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Avianca Brasil cancels 179 flights as it loses appeal on planes

(Recasts with loss of last-minute appeal)

By Marcelo Rochabrun

SAO PAULO, April 12 (Reuters) - Avianca Brasil on Friday canceled 179 flights scheduled for the next five days after a judge denied an appeal by the carrier to hold on to nine disputed planes, marking the unraveling of the airline four months after it filed for bankruptcy protection.

Avianca Brasil was operating with 35 planes, a representative said, but a federal judge late on Friday ordered the return of nine planes "immediately," denying the carrier's last-minute appeal, according to a news release by the Brazilian court.

Lessor Aircastle was scheduled to repossess its remaining nine planes leased to Avianca Brasil by Sunday, Brazil's civil aviation regulator said.

The vast majority of the airline's 179 cancellations so far are scheduled to take place between Monday and Wednesday and include some flights between Sao Paulo and Rio de Janeiro, by far Brazil's most popular route.

For months, Avianca Brasil managed to hold on to its fleet despite continuing to miss lease payments, as judges repeatedly ruled that the carrier should be able to keep operating the planes until a creditor meeting could define the fate of the enterprise.

The creditors meeting took place last week, lifting that restriction. Creditors approved the auction of most of Avianca's assets.

Another lessor, Aviation Capital Group, which is owned by Pacific Life Insurance also received a favorable decision earlier this week to repossess nine planes, and has already taken three.

Avianca Brasil is separate from the better-known Avianca Holdings SA, which is based in Colombia, although both airlines share a corporate parent. (Reporting by Marcelo Rochabrun; Editing by Leslie Adler)