TAP Air Portugal will participate in the Brazilian Varig Airlines debt reestructuring plan. The company that once was the most important air carrier in Brazil is now in bankruptcy court.
The president of the Brazilian airline, Omar Carneiro da Cunha, said Monday, November 7, that TAP will buy 95% of the shares of VarigLog and 90% of the shares of Varig Engineering and Maintenance (VEM), for a total of US$ 62 million.
According to Cunha, TAP promised to deliver the funds by Tuesday, November 8. The BNDES (National Economic and Social Development Bank) will lend US$ 42 million, and the rest (US$ 20 million) will be provided by the Portuguese airline.
Cunha said that the money will be used to pay what is owed to US leasing companies for contracts on 40 aircraft, to prevent them from being seized under court order.
"Of the six proposals that were presented, TAP’s was chosen, because it indicated the intention to keep the group intact; moreover, the amounts to be paid were greater than in the other proposals," Cunha added.
Varig filed for bankruptcy in July, The companhy is carrying a debt of around US$ 3.4 billion (7.7 billion reais). Wednesday, November 9, is the last day given by a New York bankruptcy court for Varig to get into an agreement with their creditors.
Varig employees are the company’s biggest creditors, and they are worried about keeping their jobs. They want assurances from TAP that there will be no dismissals and that the employees pension fund (Aeros) will be maintained.