Leasing firm seeks earlier return of 10 Avianca Brasil planes

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

SAO PAULO (Reuters) – Aircastle Ltd (AYR.N) will try to repossess 10 planes from Avianca Brasil before the Feb. 1 expiration of a 15-day stay on repossessions from the struggling airline, a representative of the U.S.-based aircraft leasing firm said on Friday.

Aircastle is the second lessor to seek an earlier return of the planes after Avianca Brasil, which filed for bankruptcy in December, obtained the 15-day stay on any repossessions of its planes in a court hearing on Monday.

Brazil’s aviation regulator said on Thursday it would seek to ground a separate group of 10 planes at the request of a different leasing company, General Electric Co (GE.N) unit GECAS.

Aircastle and GECAS own a combined 40 percent of the carrier’s 46-plane fleet, and the loss of those aircraft could affect tens of thousands of passengers.

Aircastle’s move creates further uncertainty about Avianca Brasil’s ability to maintain its current flight schedule. The carrier has said it is operating normally, although it has also said it will give back some planes and scale back operations.

Avianca Brasil filed for bankruptcy after falling behind on lease payments, setting off a scramble to repossess its planes.

The 15-day stay on repossessions was requested by the bankruptcy judge after the airline and its lessors failed to reach an agreement at the hearing on Monday, according to the legal order, which the lessors signed.

It specifically states that the leasing firms did not agree with the judge’s decision, Aircastle said in a statement.

“His decision is completely contrary to the Cape Town Convention,” Aircastle said, referring to a little-known international treaty that allows for swift repossession of aircraft. Brazil and the United States are among the countries that have signed the treaty.

Reporting by Marcelo Rochabrun; Editing by Christian Plumb and Paul Simao

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