SAO PAULO (Reuters) - A Brazilian appeals court on Monday suspended a bankruptcy auction set for Tuesday, in which struggling carrier Avianca Brasil hoped to raise at least $140 million by selling some of its coveted airport takeoff and landing rights, known as slots.
The suspension could put further stress on Avianca Brasil, the country’s No. 4 airline, which has been operating with very little cash since filing for bankruptcy protection in December.
The airline said in a statement that it was still analyzing what it would do in response and that it had not filed an appeal as of Tuesday afternoon. It was unclear when a new auction would be scheduled.
The auction would have capped an arduous process in which Avianca Brasil fought aircraft lessors for months to try to keep operating its fleet despite missed payments.
The airline’s operations have shrunk dramatically since April, when lessors won definitive rulings allowing them to repossess planes. Its fleet is down to six aircraft, from as many as 60 Airbus SE planes late last year.
Suspension of Tuesday’s auction, first reported by newspaper O Estado de S. Paulo, was requested by airport operator Swissport AG, which runs several Brazilian airports and is owed some 17 million reais ($4.3 million).
Swissport and several other Avianca Brasil creditors have expressed anger at the outsize role played in the process by U.S. hedge fund Elliott Management — by far the airline’s largest creditor. Under the current auction plan, much of the cash raised would cover Elliott’s debts, totaling over $400 million, and much less would go to the rest of the creditors.
Reporting by Marcelo Rochabrun; Editing by Susan Thomas and Jonathan Oatis