Portuguese flag carrier TAP Portugal has confirmed it has signed a memorandum of understanding with Brazilian flag-carrier Varig’s corporate parent, the Ruben Berta Foundation, aimed at capitalising the South American airline.
The memorandum covers the direct or indirect capitalisation of Varig – possibly leading to TAP’s taking a 20% stake in the carrier – as well as companies connected with the Brazilian Star Alliance member.
But TAP chief Fernando Pinto reiterates that a merger is “out of the question” and that both airlines will “remain independent” – although they will aim to “capture the countless synergies that may become real”.
The memorandum of understanding is aimed at supporting negotiations to reach a conclusive agreement.
Pinto says the decision to present debt-ridden Varig with a recovery plan followed the Ruben Berta Foundation’s indication that it was willing to hand over its controlling shareholding in the Brazilian airline.
“Within this process now started, [we] may be able to become a shareholder of an equity up to 20% of Varig’s capital, which is the maximum permitted by Brazilian legislation,” says TAP.
“This memorandum will allow [progress] towards the operation details as well as the necessary negotiations towards its realisation.”
No further details about TAP’s proposal have been disclosed because the two sides have agreed to a confidentiality pact. TAP adds that the process is likely to be complex.
TAP is, like Varig, a member of Star Alliance. Pinto says: “A new opportunity has been created pointing at the possibility of attempting to establish a strategic position in the South Atlantic while reinforcing, on the other hand, the alliance already existing between both carriers.”
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