Cancelled Flights, No Government Bailout. Brazil’s Varig Is on Its Last Leg.

Brazilian aviation authorities blocked a deal that would have thrown a lifeline to Brazil’s troubled flagship airline as employees held protests in the nation’s capital Tuesday, April 11, calling for a federal bailout.

Brazil’s Civil Aviation Authority shot down a proposed deal that would have let a small local airline, OceanAir, take over some of the unprofitable routes of Viação Aérea Rio-Grandense, or Varig, the company’s press office said.

The deal was vetoed on the grounds that flight slots and airport space cannot be negotiated, the Varig press office said.

Varig is reeling under an estimated US$ 3.3 billion in debt and is currently in the restructuring phase of bankruptcy proceedings.

In recent days, the airline has been forced to cancel flights because it cannot meet operating payments. It also risks having its planes grounded for nonpayment of airport fees in Brazil.

Some 300 Varig employees boarded a chartered jet to Brasí­lia, the nation’s capital, to call on the federal government to bail out the company, which employs 11,000 people.

On Friday, Varig President Marcelo Bottini went to Brasí­lia to seek a moratorium on debt payments and a cash injection in the company.

However, Brazilian Finance Minister Guido Mantega said separately last week that there will be no federal cash bailout, causing Varig stocks to slide.

Government officials are still assessing what can be done for the flagship firm.

Varig’s former cargo operation, VarigLog, last week offered US$ 350 million for Varig’s commercial operations. VarigLog, which is owned by a group of Brazilian businessmen and US investment fund Matlin Patterson, proposed setting up a new Varig to take over operations, leaving the company’s massive debts with the old company.

Meanwhile, Varig is studying plans to cut costs by returning 15 planes to leasing companies. It is currently only running 54 of its 71 planes because it lack funds to maintain all of them. It is also looking at cutting loss-making regional flights

Mercopress – www.mercopress.com

Tags:

  • Show Comments (0)

Your email address will not be published. Required fields are marked *

comment *

  • name *

  • email *

  • website *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Ads

You May Also Like

Brazil Corruption Gets Better. Country as Corrupt as Colombia Now

Brazil has improved its position in the Transparency International's annual rank of world's most ...

Woman, Former Lula Ally, to Run for Presidency in Brazil

Three Brazilian left wing groups have teamed up and last Sunday nominated a woman ...

The Fear of Being First

By making Lula look like someone who could win, the PFL hopes to scare ...

Brazilians May Need ID and Social Security to Surf the Internet

If a bill being voted this Wednesday, November 8, in the Brazilian Senate’s Constitution ...

Unemployment Still 10.9% in Brazil

Unemployment in Brazil attained 10.9% in September in comparison with August, its lowest level ...

Industry Leaders Hand Lula Minimal Agenda to Avoid Brazil’s Paralysis

Brazil’s National Confederation of Industry (CNI) delivered a proposal it calls a “minimal work ...

Brazil’s Embraer Builds US$ 50-Million Plant in the US to Make Executive Jets

Embraer, Brazil's aircraft maker, announced that the company's profits more than doubled in the ...

Living with Shortages

Tieta, Teresa Batista, Gabriela, Quincas Berro Dágua, Vadinho and Dona Flor. For many of ...

Brazil Campaign Raises Bone Marrow Donors to 130,000

After a yearlong campaign to encourage bone marrow donations, the number of donors has ...