If Varig Goes Belly Up Too Bad, Life Goes On, Says Brazilian Government

Brazil’s embattled airline Varig announced a restructuring of domestic and international routes in a last ditch effort to explain the massive canceling of flights that caused chaos in Brazilian air terminals.

In a short release Wednesday morning, June 21, Varig said the flights’ suspensions were "temporary" and respond to a restructuring of its network.

"Varig restructured its network giving priority to those routes with greater passenger demand and profitability", said the first official release in a week. Over 50 of a total 180 daily flights have been cancelled.

The temporary suspensions include flights to Milan, Munich, Madrid, Paris, New York, Miami, Los Angeles, Mexico City, Montevideo, Asuncion and Bogotá.

However flights which will continue to operate are: Frankfurt (twice daily); London (daily); Miami (daily); Buenos Aires (four daily); Lima (one daily); Santa Cruz de la Sierra (one daily); Santiago and Caracas (daily).

The announcement comes a day after a bankruptcy judge agreed to sell the airline to a consortium of Varig workers and two foreign investors. This saved Varig from immediate liquidation, but the consortium must now find US$ 75 million by Friday. The judge has warned that without this first payment the buyout will fail.

NV Participações, which represents Varig workers and two not-disclosed foreign investors, has agreed to pay US$ 449 million for the struggling airline.

Meanwhile the Brazilian government took distance from the company’s agony, "If Varig goes down, too bad. People live and die, so happens with companies. But if it’s possible to save her, we will", said Brazilian Defense minister Waldir Pires.

The minister said president Lula da Silva is following closely Varig’s sale negotiations and praised the judicial ruling.

"I think the judge did the right thing. The truth is that if liquidation can be avoided, it must be so," said Pires who added the government’s willingness to help but "in the framework of the law".

Brazil’s national airport authority has said it will begin demanding that Varig pays its airport fees every day, in cash. The news came as the country’s civil aviation authorities met other airlines to divide up Varig’s routes should it cease to fly.

Varig currently controls 16.7% of Brazil’s domestic market, but has a 66% share of the country’s international air traffic.

Mercopress – www.mercopress.com

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