A bankruptcy judge annulled Friday, June 23, the sale of Brazil flag carrier Varig airlines after a workers’ group failed to make the first required payment. The decision threatens to leave thousands of Brazilians football fans stranded in Germany.
Judge Luiz Roberto Ayoub said the TGV workers’ group, which had made the sole bid for Varig airlines at a bankruptcy auction on June 8, failed to come up with the US$ 75 million first deposit required under the auction’s rules.
By annulling the bid, Ayoub said he would refer the case to prosecutors and the company’s bankruptcy administrators to decide whether to liquidate the company, order a new auction or hold meetings between creditors and the company.
Ayoub said the fate of the company would only become clear next week, further extending a drama that has dragged on for most of the month and now threatens to leave thousands of Brazilians stranded in Germany where the football World Cup is being played.
Brazilian government officials estimate 28,000 people who travelled overseas with Varig are expected back in Brazil by the end of June. Of those, 5,600 people flew Varig to Germany, said Milton Zuanazzi, president of Brazil’s national civil aviation agency.
Grupo Aguia whose Planeta Brasil was named by the Brazilian Soccer Federation as the official tour operator for the World Cup, said it was monitoring "minute by minute decisions" affecting Varig.
The company sold 8,000 packages, which include tickets to watch Brazil’s matches, most of them using Varig.
However Mabel Kinder, a travel agent for Oficina Eventos e Turismo in São Paulo, was not taking any chances. She stopped selling packages using Varig six months ago and has recommended clients fly instead with Lufthansa, Swissair and other airlines.
"This crisis was known for some time, so we avoided selling Varig," Kinder said. The Brazilian government has five airplanes ready at the Galeão Air Force base in Rio de Janeiro to bring Brazilian passengers back to the country if needed, an Air Force spokeswoman said.
The Brazilian Air Force has three 45-seat C-99 planes and two Boeing 707 jets, each capable of carrying 160 people. The C-99’s would be used in Latin America and the bigger jets to fly Brazilians with Varig tickets back from other continents.
The Boeings have been recently retired after serving as Brazil’s Air Force One. The Brazilian government acquired new planes. The old were considered in bad shape and were mockingly call the sucatão (the big scrap piece).
The 79-year-old airline that was once Latin America’s largest carrier has been under bankruptcy protection for more than a year.
Varig’s troubles are the worst affecting international travel in the country in more than 40 years, said Leonel Rossi, director of international affairs at the Brazilian Travel Agencies Association.
Varig had a two-third share of international air traffic, according to data from the civil aviation agency. "This is a severe crisis," Rossi said.
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