Brazilian carrier Azul has entered a non-binding agreement to acquire certain assets of bankrupt airline Avianca Brasil in a $105m transaction.

The deal comprises 70 pairs of airport slots and Avianca’s certification as an airline operator in Brazil.

Under the agreement, Azul will also acquire 30 Airbus A320 aircraft from Avianca.

In a statement, Azul said: “As provided by the Brazilian Bankruptcy and Judicial Reorganization Law, the assets will be transferred to a new entity free and clear of all debts and liabilities.”

Azul expects the completion of the transaction to take up to three months.

“The assets will be transferred to a new entity free and clear of all debts and liabilities.”

Avianca filed for bankruptcy protection in a Brazilian court last December after aircraft lessors sued the company to repossess its fleet.

The repossession was in response to the carrier’s failure to make payments on many of its aircraft and posed a serious threat to the continuation of operations.

Should Boeing be bailed out?

View Results

Loading ... Loading ...

The bankruptcy petition was aimed at enabling the continuation of flight operations.

According to Reuters, a local court has allowed Avianca to continue to have possession of the aircraft.

The judges hearing the aircraft leasing companies’ appeal have postponed ruling for an additional two weeks.

Sources told the news agency that Azul will provide as much as $40m to Avianca Brasil to help the carrier meet its operating expenses until April.

One of the sources added that the deal will enhance Azul’s presence at Congonhas, Sao Paulo’s domestic airport.

Azul already acquired two Airbus A320 planes previously operated by Avianca. The aircraft were repossessed in December due to Avianca’s failure to pay the leasing companies.