Brazilian airline Azul SA said on Monday it intends to pay $105 million for cert...
SAO PAULO (Reuters) - Brazilian airline Azul SA said on Monday it intends to pay $105 million for certain assets held by Avianca Brasil, which was meeting aircraft lessors in court as it seeks to keep operating planes despite mounting pressure from late payments.
An airplane of Avianca takes off as an Azul plane sits on the tarmac at Santos Dumont airport in Rio de Janeiro, Brazil March 11, 2019. REUTERS/Sergio Moraes
Azul said the non-binding purchase agreement would involve 70 pairs of slots, which grant airlines the rights to operate regular flights between airports.
The sale would more than double Azul’s presence at Congonhas, Sao Paulo’s busy domestic airport, according to a source familiar with the deal.
“These are slots that the company could not have obtained on its own,” said the source.
Azul shares jumped more than 7 percent after the announcement.
Brazil’s air travel regulator ANAC said they have not yet received a formal proposal from the carriers regarding the sale.
“The deal, if approved, could be accretive for Azul,” wrote analysts at Brazil bank BTG Pactual in a note to clients, highlighting the profitability of operations at Congonhas and the possibility of acquiring Avianca Brasil’s loyalty program.
Azul already operates two Airbus A320 planes that were previously used by Avianca Brasil until they were repossessed in December due to outstanding payments.
Under the agreement announced on Monday, Azul said it could end up operating up to 30 Airbus planes currently in use by its rival.
Azul did not disclose how it would be able to take over the leases.
Avianca Brasil filed for bankruptcy protection in December in an attempt to stall aircraft lessors who had sued to repossess its fleet, two months after the carrier started missing payments on many of its aircraft.
The Avianca Brasil hearing scheduled for Monday in an appeals court will deal with a request from aircraft lessors, including Aircastle, that planes be repossessed as soon as possible. A bankruptcy judge had extended the airline’s control over the aircraft until at least April.
Since filing for bankruptcy, Avianca Brasil has secured a $75 million loan from hedge fund Elliott Management.
Reporting by Alberto Alerigi and Marcelo Rochabrun; additional reporting by Ana Mano and Paula Arend Laier; editing by Chizu Nomiyama, Bill Trott and G Crosse