Brazil judge halts suits seeking to repossess Avianca Brasil jets

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

SAO PAULO (Reuters) - A Brazilian bankruptcy judge late on Tuesday granted a request by the country’s fourth-largest airline, Avianca Brasil, to suspend lawsuits seeking repossession of at least 14 of its aircraft, according to a court document.

Avianca Brasil filed for bankruptcy protection on Monday, after aircraft lessors sued and won initial victories in seeking to repossess the planes. The airline has 494 million reais ($129 million) in debt, according to a court filing that is under seal but was seen by Reuters.

Its top creditor is state-controlled oil company Petroleo Brasileiro SA (Petrobras) PETR4.SA, owed 60 million reais for fuel, followed by airports and aircraft maintenance providers including General Electric Co GE.N unit GE Celma and United Technologies Corp's UTX.N Pratt & Whitney.

At least three leasing companies have sued Avianca Brasil seeking to repossess passenger jets representing 30 percent of its fleet. Leases, which are not classified as debt in the company’s financial statements, are not protected by Brazil’s bankruptcy rules, making it unclear how long Tuesday’s decision will hold if the leasing companies appeal.

The judge said he was suspending those lawsuits because of the impact they may have on passengers.

“It’s undeniable that if (Avianca Brasil) suspends its service it will cause evident harm to a very large number of passengers,” he wrote.

Avianca has warned that 77,000 ticket holders could be grounded in December if the lessors’ suits are not frozen.

($1 = 3.8744 reais)

($1 = 3.8371 reais)

Additional reporting by Tatiana Bautzer; Editing by Bernadette Baum and Steve Orlofsky