Azul Makes Offer for Avianca Brasil Slots, Airbus Leases

 - March 11, 2019, 4:03 PM

Brazilian airline Azul has reached a $105 million non-binding agreement to take over selected slots, about 30 Airbus A320 leases, and the operating certificate of embattled carrier Avianca Brasil, the airlines announced Monday. The offer still depends on due diligence and regulatory and antitrust approvals, as well as approval by creditors, and might take up to three months to complete. Avianca Brasil operates as a separate entity from Colombian carrier Avianca, and ownership shelved the exploration of a merger of the two last month.

Azul wants slots at Guarulhos and Congonhas airports in São Paulo and Rio’s downtown Santos Dumont airport, according to newspaper Folha de S. Paulo. The acquisition at Congonhas would nearly triple Azul’s slots there, though still leaving it with less than 30 percent of the access enjoyed by each of larger rivals Latam and Gol. Preference given to established carriers in the distribution of slots has proved an obstacle to new entrants at major airports.

Azul, the country’s third-largest carrier in passenger volume but the largest in takeoffs and landings and destinations served, came into existence in 2008 and grew by establishing a hub at underused Viracopos airport near São Paulo, initially serving smaller cities with a fleet of Embraer regional jets and ATR turboprops. Azul’s fleet of 126 aircraft now includes seven Airbus A330s and 24 A320s. The deal would double the size of Azul’s Airbus fleet. Lessors have placed pressure on Avianca to return aircraft. A flurry of court orders and appeals has held off deregistration under the Cape Town Convention, but only until a creditors' assembly in early April.

Avianca Brasil has operated under protection from creditors since December, but a feature of local bankruptcy law—used by Gol in 2007 when acquiring the name of defunct carrier Varig—allows assuming Avianca’s slots and routes, without taking on all its obligations.