Avianca Brasil (OceanAir) confirms collapse
Airline had filed for bankruptcy in 2018, but unable to afford $ 500 million in debt, abandoned recovery plan
The airline OceanAir, also known as Avianca Brasil, announced on Monday that it had asked Justice to end bankruptcy protection. The company has been out of business for over a year, without aircraft and employees, and has a debt of more than $ 500 million.
Founded by entrepreneurs Germán and Jose Efromovich in 1998, OceanAir adopted the name Avianca Brasil in 2010, years after the brothers managed to take over Avianca Colombia.
The airline was for many years the 4th largest in Brazil, however, it started to expand its network, including abroad, leasing dozens of aircraft such as the A320neo and A330-200. With a high dollar exchange rate and a very tight profit margin, the company started to delay payments for aircraft leasing until lessors demanded their return in court.
In December 2018, Avianca Brasil filed for bankruptcy in hopes of implementing a recovery plan in the following months, but the agreement with creditors has not evolved and its fleet, of more than 50 planes, has started to shrink every week.
In April last year, the company only operated some routes after abandoning international flights. In the following month, ANAC, the Brazilian civil aviation agency, suspended Avianca’s operations for lack of proof of minimum safety conditions. In June, the airline lost its air transport concession and soon had its slots in central airports passed on to other companies, making any possibility of return unlikely.
Since then, OceanAir’s existence has become just a legal matter. One of the judges in the case even recommended the end of the process, but in a vote the bankruptcy chamber of the Brazilian court preferred to keep the recovery plan.
Common case in Brazil
The collapse of OceanAir is no exception in the Brazilian air transport market. With excessive regulations, high operating costs and ineffective laws, the South American country makes operating an airline extremely difficult. However, this same system allows obscure business groups to accumulate high debts and break down without paying off their commitments, especially with employees.
Years ago, the three largest airlines in Brazil, Varig, Vasp and Transbrasil, succumbed leaving a huge trail of debts and disputes in the courts that are running to the present day. Everything suggests that OceanAir will be another one.[DISPLAY_ULTIMATE_SOCIAL_ICONS]