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Brazil judge allows lessor to seek seizure of 10 Avianca Brasil planes

SAO PAULO, March 18 (Reuters) - A Brazilian appeals judge on Monday lifted an order that allowed struggling carrier Avianca Brasil to operate 10 of its planes despite missed leasing payments.

The decision is the latest development in a bitter legal fight between lessors and the carrier, which is going through bankruptcy protection, and which could disrupt the airline’s ability to complete scheduled flights.

Avianca Brasil could still seek an emergency injunction in Brazil’s Superior Court of Justice. An Avianca Brasil representative said the carrier was unaware of the legal decision, a copy of which was reviewed by Reuters.

Avianca Brasil filed for bankruptcy protection in December after falling behind on lease payments for most of its fleet of more than 45 Airbus planes. Since then, it has scored several rounds of successful court decisions that allowed it to hold onto the planes despite vigorous protests from its lessors.

But on Monday, a Brazilian appellate judge said the carrier had failed to meet one of the conditions to keep the planes: that it resume and keep up with its regular monthly payments.

Lessor Aircastle Ltd filed the appeal. Avianca Brasil is its single biggest customer and operates 10 Airbus planes owned by Aircastle.

In a statement, Aircastle said it is hoping for a prompt return of the aircraft so they can be leased again to other carriers.

“While the process of repossession has been delayed,” the lessor said in a statement, “Aircastle is appreciative that this new ruling adheres to the rule of law and provides a path towards resolution.”

(Reporting by Marcelo Rochabrún; Editing by Leslie Adler)