Deadline looms for Varig as flights slashed

With two thirds of its flights cancelled, Brazil’s bankrupt airline Varig’s future looks increasingly shaky.According to media reports, the employee buyer group has confessed it may not meet a Friday deadline to deposit $75 million or see the sale voided.

By Thursday afternoon Varig had canceled over 100 of its flights, state airports authority Infraero said, while only nine out of its 32 international flights were completed.

Financial troubles also left all but 25 of the company’s 61 jet planes inactive, local media said, with some 20 planes grounded to comply with U.S. court orders. Lawsuits are impending from leasing companies who are seeking the return of aircraft.

Stocks of other Brazilian airlines TAM and GOL also fell amid worries that the carriers will incur increased expenses with the possible liquidation of rival flagship airline.

This is because the government has indicated that it may offer routes to other smaller carriers to diversify the sector.

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“Stay at home in the coming days. Patience!” Defense Minister Waldir Pires advised passengers holding tickets for Varig’s domestic flights.

The government’s priority is to assure the return of Varig’s passengers now abroad, said Pires, who is spearheading a plan to deal with the crisis. One of the issues is repatriating 20,000 Brazilians who are abroad on Varig tickets, and 5,000 in Germany for the Footbal World Cup.
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