in service, all of which are leased.
Total debts amount to 493 million reais ($127 million) with multiple creditors, according to Brazilian business daily Valor.