The National Post reports in its Wednesday, June 14, edition that Brazilian airline Varig SA is asking ACE Aviation Holdings for a bailout. The Post’s Chris Sorensen writes the debt-ridden Brazilian airline, a Star Alliance partner, is facing bankruptcy.
One anonymous source familiar with the situation told the Post that ACE has received a phone call from Varig.
The Canadian company has a history of investing in troubled airlines and so, the source, said it was an “obvious phone call.”
Air Canada is one of the founders of the Star Alliance, which may make a bailout even more likely.
Westwind Partners analyst Horst Hueniken said, “It might make sense to save the carrier just to maintain the Star Alliance network.”
He noted that Robert Milton, chief executive officer of ACE, has showed interest in investing in near-bankrupt airlines in the past. For example, ACE put $75-million (U.S.) into US Airways in 2005.
The value of this investment has tripled. Similarly, ACE bought a 20-per-cent interest in Continental Airlines in 1992. This also proved profitable.