Varig’s recovery on track
VARIG Brazilian Airlines is making considerable progress in implementing the recuperation plan that is aimed at returning the company to full financial, commercial and operational stability.
VARIG, which offers daily services between the UK and Brazil, settled all its outstanding payments to the leasing companies of its aircraft. The money for the payments, over US$54 million, having been generated by the airline’s own commercial operations and the sale of two of its subsidiaries, VEM and VARIG LOG, for a sum of US$72.2 million. That is US$10 million more than the initial negotiations suggested would be raised.
VEM (Varig Engineering & Maintenance) has been sold to the Aero-LB consortium, while VARIG LOG, the airline’s cargo and logistics subsidiary, has been sold to Volo Brasil, a consortium headed by US-based private equity fund, Matlin Patterson. Both Aero-LB and Volo Brasil are expected to become important investors in the recovery of the company.
“The conclusion of both transactions is further proof that VARIG is fulfilling the promises that it undertook with its clients, partners, creditors and employees, and also with the Brazilian judiciary that is overseeing the recovering process”, said VARIG’s president, Marcelo Bottini.
Having paid off the lessors and in addition been granted a further 24 months of protection by the American judge - Robert Drain - VARIG will continue to work on its recovery plan and that will see an increase of the VARIG fleet from 58 to 65 aircraft by February. The new planes will help VARIG increase capacity and offer on both domestic and international routes. In addition, extensive cabin enhancements are already underway to improve seating comfort for VARIG passengers.