Goods from the former Avianca Brasil will be auctioned on the 31st

The assets of OceanAir, or Avianca Brasil, will be auctioned on the 31st, in yet another chapter of the company’s bankruptcy process, announced last year. The auction brings up again the debate on the competitiveness of airlines in the country – which are currently discussing consolidation and even their survival in the post-pandemic period.

For specialists heard by Estadão/Broadcast, although the cost scenario for the sector is historically unfavorable, there is still room for more competitors in the market, once Covid-19 is surpassed.

The bankruptcy of Avianca Brasil was decreed in 2020 by the 1st Court of Bankruptcy and Judicial Reorganizations, of the Central Forum of São Paulo. The company had been under bankruptcy protection since December 2018. The airline had approximately R$2.7 billion in debt and had not flown since May 2019. By the end of this month, more than 1 million items will be auctioned, being the largest lot valued at $16 million.

“The case of Avianca shows that the initiatives of airlines in Brazil need to be very well thought out, because the activity involves high costs and the infrastructure is still in deficit for the expansion of the network”, says the president of the Aeronautical Law Commission of the Portuguese Bar Association do Brasil – São Paulo section (OAB-SP), Felipe Bonsenso.

Attorney at the ASBZ office and effective member of the Special Committee on Aeronautical Law at the OAB, Renan Melo says that airlines have historically faced high tax burdens, high fuel costs and airport fees in Brazil. However, the domestic market would still have room for more companies.

“Given the unstable business environment in civil aviation in Brazil, we had several bankruptcies, such as those of Vasp, Varig and Avianca”, he says. “However, in the domestic segment, we still have a concentrated market.”

Consolidation

For specialists, the entry of ITA (Itapemirim group) into the market is an example of how there is still room for new companies in the country. Even so, agents in the airline industry have been claiming that consolidation should be “inevitable”.

Recently, Gol announced the acquisition of MAP Linhas Aéreas, which operates in the region. Azul, on the other hand, has been publicly positioning itself in favor of the movement and about its intention to make an offer for Latam Brasil, whose controller is facing a Chapter 11 lawsuit in the United States, equivalent to judicial reorganization in the country.