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Ailing Avianca’s plan to sell airport slots might be rejected

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Avianca is the fourth largest airline in Brazil, and it has been in judicial recovery since December of last year with debts of approximately R$500 million.

A new plan approved by Avianca’s creditors on Friday is not setting well with Brazil’s anti-trust agency, CADE. The agency said that depending on which competitors buy out Avianca’s main airport slots, the operation may not be approved.

The approved plan includes the partition of the company’s assets into 7 parts, called Individual Productive Units (UPIs). Six of the UPIs will be made up of slots (airport landing and take-off times), employees and aircraft, and the seventh will hold Avianca’s loyalty program, Amigo.

It is CADE’s expectation is that agents will find the best solution to suit the private interests of Avianca’s shareholders and its creditors as well as the public interests of Brazilian consumers.

Included in each UPI will be the registration and authorizations of routes and the right to use slots at Congonhas (SP), Guarulhos (SP), and Santos Dumont (RJ) airports, in addition to the temporary right of use of the Avianca Brasil brand and the Air Operator Certificate approved by the National Civil Aviation Agency (ANAC).

CADE stated that the best case scenario would be for a new company to assume the operation of the units for which there would be no change in the concentration level of the sector. But if the UPIs are acquired by Gol or Latam, the agency sees problems, because these two companies already have high market shares in the main routes in which Avianca operates. Both Gol and Latam have announced interest in purchasing some of the Avianca’s assets.

Azul Airlines had announced earlier that it had made an offer to acquire Avianca Brasil’s assets, including airplanes and airport slots for US$105 million.

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Xtra Aerospace in Florida also responsible for Boeing 737 Max crash?

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Our purpose is to ensure each flight is safe and cost-effective every day. This is the message on the Xtra Aerospace website. The Xtra Aerospace states their maintenance division can provide optimal maintenance to all of the unique aviation needs.

Xtra Aerospace may have been very much off on this goal when in Indonesia a Lion Air Boeing 737 MAX crashed after it was repaired in a U.S. aircraft maintenance facility and the so-called angle-of-attack sensor was replaced. This sensor sent erroneous signals causing repeated nose-down movements on the Oct. 29 flight that pilots struggled with until the Boeing Max plunged into the Java Sea. Everyone on board, 189 people were killed.

XTRA Aerospace is an FAA/EASA/ANAC certified repair station located in Miramar, Florida, USA.

Documents obtained by Bloomberg News show the repair station, XTRA Aerospace Inc. in Miramar, Fla., had worked on the sensor. It was later installed on the Lion Air plane on Oct. 28 in Bali, after pilots had reported problems with instruments displaying speed and altitude. There’s no indication the Florida shop did maintenance on the Ethiopian jet’s device, according to Bloomberg.

Xtra Aerospace states: ” We specialize in the repair of instruments, radio & mechanical/electrical accessories. XTRA offers extensive capabilities servicing the A300, A320 family/A330/A340 and Boeing 737 thru 777. We are proud to serve the world’s top airlines and suppliers with one goal… complete customer satisfaction.

XTRA Aerospace welcomes the U.S. Government. XTRA is DD2345 certified to obtain military critical technical data. XTRA’s cage code is 5FWE2 and we look forward to helping you with all your sourcing and repair needs.”

U.S. teams assisting the Indonesian investigation reviewed the work by the company to ensure that there weren’t additional angle-of-attack sensors in the supply chain with defects, said a person familiar with the work. They didn’t find any evidence of systemic issues on other sensors the company may have worked on.

Bloomberg states in their article:

“Much of the concern by regulators and lawmakers after the Lion Air and Ethiopian Airlines crashes has focused on Boeing’s design of the Maneuvering Characteristics Augmentation System, or MCAS, which was programmed to push down a plane’s nose to help prevent aerodynamic stalls in some situations. But the preliminary report by Indonesia on the Lion Air crash shows that maintenance and pilot actions are also being reviewed.

It’s common for licensed repair stations to overhaul older parts so they can be resold, said John Goglia, a former member of the NTSB who earlier worked as an airline mechanic. Airlines can save money buying used parts and U.S. regulations require that the parts meet legal standards, Goglia said.

If the sensor was repaired at XTRA Aerospace, “it would have to go through what the manual says to overhaul it,” he said. “That means all the steps.”

The Indonesian preliminary report doesn’t say what went wrong with the device but indicates that the plane’s maintenance is a subject of the investigation.”

The Ethiopian Airlines 737 Max that crashed on March 10 also apparently had issues with the same type of sensor, which triggered a safety system on the plane that was driving down the plane’s nose, according to people familiar with the accident. In that case, investigators are still attempting to locate one of the sensors to help determine why it malfunctioned.

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