Aircastle Limited (NYSE: AYR) today provided an update on its aircraft still being operated by Avianca Brazil.
On February 1, 2019, the judge in the bankruptcy proceeding of Avianca Brazil issued an order extending the stay on repossession until mid-April. Despite extending the stay, the decision requires the airline to resume making payments beginning February 1, 2019. Aircastle believes the decision is contrary to well established Brazilian law and The Cape Town Convention, a treaty adopted by Brazil which provides international standards for the repossession of aircraft. Aircastle intends to continue to aggressively pursue its rights, including the immediate appeal of the judge's decisions.
Mike Inglese, Aircastle's CEO, stated, "A predictable judicial system and reliable framework for the recovery of aircraft is a principal factor in the cost and availability of capital to airlines. Brazil is the third largest civil aviation market in the world and the country's aviation industry has benefitted from its adoption of Cape Town, enabling Brazil to attract significant foreign capital. While we were fully prepared for an unfavorable ruling, we remain hopeful that the Brazilian Judiciary will respect the rule of law and honor their obligation under The Cape Town Convention. We still expect to recover our aircraft on a timely basis."
Mr. Inglese continued, "Our aircraft being operated by Avianca Brazil are modern, desirable aircraft and we expect the aircraft to be placed in a timely manner after repossession. In addition to leasing aircraft to Avianca Brazil, we provide financing to other major airlines in Brazil and have commitments to purchase almost $1 billion in Embraer E2 next generation regional jet aircraft. We believe the judge's decision will negatively impact Brazil's civil airline industry with higher costs and less funding."
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