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AVH - Avianca Holdings SA News Story

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Last Trade - 08/05/20

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Brazil airline Azul could bid for Avianca Brasil's assets after all

Thu 2nd May, 2019 11:27pm
SAO PAULO, May 2 (Reuters) - Brazilian airline Azul SA
 AZUL.N  has registered to participate in a bankruptcy auction
for the assets of struggling carrier Avianca Brasil scheduled
for next week, potentially walking back a previous decision not
to participate. 
    The airline confirmed through a representative that they had
registered, although he said no decision had been made whether
to actually place a bid. The bankruptcy auction is set for
    Avianca Brasil filed for bankruptcy in December and will
auction some of its most coveted airport slots, which grant
airlines the right to operate flights out of crowded airports.
    Brazilian newspaper Valor Economico first reported Azul's
registration earlier on Thursday. 
    Avianca Brasil, which is the country's fourth largest
airline, has been so strapped for cash in recent months it has
been kept afloat by loans from its competitors, who sought to
keep the airline alive until the auction. If Avianca Brasil
ceased operations before the auction, it would also lose its
    Its fleet has been dwarfed from a high of 60 planes late
last year to fewer than 10 in late April. 
    The auction has caused much tension among Brazil's top 3
airlines, including Azul. 
    An initial plan would have had Azul take over the majority
of Avianca Brasil's airport slots in Sao Paulo and Rio de
Janeiro. But a few weeks later, its bigger competitors, LATAM
Airlines Group  LTM.SN  and Gol Linhas Aereas Inteligentes
 GOLL4.SA  struck a deal with Avianca Brasil's largest creditor,
U.S. hedge fund Elliott Management, to create a new plan that
would divide up some of those slots among themselves instead. 
    The shakeup was ill received by Azul, which has loaned
Avianca Brasil 51 million reais ($12.86 million) and said in
court papers filed on Thursday that the struggling carrier had
already defaulted on repaying that debt. This week, Azul said it
would leave Brazil aviation industry group Abear, where it was a
member along with LATAM and Gol. 
    LATAM and Gol have also loaned Avianca Brasil tens of
millions of dollars and have pledged to bid at least $70 million
each at the Tuesday auction. 
    Avianca Brasil is separate from the better-known Avianca
Holdings  AVT_p.CN , which is based in Colombia and is not going
through bankruptcy proceedings. 
($1 = 3.9665 reais)

 (Reporting by Marcelo Rochabrun
Editing by James Dalgleish)
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