April 15, 2019 / 10:16 PM / a month ago

Avianca Brasil still selling tickets on routes it plans to cancel

SAO PAULO (Reuters) - Struggling Brazilian airline Avianca Brasil had told regulators that it was permanently cancelling several routes as of Monday despite continuing to sell tickets for them on its website, according to a letter seen by Reuters.

FILE PHOTO: Customers walk past Avianca airline check-in machines at Congonhas airport in Sao Paulo, Brazil, April 12, 2019. REUTERS/Nacho Doce/File Photo

The airline, which has been fighting aircraft lessors in bankruptcy court, told civil aviation regulator ANAC in the letter sent on Friday that it was ending 48 flight frequencies — around a quarter of its capacity — due to a shrinking fleet.

The letter, which has not previously been reported, was the strongest sign yet of the operational impact of a bankruptcy process started in December by Brazil’s fourth-largest airline.

The changes were due to take effect on Monday, according to the letter, but Avianca Brasil’s website showed it was still selling tickets for several of the routes that it had told ANAC it would discontinue.

For example, Avianca Brasil said in the letter it would end flights between international airports serving the capitals of Sao Paulo and Minas Gerais states but its website was still selling two daily frequencies each way as far out as March 2020.

A representative for Avianca Brasil told Reuters the letter to ANAC was just a preliminary plan and that it was working hard to reaccomodate its flights to affect the fewest passengers possible.

On Friday, facing the imminent repossession of nearly a third of its fleet, the airline issued a news release saying some flights would be canceled on a case-by-case basis, starting with 179 flights from Saturday to Wednesday.

On Monday, Avianca Brasil canceled an additional 150 flights from Thursday through Saturday but did not made public its plans for those routes afterwards.

Currently, the company representative said Avianca Brasil is operating a fleet of 26 planes compared to 36 just a week ago.

ANAC said in a statement to Reuters on Monday that Avianca Brasil is required to “broadcast broadly its canceled and altered” flights and said that so far the agency has not registered any violations.

ANAC has already signaled it is concerned about Avianca Brasil’s ability to keep its flight schedule.

In court documents filed late on Friday, it said there was “a real and considerable risk that (Avianca Brasil) would not honor” its ticket sales, affecting “hundreds of thousands” of travelers.

The regulator issued a press release on Friday saying it had banned Avianca Brasil from selling tickets on “affected routes,” without specifying which routes or for how long.

Canceled flights entail additional costs for the struggling carrier, which has to either reimburse or re-accommodate affected passengers. In court papers, Avianca Brasil described the financial toll of canceled flights as “brutal.”

The airline is already running low on cash. It missed its payroll in recent weeks and several Brazilian airports now only allow its flights if they receive payment in advance.

The carrier is paying its day-to-day expenses largely with short-term loans from two of its competitors, who hope to end up with some of Avianca Brasil’s airport slots — the coveted takeoff and landing rights at crowded terminals.

The carrier’s assets, consisting mainly of its slots, are expected to be auctioned in May as part of the bankruptcy process.

LATAM Airlines Group and Gol Linhas Aereas Inteligentes have already agreed to bid at least $70 million each for different sets of slots.

Reporting by Marcelo Rochabrun; editing by Daniel Flynn and Diane Craft

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