Brazil's Avianca expects loan talks progress to buy time for a deal: sources

SAO PAULO (Reuters) - Brazilian airline Avianca Brasil, which filed for bankruptcy protection in December, expects that advanced loan talks with hedge fund Elliott Management Corp will avoid the grounding of its planes, two sources with knowledge of the matter said on Thursday.

Avianca Brasil has been talking to Elliott about the hedge fund’s providing a 250 million real ($68.59 million) loan, the sources said. No agreement has yet been reached, however, and the aircraft lessors have not been paid, the people added, asking for anonymity to disclose private talks.

Avianca plans to tell the judge overseeing its bankruptcy that there has been progress on the loan talks and expects the court to give it more time to reach a final deal, the sources said. Avianca is battling its main creditors, aircraft lessors Aircastle Ltd and General Electric Co’s unit GE Capital Aviation Services, which have been seeking to repossess their planes since December.

Avianca declined to comment and Elliott did not immediately respond to a request for comment.

In December, Avianca hired consultancy Galeazzi & Associados to help it find a partner or a buyer, Reuters reported last week.

Reporting by Tatiana Bautzer; Editing by Leslie Adler