New Varig’s First Move: To Cancel All Domestic and International Flights

In a swift and surprising move, the new owners of Varig Brazilian Airlines, just a few hours after an auction to buy the forlorn company, suspended all flights, with exception of the Rio-São Paulo shuttle service, which is the most profitable piece of the business.

The flights are suspended at least for one week. What about the passengers holding Varig tickets? The new owners say there is no reason to worry about and that everyone will be placed in other airline companies, according to a contingency plan previously approved by ANAC (Agência Nacional de Aviação Civil), the Brazilian civilian aviation authority.

Things don’t seem to be running that smoothly though. And if a contingency plan is in place it doesn’t seem to be publicized enough. Brazzil Magazine has received complaints of people stranded in airports. In one such case a man from London wrote in an email:

"A friend of mine is at the São Paulo airport on her way back to England with a baby. She has been told that her flight by Varig was cancelled and  she has not enough money  to buy another ticket after attending her father’s funeral."
 
Varig was spared bankruptcy, yesterday, July 20, at the eleventh hour when it was bought by its former subsidiary VarigLog for the minimum price of US$ 24 million.

VarigLog has promised to assume several debts and commitments left by the old Varig, including US$ 112 million in previously bought tickets and US$ 32 million from the frequent-flyer program Smiles. It should also invest US$ 150 million in 30 days.

The new management announced that starting today, July 21, flight between Congonhas (São Paulo) and Rio (Santos Dumont) will be more than tripled going from 10 to 36.

In what is being called "first step in the strategy to recover the company" all the other flights have been cancelled. They will restart, management promises, gradually, beginning with Brazilian capital Brasí­lia and then Porto Alegre, in Brazil’s southernmost state of Rio Grande do Sul.

That means also that all Varig’s foreign destinations have been scrapped, including New York, Miami, Copenhagen, London, Frankfurt and several Latin American cities.

Today, the new company will be at a New York hearing asking from the bankruptcy court more time to pay late lease fees. They will also try to prevent some airplanes from being seized while negotiating new contracts to allow other planes to go back into service.

The suspension of flights is scheduled to end July 28. But then number of flights should increase only gradually,

The market didn’t seem to like the sale to VarigLog. Varig stocks fell 31.39% to 2.60 reais, yesterday.

Tags:

You May Also Like

IMF Goes to Brazil to Liquidate the Country’s Debt

The managing director of the International Monetary Fund, Rodrigo de Rato, will be in ...

Brazil Expecting 7% Inflation for 2004

The Cost of Living index in the municipality of São Paulo, Brazil’s largest city, ...

Brazil’s Supreme Gets Case Against Speaker of the House

The wheels of justice continue to turn in Brazil. Even though the Brazilian Speaker ...

Brazil’s Domestic Market Picks Up Strength

Job openings in the Brazilian industry increased 0.88% in August, in comparison with July, ...

World’s Top Vaccine Scientists Gathered in Brazil See Bright and Challenging Future

Many new vaccines that have the potential to save millions of lives are in ...

Black Wednesday Knocks Brazil Markets Down 5%

It was Brazil stock market's second worst day this year. Battered by a widespread ...

Pope’s Interest in Zero Hunger Warms Up Brazilian Government’s Heart

Brazil’s Minister of Social Development and Hunger Alleviation, Patrus Ananias, has been in Italy ...

Brazilian Analysts Predict Dollar Will Be 2.40 Reais by Year’s End

Brazil’s foreign current account balance for last year – the result of all commercial ...

November 1994

CONTENTS: Cover story: We are reading more (p. 8) All about the president (p. ...

While Foreign Investment Falls in Brazil It Grows in LatAm

The worldwide foreign direct investment (FDI) flow reached US$ 897 billion last year, an ...

WordPress database error: [Table './brazzil3_live/wp_wfHits' is marked as crashed and last (automatic?) repair failed]
SHOW FULL COLUMNS FROM `wp_wfHits`