Varig bankruptcy

[Young Paul]

I understand that Varig have applied for bankruptcy protection. Does anybody have any more news?

[catchup]

Oops!

Where do you have got that from?

regards

[AIRWAY]

And the negotiations between Varig and TAP Portugal to help and ease their financial situation and 20% of Varig, have been cancelled due to the above.

4 a/c have been returned to the lessor last week due to non-payment ...

[catchup]

TRUE !
:(

AP
Paper: Varig, TAP Negotiations Collapse
Monday June 20, 6:34 am ET
Negotiations Between Debt-Ridden Varig and TAP Collapse, Newspaper Says

LISBON, Portugal (AP) -- Negotiations between Brazil's flagship carrier Varig and Portugal airline TAP for a plan to rescue Varig from financial collapse have failed, TAP Chief Executive Fernando Pinto was quoted as saying in an interview published Monday.


"The operation has ended, although TAP is still interested in a partnership with Varig and will now see if it makes sense to apply the same kind of plan to the process," Pinto told the Diario Economico financial newspaper.

TAP representatives could not immediately be reached for comment Monday. Portuguese officials would not comment.

TAP and Varig had been discussing a plan under which Portugal's state-owned airline would invest an undisclosed sum in Varig and get a stake of up to 20 percent in the Brazilian carrier. The companies have overlapping trans-Atlantic routes between South America and Europe, and already have a code-sharing agreement on some flights. The two airlines would not have merged under the deal being discussed.

But Varig filed for bankruptcy protection on Friday to keep a restructuring plan on track and prevent 11 of its 82 jetliners from being seized by a division of American International Group Inc. The airline has debt of 9.5 billion reals (US$4 billion; euro3.2 billion) and has steadily lost domestic market share in Latin America's largest country over the last several years.

"The way that Varig has found to deal with its immediate cash flow problems is also an internal process that TAP cannot be a part of," Pinto added. He said TAP would further analyze its stance and follow the developments closely.

Varig, whose full name is Viacao Aerea Riograndense SA, had faced a Friday deadline to pay overdue leasing bills for the planes. The filing allows the carrier to keep using the jetliners while a judge mediates details of the airline's rescue plan with creditors, Varig lawyer Sergio Bermudes said.

Varig now has two months to present a recovery plan to creditors, Bermudes said, and will continue operating as usual.

[CaptW5]

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh23860_2005-06-17_19-57-53_n17287252_newsml

[mutt]

Flew on them outta Sao Paulo two days ago, so they are still flying!!!!

Mutt

[WHBM]

Varig has had more financial crises than you would believe. Been bust before, I'm sure. But more notably there have been multiple occasions in the past (including recent years) when the creditors, particularly the leasing companies, have taken aircraft back due to non-payment. It's happened to several types in their fleet.

Varig have also made a speciality over the years of taking over cancelled orders, new airframes from desert storage, and similar cheap deals they managed to cut.

Surprising too how few international carriers now serve Rio. The bottom seems to have dropped out of international travel to the city. Once the destination of choice for the international jet set (it was an Air France Concorde destination for a while), the world seems to be passing Brazil by.

[ALLDAYDELI]

which aircraft have gone back? They just took 2x more (ex-United) 772s recently... There was a GECAS incident in Paris a while back with an RG B772 and lease payments.

[broadreach]

ALLDAYDELI

If I'm not mistaken it's five or six 733s, three or four 757s and both the 732s. A recent newspaper article mentioned Gol as being ready to take on most if not all the 733s.

WHBM
More or less spot on but it's not Brazil being passed by, just Rio; Sao Paulo's bursting at the seams. Guarulhos is busier every year, hotels sprouting up around it and the new facilities at Congonhas, the downtown airport, are excellent (as long as we don't talk about the traffic).

Rio's basic problem is political; stalemate between federal, state and municipal governments for yonks. Indecision, social violence, rampant corruption, companies moving headquarters to where the market is. Highway from Galeão to town frequently closed down due to crossfire between rival drug gangs and/or the police. SDU's (Santos Dumont, the downtown Rio airport) being restricted to Rio-SP shuttle flights, with all others transferred to Galeão (damn, after all the name changes I can't even remember the code!) while SDU revamp the terminal, seems to have driven even more traffic away.

Someday, surely, it will all be resolved. In the meantime we all grow older and one's stomach churns for the friends in Varig. Apologies for the rant.

[Young Paul]

Particularly a shame given that Brazil has one of the most stable governments in SA, a staggering variety of experiences (being the size of Europe!), great places to stay, good value food and drink, a temperate/tropical climate all year round (depending on where you go) and even malaria-free areas.

[AIRWAY]

TAP Portugal just added another brazil route to their network, a big percentage of their income is from Brazilean routes.

[alemaobaiano]

This is quite similar to Chapter 11 protection in the USA. Basically Varig have 6 months free from action by their creditors in which they have to restructure the business. Their options are to make the company attractive to a buyer, or set their house in order and wind up the company at the end of this time giving the best return to their creditors. They could of course, restructure the company and return to profitability, but that isn't really likely without a lot of State aid.

In the meantime they can continue flying, BUT, they have a problem in that they can't force companies to extend further credit. Petrobras, for example, might decide to cut their losses and not sell more fuel to Varig on credit, strictly cash only. Same with Infraero, landing fees paid in cash. There may be other issue, such as the payment of employee social security, union action, loss of slots at the major airports, and last but not least, corruption. (This is Brasil, after all :uhoh: )

Varig, as we know it today, is basically dead. Vasp is already dead and gone, but there is major competition in the form of TAM and GOL, both well run airlines. They would, I suspect, be more than happy to see Varig fail rather than be taken over.

alemaobaiano