The Brazilian justice decided that bankrupt airline company Varig, which once was the pride of Brazil but became buried in debt due to mismanagement, be sold to NV Participações, a group formed by workers of the firm itself.
Judge, Luiz Roberto Ayoub, from Rio’s Justice Court, had been dragging his feet to reach a decision, since June 8, when the TGV (Trabalhadores do Grupo Varig – Varig’s Group Workers) were the only ones to present a bid in an auction to sell Varig.
The group offered at that time US$ 449 million for the domestic and international operations of the moribund airline. Since then TGV had been trying to convince Ayoub that it had the monetary resources to fulfill its side of the bargain.
The TGV has now until Friday to deposit the first payment of US$ 75 million to keep the company afloat. This Monday morning alone, Varig had 13 of its flights canceled. Thousand of passengers were affected by cancellations since Saturday. Monday, June 19, Varig’s stocks fell 20,56% to 1,70 reais.
According to public prosecutor, Gustavo Lunz, the group willing to buy Varig has not shown any concrete proof that it has the necessary backing to pay for the purchase of the airline.
Despite the sale approval, many aviation experts believe that the shutdown is not a question of if but just when, They argue that very soon the new buyers of Varig will be forced to crash land.
Expenses with fuel and airplanes lease besides salaries are just a few items that make managing Varig at this juncture a virtually impossible task.
Afraid of being left with a useless ticket travelers have been avoiding the company and in doing this driving another nail into Varig’s coffin.