Brazil’s Varig at the End of Its Rope. It Might Stop Flying Any Minute Now.

Varig Brazilian Airlines on its last legThe 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.

Mercopress

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  • Guest

    GET STUCK
    I am get stuck in the Los Angeles ). I am supposed to fly to Porto Alegre today, Varig has cancelled all the flights. I was told by the Varig staff that I could be arranged to get on the UNITED AIRLINES 2 days later ( from Los Angeles to Chicago, from Chicago to Sao Paulo ), it spends 6 more hours than the direct flight from Los Angeles to Sao Paulo, and the domestic transit from SAO PAULO to PORTO ALEGRE is not yet confirmed ! That means theres no BRAZIL domestic airlines has promised to take care the mess of VARIGS CHAOS.My gosh, should I had to stay 12 hours or one day in the Sao Paulos airport ??? Who Knows !!! And the return flight schedules are also
    impossible to be confirmed.
    I am totally screw up by VARIGS FUCK UP situation. My trip is destructed as many thousands of VARIGS passengers all over the world. The VARIG FINANCIAL CRISIS DRAMA IS RIDICULOUS.OBVIOUSLY, THEY KNOW THEIR PROBLEMS, THEY SHOULD HAVE STOPPED SELLING AIR-TICKETS A MONTH AGO, ITS A DEFINITE FRAUDULENCE. I WILL NOT TOLERATE IT AND LET MYSELF BECOME A SILENT VICTIM.I HAVE ALREADY WASTED TIME AND SACRIFICED MY VACATION WITH NO COMPENSATION.
    I WILL CANCEL THE TRIPAND I WILL FIGHT HARD TO ASK FOR MY TOTAL FARE REFUND.
    ASHAME ON BRAZIL!!!

  • Guest

    Why Varig Sucks
    Varig is burdened with the same problems as United or American – it is structured to operate within a 100% regulated business environment. It has too many workers, legacy systems, union contracts and outdated infrastructure. This means it has to charge higher prices than its competition to make a profit. Compounding its problems is the fact VARIG is losing market share to its more nimble competitors, TAM and GOL. So that means it has to reduce the number of flights — but it still has to pay for the idle planes it bought on credit from Boeing and AirBus. All in all, VARIG should disappear like VASP and TransBrasil. A new, more efficient and modern company will appear to fill the void in the market.

  • Guest

    Varig\’s Debt Problem
    What is Varig’s problem – bad management, too many routes, too many aircraft?

    Try getting a seat on a Varig flight from Europe at short notice at any time of year and you’ll find it’s impossible. Why don’t they concentrate on improving the level of service they offer on routes where there is strong demand instead of trying to be a global airline?

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