January 18, 2019 / 12:39 AM / in 6 months

Brazil regulator moves to ground 20 percent of Avianca Brasil's fleet

SAO PAULO (Reuters) - Brazil’s aviation regulator said on Thursday it was going to ground 10 planes operated by Avianca Brasil, 20 percent of its fleet, prompting the carrier to go to court seeking to prevent the decision being enforced.

FILE PHOTO: An Avianca Brasil Airbus A319-100 plane ands at Santos Dumont Airport in Rio de Janeiro, Brazil, June 6, 2016. REUTERS/Ricardo Moraes

The regulator, known as ANAC, said it was acting at the request of one of various lessors involved in a festering legal dispute with Avianca Brasil, which filed for bankruptcy last month after falling behind with lease payments.

In response, Avianca Brasil, the country’s fourth largest airline, filed an emergency motion asking a judge to issue an injunction against the regulator. The motion is still pending.

The decision came as a surprise because Avianca Brasil reached an agreement in court on Monday with the aircrafts’ owner and other lessors which granted the carrier 15 more days to operate the planes.

No planes had been grounded as of Thursday night and it could take up to five business days to take them out of service, the regulator said. Avianca Brasil has argued that grounding the planes would affect thousands of people.

Avianca Brasil said in a statement that the announcement by ANAC was “in disagreement with the judicial decision” in a Sao Paulo bankruptcy court.

The request to ground the planes was submitted by GECAS, a General Electric subsidiary that leases aircraft, two days after its Brazilian lawyers agreed to let the planes fly for 15 more days, according to a letter obtained by Reuters.

“Given recent events, GECAS has found it necessary to take steps to protect our interests,” company spokesman James Lutton said in an email. “We have terminated leases on these aircraft and are currently working with Brazilian authorities and the airline to ensure a satisfactory return of the aircraft.”

In the letter, the regulator said the agreement signed between Avianca Brasil and GECAS only applied to actions filed in a court. But since ANAC is not a judicial body, it was not bound by that court decision.

Avianca Brasil filed for bankruptcy in December, after falling behind on lease payments on many of its planes, setting off a legal battle in Brazil and the United States over whether it could still operate the aircraft. The airline has so far said it has managed to keep its operations running as normal.

Avianca Brasil is separate from the better known Avianca Holdings AVT_p.CN which is based in Colombia. Although they share a corporate parent.

Reporting by Marcelo Rochabrun; editing by Grant McCool

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