The president of Brazil’s debt-burdened flagship airline Varig acknowledged Wednesday, April 5, that his company was running short on cash, but said there was no risk its money woes would soon force it out of the skies.
Marcelo Bottini said Viação Aérea Rio-Grandense SA, or Varig would not be grounded in the near term, despite juggling more than US$2 billion in debt and facing federal demands for payments.
Bottini’s comments came in response to reports in the financial daily Valor and O Globo newspaper that the airline’s financial problems would force it to suspend its flights as early as today, for failing to pay maintenance and airport bills on time, breaking agreements made earlier this year.
Bottini said he had asked to meet with President Luiz Inácio Lula da Silva to discuss plans to rescue the ailing company, which already is operating under bankruptcy protection.
He also said he was seeking a line of credit to cover airport fees and fuel costs, to help the airline through Brazil’s off-season.
Varig owes the federal airport administration some US$ 54 million and spends about US$ 422,000 to cover its airport fee each day.
Creditors appeared to reject an offer from Volo do Brasil, which purchased the airline’s former cargo subsidiary VarigLog in January for US$ 46 million.
Volo do Brasil had offered to buy Varig for US$ 350 million, without taking responsibility for any of the company’s debts. Under the proposed deal, Volo do Brasil was expected to lay off about half of the airline’s 10,000 employees.
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