Avianca Brasil (São Paulo Congonhas) has entered into talks with New York-based hedge fund Elliott Management over a capital injection.

Citing sources close to developments, Bloomberg said on Friday that the talks were currently ongoing. Neither party confirmed the move.

Cash-strapped Avianca Brasil entered into bankruptcy protection in December last year after failing to reach an agreement with lessors over the restructuring of their contracts.

While BOC Aviation has since confirmed to ch-aviation that it was able to repossess and redeploy both its aircraft before the judicial stay, the Brazilian civil aviation authority (Agência Nacional de Aviação Civil — ANAC) said on Friday that the São Paulo court had overturned a recent motion by GECAS to remove ten A320 Family jets, currently operated by Avianca Brasil, from the local register.

For its part, a source from Constitution Aircraft Leasing/Aircastle told Reuters on Friday that the firm would appeal the São Paulo bankruptcy court ruling on January 14 that stayed repossession of Avianca Brasil’s aircraft. At the time of the ruling, Aircastle and other lessors said that they did not agree with the bankruptcy judge’s decision on the grounds the 15-day stay contravened the terms of the Cape Town Convention.

In an effort to reduce its costs, Avianca Brasil has set about reducing its staff headcount and, more recently, confirmed in a press release that it will also axe most of its international network - New York JFK, Miami International, and Santiago de Chile - effective March 31, 2019. The move coincides with the return of Avianca Brasil's four A330-200s to lessors and would then leave Bogotá as its only international destination.