Another Airline Merger (Varig & TAP Portugal)

[Knight Templar]

According to official reports, Varig Brazil and TAP Portugal have signed an agreement to start negotiating a merger between these two airlines... Interesting times ahead for both airlines, if someone has some more indepth info please post it here. I'll try and find out a little bit more from my Portuguese friend.

Regards,
KT

[Nopax,thanx]

Always thought it was going to be TAP and Faucett that were merging..........:rolleyes:



sorry; couldn't resist that one.....

[bmibaby.com]

From what has been made apparent, TAP Portugal & VARIG Brasil, will not be merging, but instead TAP, now a very profitable national flag carrier, will be using some of their spare resources & funds to invest in VARIG. Rather than a merger, TAP will have a shareholding in VARIG & the two airlines will codeshare across each other's networks.

It does make sense. TAP's management have really turned the airline around, which VARIG really needs & the two airlines already have a strong cooperation on routes between Portugal/Brazil and through the Star Alliance.

[Krueger]

It's not clear that TAP will pour any money onto Varig. From what I understood from the statements of both CEO's is that TAP is going to help Varig turnaround it's overwhelming finance burden, not necessarily with money. Since both airlines belong to Star Alliance, there are some costs that can be saved, code-shares to be made, etc. After Varig debts are solved, then TAP can get in and have 20% of the company (that's the max a foreign company can have). Even though TAP has been posting some good numbers, there are still some financial and structural problems to be solved which leaves not a lot of breath to gamble on another airline.However since TAP is the european biggest airline to Brasil with 6 daily flights, it's only natural to try to expand to one of it's natural fields of expertise, being the other the Portuguese-speaking Africa.

[Konkordski]

According to official reports, Varig Brazil and TAP Portugal have signed an agreement to start negotiating a merger between these two airlines...


No, no and no. There's never been talk of a merger - in fact, it's been repeatedly pointed out that a merger is exactly what ISN'T happening.

[alemaobaiano]

According to the local news last night a merger is not on the cards.

TAP would be interested in helping Varig if (and this is a very big if) the foundation that holds 87% of Varig relinquishes control of the company. That is highly unlikely.

Varig actually runs at a daily loss, and they owe money to protected creditors (the government, Petrobras, Infraero) who may or not wait to see what happens. VASP went to the wall because these organizations wanted their payments.

The financial commentators last night were suggesting that the only way out for Varig is to declare themselves bankrupt and start again.

Tony

[Knight Templar]

I stand corrected and apologies, it is indeed 20%.

Once again my apologies.

KT

[Oshkosh George]

News story here---

http://www.commercialaviationtoday.com/

(This is a daily news bulletin,so if viewing after the 17th May,you may have to search for it)

[Krueger]

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.”

Check Six Krueger...