It seems that the name Varig will survive after all. The moribund airline company which once was a symbol and pride of Brazil was spared bankruptcy at the eleventh hour being bought today, July 20, by its former subsidiary VarigLog for the price of US$ 24 million.
São Paulo- based VarigLog was the only interested in the auction held in Rio de Janeiro. While the name Varig may be preserved, very little will be left of the old company starting with the 10,000 employees, which should be reduced to a maximum of 2000. And the fleet which had 80 planes just 6 months ago, will be cut to 13 aircraft.
VarigLog paid the minimum price established by the auction, but it will assume several debts and commitments left by the old Varig, like US$ 112 million in previously bought tickets and US$ 32 million from the frequent-flyer program Smiles. The new company inherits the name and all the international and domestic routes that belonged to Varig and Rio Sul.
The buyer has also promised to invest US$ 150 million in 30 days and to issue debentures in the value of US$ 46 million which might be converted in stocks in the new company.
About 1,000 Varig employees who were present at the auction were ecstatic. They applauded noisily when the sale was announced. The judge who dealt with the bankruptcy all these months, Luiz Roberto Ayoub, was cheered and received with signs that said: "Ayoub 100% Justice."