Avibras Asks for Judicial Recovery And Lays off 400 in Sao Paulo FactoriesArms manufacturer blames the covid-19 pandemic for the drop in exports, which account for 85% of sales.
Arms and defense equipment maker Avibras, which it says is Brazil’s biggest defense industry, filed for bankruptcy on Friday and laid off 400 of its 1,400 employees. The company has accumulated losses in the last two years and has a debt that exceeds R$ 395 million.
The request for protection against bankruptcy was filed at the courthouse in Jacareí, in the interior of São Paulo, where the company has a factory. In the petition, Avibras claims that equipment exports, which account for about 85% of its revenue, have dwindled during the pandemic.
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Those laid off are concentrated in the factories and administrative areas of Jacareí and Lorena, cities in the interior of Sao Paulo.
Avibras was founded in 1961 and is headquartered in Sao Jose dos Campos. It manufactures armored vehicles, missiles, rockets, drones and software intended for defense and its revenue is concentrated in exports mainly to countries in the Middle East and Asia. Iran and Saudi Arabia, for example, are among the company’s armored vehicle buyers.
In the petition asking the Court for protection against bankruptcy, Avibras says that its revenue plummeted during the pandemic. In 2019, the company’s net revenue was BRL 920.86 million. In the following year, already in the pandemic, there was a 7.9% decrease, to R$ 848.16 million. In 2021, revenue plummeted 73.7% to R$223.22 million.
Avibras’ loss, which in 2020 had been R$ 85.69 million, increased to R$ 134 million last year.
In the petition asking for judicial recovery, the industry claims to have debt of R$ 394.75 million, not counting R$ 138.76 million of debts not included in the judicial recovery. The largest amount of debt, R$ 259.47 million, refers to debts with unsecured creditors, without guarantees.
“In the market in which Avibras operates, demands, negotiations and conclusion of contracts are covered with a high level of secrecy, since they concern matters of national security and sovereignty (…). Obtaining information on acquisitions specific, can, by themselves, generate conflicts or tensions between countries (…).
“In this sense, any and all acquisitions are dealt with in face-to-face meetings or negotiations (…). Therefore, Avibras’ commercial team was prevented from making any face-to-face contact with its base customers for at least a year and a half , given the restrictions on international travel caused by the closing of borders”, says the company in the file.
Avibras says in the process that “despite the impacts caused by the retraction of the national and international markets in recent years”, it foresees an increase in sales with the reactivation of the global economy and says that “it has already identified that its customers have increased their operations and ( …) restarted the projects they had stopped”.
The company’s forecast is for a gradual resumption of business in 2022 and “more sharply” in 2023.
In a note, Avibras says that this Friday it started “actions to restructure the company’s organizational structure, maintaining the essential activities for the fulfillment of the contractual commitments assumed with its customers”.
“In the last two years, the company had its results strongly impacted by the Covid-19 pandemic, especially in the financial aspects, with the postponement of negotiations of export contracts and the consequent significant reduction in its sales”, says the note.
Avibras says that it is committed “to the resumption of business, focusing on the development of new markets and corporate sustainability” and neither confirms nor denies that there may be more cuts in the coming days.
The Metalworkers Union of Sao Jose dos Campos, Avibras’ headquarters city, protested against the decision. In a note, it says that the dismissal “took everyone by surprise and took place without prior negotiation”
“As soon as they learned of the cuts, union leaders went to the factory and filed an extrajudicial notification to the company, demanding an urgent meeting with the Avibras management, as well as the immediate suspension of all layoffs”, says the note from the entity.
The union claims that measures such as suspending contracts or drawing up a voluntary redundancy plan could have been negotiated as an alternative to layoffs.
In the past, Avibras received financing of R$ 21.11 million from BNDES for the construction of a plant destined to the production of resins in Lorena.
Arms and defense equipment maker Avibras, which it says is Brazil’s biggest defense industry, filed for bankruptcy on Friday and laid off 400 of its 1,400 employees. The company has accumulated losses in the last two years and has a debt that exceeds R$ 395 million.
The request for protection against bankruptcy was filed at the courthouse in Jacareí, in the interior of São Paulo, where the company has a factory. In the petition, Avibras claims that equipment exports, which account for about 85% of its revenue, have dwindled during the pandemic.
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Those laid off are concentrated in the factories and administrative areas of Jacareí and Lorena, cities in the interior of Sao Paulo.
Avibras was founded in 1961 and is headquartered in Sao Jose dos Campos. It manufactures armored vehicles, missiles, rockets, drones and software intended for defense and its revenue is concentrated in exports mainly to countries in the Middle East and Asia. Iran and Saudi Arabia, for example, are among the company’s armored vehicle buyers.
In the petition asking the Court for protection against bankruptcy, Avibras says that its revenue plummeted during the pandemic. In 2019, the company’s net revenue was BRL 920.86 million. In the following year, already in the pandemic, there was a 7.9% decrease, to R$ 848.16 million. In 2021, revenue plummeted 73.7% to R$223.22 million.
Avibras’ loss, which in 2020 had been R$ 85.69 million, increased to R$ 134 million last year.
In the petition asking for judicial recovery, the industry claims to have debt of R$ 394.75 million, not counting R$ 138.76 million of debts not included in the judicial recovery. The largest amount of debt, R$ 259.47 million, refers to debts with unsecured creditors, without guarantees.
“In the market in which Avibras operates, demands, negotiations and conclusion of contracts are covered with a high level of secrecy, since they concern matters of national security and sovereignty (…). Obtaining information on acquisitions specific, can, by themselves, generate conflicts or tensions between countries (…).
“In this sense, any and all acquisitions are dealt with in face-to-face meetings or negotiations (…). Therefore, Avibras’ commercial team was prevented from making any face-to-face contact with its base customers for at least a year and a half , given the restrictions on international travel caused by the closing of borders”, says the company in the file.
Avibras says in the process that “despite the impacts caused by the retraction of the national and international markets in recent years”, it foresees an increase in sales with the reactivation of the global economy and says that “it has already identified that its customers have increased their operations and ( …) restarted the projects they had stopped”.
The company’s forecast is for a gradual resumption of business in 2022 and “more sharply” in 2023.
In a note, Avibras says that this Friday it started “actions to restructure the company’s organizational structure, maintaining the essential activities for the fulfillment of the contractual commitments assumed with its customers”.
“In the last two years, the company had its results strongly impacted by the Covid-19 pandemic, especially in the financial aspects, with the postponement of negotiations of export contracts and the consequent significant reduction in its sales”, says the note.
Avibras says that it is committed “to the resumption of business, focusing on the development of new markets and corporate sustainability” and neither confirms nor denies that there may be more cuts in the coming days.
The Metalworkers Union of Sao Jose dos Campos, Avibras’ headquarters city, protested against the decision. In a note, it says that the dismissal “took everyone by surprise and took place without prior negotiation”
“As soon as they learned of the cuts, union leaders went to the factory and filed an extrajudicial notification to the company, demanding an urgent meeting with the Avibras management, as well as the immediate suspension of all layoffs”, says the note from the entity.
The union claims that measures such as suspending contracts or drawing up a voluntary redundancy plan could have been negotiated as an alternative to layoffs.
In the past, Avibras received financing of R$ 21.11 million from BNDES for the construction of a plant destined to the production of resins in Lorena.