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Old December 14th, 2005, 01:02 AM   #81
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Brazil's Docas Faces Uphill Battle To Turn Round Varig
By Alastair Stewart
13 December 2005

SAO PAULO (Dow Jones)--Brazil's Docas Investimentos faces an uphill struggle to put ailing flagship airline Viacao Aerea Riograndense, or Varig, (VAGV4.BR) back on its feet, analysts warned Tuesday.

The investment firm, owned by local entrepreneur Nelson Tanure, on Sunday evening stepped into the breach to take over the administration of Varig in a deal worth $112 million. But the real challenge will be to restructure a company that is weighed down by approximately 7.7 billion Brazilian reals ($3.4 billion) of debt and has been slowly disintegrating over the last year.

"Something radical needs to be done, otherwise the company will continue in a downward spiral of debt and lost market share," said Pedro Galdi, an analyst at ABN Amro bank in Brazil.

But it is very unlikely that Tanure will make the major cash injections that most analysts believe are necessary, and it appears the government is unwilling to help him out by discussing their massive mutual debts, analysts said.

"Without the government negotiating their debt with Varig as part of the deal, there is little chance of a meaningful resolution," said Elaine de la Rocque, of Rio de Janeiro-based brokerage BES Securities.

The government owes Varig approximately BRL3 billion in tax credits, but it is also a major creditor, with Varig owing the government more than BRL4 billion.

On Tuesday morning, Brazil's Vice President Jose Alencar said the government would not interfere in the Varig restructuring process - which has been interpreted as implying that the government won't offer concessions on the debt.

Varig has until January 8 to submit a restructuring plan to a Brazilian court to save the company, which in June filed for protection from creditors under Brazil's new bankruptcy law.

Docas will present its plan at a meeting of Varig creditors on Dec. 19, Paulo Marinho, Docas' financial director, told journalists Monday evening.

According to the deal struck by Docas, it will pay $100 million to buy a 25% stake in Fundacao Rubem Berta, Varig's controlling shareholder. Docas will pay a further $12 million to rent another 42% stake in FRB for a period of 10 years. FRB, which has a majority 87% stake in Varig, was managed on behalf of Varig's employees.

Tanure will make an initial payment of $11.2 million, with the remaining cash to be paid over 10 years.

Separately, Docas has also agreed to pay $139 million to buy Varig's profitable cargo and maintenance subsidiaries. This will substitute an existing deal with TAP Air Portugal (TAP.YY), which agreed to pay $62 million for the units in September.

To reverse the TAP sale, Tanure and Varig need the OK of Brazil's National Development Bank, or BNDES, which had financed part of TAP's acquisition. However, Tanure himself is unlikely to get any new financing from BNDES, because of his own outstanding debts with the bank, local newspaper Estado de Sao Paulo reported Tuesday.

The deal would appear to frustrate TAP's bid to seize control of Varig. The purchase of Varig's subsidiaries was part of a bailout proposal that included an offer to invest $500 million in the restructuring of Varig.

Varig has registered its bankruptcy process with New York's Southern District Court, seeking protection from overseas creditors, including aircraft leasing firms and suppliers. The New York court is scheduled to re-examine the case on December 21.

Tanure has a long history of investing in problem companies, and the strategy of renting control of the company is typical of his approach. He bought ailing Rio de Janeiro-based newspaper Jornal do Brasil in 2000 and the struggling business daily Gazeta Mercantil in 2003, but results have been mixed.

"There remain question marks over Tanure's record with no major turn-around in the other companies he has sought to bail out," said BES Securities' Rocque.

Varig was Brazil's leading airline for years, and remains the dominant international carrier, but its position in the domestic market has been in gradual decline. In September, low-cost rival Gol Linhas Aereas AS (GOL) overtook it in the Brazilian domestic market, pushing Varig into lowly third place. The number one domestic carrier is TAM SA (TAMM4.BR).

Varig shares rose on Tuesday morning following the announcement. At 1415GMT, the company's preferred shares was 9.3% higher at BRL1.65.
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Old December 15th, 2005, 02:37 AM   #82
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Brazil Court Suspends Docas, Varig Airline Deal
14 December 2005

SAO PAULO (Dow Jones)--A Brazilian court Wednesday evening suspended the sale of control in embattled Brazilian airline Viacao Aerea Rio-Grandense, or Varig, (VAGV4.BR) by Docas Investimentos (DOCA4.BR), pending approval of creditors.

Judges at a Rio de Janeiro court ruled that the deal through which Docas bought the right to administer the flagship airline over 10 years for $112 million, announced Monday, needed to be agreed upon at a meeting of creditors on Dec. 19, upholding a case brought by the Rio de Janeiro prosecutor's office.

The ailing airline was granted bankruptcy protection in July under the weight of debts totaling approximately 7.7 billion Brazilian reals ($3.4 billion).

The Brazilian court that suspended the deal has given Varig until Jan. 8 to form a restructuring plan, while the company has also registered its bankruptcy process with New York's Southern District Court, seeking protection from overseas creditors. The New York court is scheduled to re-examine the case on Dec. 21.

Under the terms of Monday's deal, Docas, owned by businessman Nelson Tanure, would buy a 25% stake in FRB-Par, the holding company that controls Varig, and rent a further 42% stake in FRB-Par for 10 years in order to administer the company.

Varig controllers rejected an offer of $500 million from U.S. investment fund Matlin Peterson in favor of the Docas offer, according to a report in the local business daily Valor Economico.

Varig has for years been the leading Brazilian airline. It remains the dominant international carrier but increased competition from low-cost rival Gol Linhas Aereas AS (GOL) helped it drop to third place in the Brazilian domestic market in September.
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Old December 16th, 2005, 04:33 AM   #83
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Carrier TAM Decides Between Embraer, Airbus Early 06-CEO
15 December 2005

MIAMI (Dow Jones) - Brazil's top airline, TAM Linhas Aereas SA (TAMM4.BR), will make a decision on which aircraft manufacturer to buy new planes from in the first quarter of next year, Chief Executive Officer Marco Antonio Bologna told Dow Jones Newswires Thursday.

TAM officials had said a decision would be reached by late 2005. The carrier, which enjoys a 43% market share in Brazil, is in talks with Brazil-based Empresa Brasileira de Aeronautica (ERJ), or Embraer, and France-based Airbus (ABI.YY), seeking to replace its 25 Fokker 100, which can carry 90 to 120 passengers.

Bologna spoke on the sidelines of a Latin American airline conference here. He was mum on TAM's specific plans for 2006, limiting himself to say the company is going to focus on consolidation rather than seeking expansion in the new year.

"The goal is to keep what we have," he said, declining to give guidance on what's the market share goal for 2006. TAM grew 10 basis points in the past 20 months alone, Bologna noted, and it would be unrealistic to expect the same level of growth going forward.

Rather, the company will invest in customer loyalty: The customers will keep coming back because the company will continue to offer more direct flights to more places at competitive prices, he said. Bologna also declined to discuss capital expenditure goals for next year, saying only the company will mainly invest in its maintenance programs, system technologies and training. Bologna said TAM is mulling over a new Montevideo-Sao Paulo route in the near future, besides the already announced routes Lima-Sao Paulo and Manaus-Caracas, scheduled to take off in January of 2006.

The carrier is also "wooing" London, Bologna said, a market served by competitors Viacao Aerea Rio Grandense, or Varig, and British Airways.

"We are asking (British) authorities for seven flights by the end of 2006," he said. TAM's main competitors in Brazil are no-frills Gol Linhas Aereas Inteligentes (GOL) and embattled Brazilian legacy carrier Varig. But TAM climbed to the top spot in Brazil growing organically and by focusing on customer service, Bologna said.

It isn't counting on a complete breakdown of Varig, which many in the industry believe it might be just a matter of time, to win over that many more customers, he said. Budget carrier Gol may be another story, he conceded.

"Gol is the company that makes us get up earlier in the morning," quipped Bologna. "It is a healthy competitive environment."

Analysts have said TAM will continue to have an edge against Gol in attracting business travelers, which make up for the vast majority of passengers in Brazil, because it offers more flights and fewer stopovers than Gol. In the regulatory scene, Bologna was enthusiastic about the planned Agencia Nacional de Aviacao Civil, or Anac, which is scheduled to take over many of the duties of the Department of Civil Aviation, or DAC, an arm of the Brazilian Air Force. The change from a military organism to a political agency was an old request of the Brazilian airline industry.

On Thursday, future Anac directors were been questioned by the Brazilian Congress, and the agency is expected to be up and running next year. The sector is going to lobby mainly on improvements in airport infrastructure and for a lesser tax burden for commercial aviation, Bologna said.

Bologna was also optimistic about prospects for the Brazilian economy in 2006.

"It should be an even better year," he said. Foreign exchange rates should continue to be stable, and oil prices are likely to continue to hover around $55 to $60 a barrel, he said.

"This is a growth environment," Bologna said. The strides made in the economic situation will bring more Brazilians to the skies, but not at the same pace of this year, when the domestic market grew 19%, Bologna said. He expects overall growth of 8% to 10%, he added. Recent years were times of unprecedented growth for Brazilian aviation, Bologna said, adding that in 2004 the domestic market grew 12%.
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Old December 16th, 2005, 04:34 AM   #84
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Brazil Varig Air Petitions To End Bankruptcy Proceedings
15 December 2005

SAO PAULO (Dow Jones) -- Financially troubled Brazilian airline Varig SA (BAGV4.BR) filed a petition on Thursday seeking an abrupt end to bankruptcy proceedings it initiated in July.

"The petition has been filed with the local bankruptcy court (in Rio de Janeiro)," said a Varig spokesman. "Everything now depends on the judge."

The spokesman said the court has offered no timetable for a ruling on the petition. The airline didn't give a reason for its petition, which it didn't publish.

Varig sought protection from creditors through a bankruptcy procedure it began in July.

Under terms set by the bankruptcy court, Varig has until Jan. 8 to present a restructuring plan.

The airline has encountered difficulties in filing such a plan, however, since virtually any plan would depend on attracting strategic partners.

Earlier this month, Rio de Janeiro investor Nelson Tanure presented an investment proposal that would have pumped $112 million into Varig. However, on Wednesday a panel of Rio de Janeiro judges ruled the proposal out of order for various procedural reasons. Other proposals from outside investors have been vetoed by Varig's creditors.

By withdrawing from the bankruptcy procedure, Varig would be free to seek partners without interference from the courts or creditors, but it would also be open to suits from creditors that could eventually lead to its liquidation.

The ailing airline was granted bankruptcy protection in July under the weight of debts totaling approximately 7.7 billion Brazilian reals ($3.4 billion).

For years, Varig has been the leading Brazilian airline. It remains the dominant international carrier but increased competition from low-cost rival Gol Linhas Aereas AS (GOL) meant it lost second place in Brazil's domestic market in September.
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Old December 16th, 2005, 05:41 PM   #85
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Brazil Court Returns Control Of Varig Air To Foundation
16 December 2005

SAO PAULO (Dow Jones)--A Brazilian appeals court on Friday returned control over troubled airline Varig to its traditional controler, the Rubem Berta Foundation, a spokesman for the airline said.

On Thursday night, a local civil court ordered the temporary removal of the foundation's appointees from Varig's board of directors, saying control should rest with a bankruptcy judge.

The foundation immediately appealed the order, overturning it Friday at the appeals level.

Varig sought protection from creditors through a bankruptcy procedure that began in July.

Under terms set by the bankruptcy court, Varig has until Jan. 8 to present a restructuring plan.

The airline has encountered difficulties in filing such a plan, however, since it has failed to find any strategic partners.

The ailing airline was granted bankruptcy protection under the weight of debts totaling approximately 7.7 billion Brazilian reals ($3.4 billion).

For years, Varig has been the leading Brazilian airline. It remains the dominant international carrier but increased competition from low-cost rival Gol Linhas Aereas AS (GOL) meant it lost second place in the Brazilian domestic market in September.
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Old December 19th, 2005, 10:44 PM   #86
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Creditors In Brazil's Varig Airline Reject Docas Deal
19 December 2005

SAO PAULO (Dow Jones)--Creditors in the embattled Brazilian airline Viacao Aerea Rio-Grandense, or Varig, (VAGV4.BR) rejected the sale of a controlling stake in the company's owner FRB-Par to Docas Investimentos during a meeting in Rio de Janeiro Monday, a company spokesman said.

Last week, Docas, owned by local businessman Nelson Tanure, announced he had bought 25% of FRB-Par and would rent 42% of its shares for a period of 10 years in a deal worth $112 million.

However, a court later ruled that creditors first had to approve the deal.

The creditors' decision was met with cheers from representatives of Varig workers, who feared Tanure would run the company into the ground.

FRB, or the Ruben Berta Foundation, owns 87% of Varig and mainly represents its workers.

Varig has been under bankruptcy protection since July under the weight of debts totaling approximately 7.7 billion Brazilian reals ($3.4 billion).

Under terms set by the bankruptcy court, Varig has until Jan. 8 to present a restructuring plan.

The airline has encountered difficulties in filing such a plan, however, having failed to find any strategic partners.

Meanwhile, a New York bankruptcy judge will rule Wednesday on an application by aircraft leasing companies to confiscate Varig planes on U.S. soil to ensure payment.

The creditors' meeting was due to start in the morning but only got under way at approximately 1700 GMT after a series of injunctions stopping the gathering had been lifted.
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Old December 23rd, 2005, 12:54 AM   #87
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US Court OKs Brazil Airline Varig Payment Pact With Gecas
21 December 2005

NEW YORK (Dow Jones)--A New York bankruptcy court on Wednesday gave its seal of approval for Brazil's flagship airline, Viacao Aerea Riograndense SA (VAGV4.BR), or Varig, to pay $6.46 million to GE Commercial Aviation Services LLC.

The New York court brokered the agreement between Gecas, a unit of General Electric Co (GE), and Varig, after the two sides had disagreed over how the funds in an escrow account held at JPMorgan should be paid out.

The agreement states that cash received before Varig filed for bankruptcy on June 17 should be paid to Gecas, to settle debts run up by the airline through leasing contracts with the U.S. firm. Any money paid into the escrow account should be paid to Varig, according to the agreement.

According to the court order, Varig has $14.7 million plus accrued interest in an escrow account at JPMorgan. The remaining $8.26 million plus interest, which has been received since June 17, will be paid out to Varig.

The New York court said Varig must seek ratification from the 8th Commercial Court of the City of Rio de Janeiro, which is managing the airline's bankruptcy process, on Thursday.

In previous court documents, Gecas has said that the Brazilian airline acknowledged debts of about $100 million in 2004, some of which have since been repaid. Gecas said it no longer leases any aircraft to Varig.

Earlier Wednesday, Varig said in a statement that the New York court has extended the airline's protection from creditors through Jan. 13. The airline had been threatened with seizure of aircraft on U.S. soil because of arrears in payments to aircraft leasing companies.

Varig said it is preparing a detailed recovery plan that will resolve the arrears problem.

Under terms of its Brazilian bankruptcy procedure, Varig has until Jan. 8 to present a detailed recovery plan. Varig said it will meet the Jan. 8 deadline.
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Old December 24th, 2005, 08:44 AM   #88
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Brazil Varig Airline 11-Month Loss BRL1.06B - Report
23 December 2005

RIO DE JANEIRO (Dow Jones)--Financially troubled Brazilian airline Viacao Aerea Riograndense SA (VAGV4.BR), or Varig, posted a net loss of 1.06 billion reals ($457 million) in the first 11 months of 2005, widening sharply from a net loss of BRL348 million in the same period a year ago, the company said Friday, according to the Estado newswire.

Varig reported net revenue of BRL5.11 billion in the first 11 months of 2005, down from BRL6.15 billion in the year-ago period.

Varig needs to report financial results on a monthly basis as part of the court-managed financial restructuring process, which began on June 17. The company has approximately BRL7.7 billion in debt.

The company has seen a continued drop in its market share resulting in the loss of the No. 2 position in the domestic market to Gol Linhas Aereas SA (GOL).
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Old December 30th, 2005, 05:17 PM   #89
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Brazil Airline Varig Ends Flights Between Brazil, Japan
28 December 2005

SAO PAULO (Dow Jones)--Brazil's embattled flagship airline Viacao Aerea Rio-Grandense, or Varig, (VAGV4.BR) will stop flying between Sao Paulo and Tokyo in order to cut costs, a company spokesman confirmed Wednesday.

The last flight will take off on Jan. 14, ending 37 years of operations in Japan. Offices across Asia will also be closed as the company seeks to appease creditors.

Varig sought bankruptcy protection in June under the weight of debts that total approximately 7.7 billion Brazilian reals ($3.3 billion).

The company has until Jan. 8 to present a recovery plan to Brazilian judges.

The route was once profitable as it connected Brazil's large Japanese immigrant population with the old homeland, but that changed with the dip in international air traffic following the terrorist attacks on New York City on Sept. 11, 2001, according to a report in the local Valor Economico business daily.

For years Varig has been the leading Brazilian airline. It remains the country's dominant international carrier, but increased competition from low-cost rival Gol Linhas Aereas AS (GOL) pushed it to third place in the Brazilian domestic market in September.
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Old December 30th, 2005, 05:18 PM   #90
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Brazil Gol Airline To Begin Flights To Paraguay Jan 4
28 December 2005

SAO PAULO (Dow Jones)--In one more step in its expansion across South America, Brazilian no-frills airline Gol Linhas Aereas Inteligentes SA (GOL) announced Wednesday that it will begin flights to Asuncion, Paraguay on Jan. 4.

The company said it will initially offer one flight per week, departing from Sao Paulo.

Paraguay is the fifth most frequented destination by Brazilians flying to neighboring countries. In 2003, approximately 144,000 passengers traveled between Brazil and Paraguay, Gol said.

Last week, Gol said it started selling tickets from Brazil to the Uruguayan capital of Montevideo and also to two more Argentine cities, Cordoba and Rosario. Gol already offers flights to Argentina's capital of Buenos Aires.

Gol became the country's first low-cost airline in 2001 and since then has registered breakneck growth. In November, Gol had 29.1% of domestic market share in Brazil, up from 23.9% in November 2004. Currently, Gol is the second largest domestic airline in market share.

TAM SA (TAMM4.BR) is Brazil's largest local carrier, while financially troubled Viacao Aerea Riograndense SA (VAGV4.BR), or Varig, came in third place.
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Old January 8th, 2006, 04:14 AM   #91
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Tanure Withdraws Bid For Brazil Airline Varig
5 January 2006

SAO PAULO (Dow Jones)--Nelson Tanure, owner of Docas Investimentos, withdrew his proposal to buy control of Brazil's embattled flagship airline Viacao Aerea Rio-Grandense, or Varig, (VAGV4.BR) in the face of opposition to the bid from creditors, shareholders and company workers, the local Estado newswire reported Thursday.

However, Tanure said he would maintain his bid of $139 million for the profitable logistics and maintenance wings of Varig, said Docas Spokesman Demetrius Guiot.

Brazil's Varig filed for bankruptcy at a Brazilian court in June under the weight of a debt load of approximately 7.7 billion Brazilian reals ($3.4 billion).

The court gave Varig until Jan. 8 to agree terms with a new partner and submit a recovery plan.

In December, Tanure had offered $112 million for control of Varig's controller, Fundacao Rubem Berta. The deal involved the purchase of a 25% stake in Rubem Berta and a loan of a 42% stake over 10 years.

Speaking at a meeting of Varig workers' representatives in Rio, Tanure blamed negative press about his intentions for Varig for his decision to pull out.

Following the proposal, many observers had warned that Tanure would attempt to take control of the company without assuming the debts, leading to a series of court actions seeking to block the deal.

In November, Varig closed a deal to sell the cargo and maintenance subsidies to a consortium led by Portuguese airline TAP (TAP.YY) for $62 million in order to avoid the repossession of a number of its jets in the U.S..

However, there was a clause in the deal that allows other companies to take the subsidiaries should they make higher bids.

According to Varig officials, U.S. investment fund Matlin Patterson made a bid for $77 million, along with the Tanure offer.

For years, Varig has been the leading Brazilian airline. It remains the dominant international carrier but increased competition from low-cost rival Gol Linhas Aereas SA (GOL) meant it fell to third place in the Brazilian domestic market in September.
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Old January 8th, 2006, 04:15 AM   #92
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Brazil Airlines Dec Passenger Miles Rise 25.3% On Yr
5 January 2006

SAO PAULO (Dow Jones)--Paying passengers on Brazilian domestic flights flew a total of 3.24 billion kilometers in December, up 25.3% in the same month a year earlier, according to monthly figures published by Brazil's Civil Aviation Department, or DAC, Thursday.

The increase in traffic was due to more flights being run by Brazil's largest local carrier, TAM SA (TAMM4.BR), and no-frills operator Gol Linhas Aereas (GOL).

The growth occurred amid an increase in the average number of seats filled to 73% from 71% in 2004. The number of passenger kilometers rose from 2.87 billion in November.

TAM remained the market leader, accounting for 46.1% of all domestic passenger kilometers flown, up from 43.8% in November and up from 41.2% a year earlier.

Meanwhile, Gol increased its advantage over Viacao Aerea Riograndense SA (VAGV4.BR), or Varig. Gol had 29.1% of the market last month compared with 29.1% registered in November and 24.2% registered in December 2004. Varig slipped to 21.7% compared with 31.6% a year earlier.

Gol and TAM both took advantage of a 13.9% decline in Varig's passenger kilometers to 710,470. Varig continues to struggle under the burden of crippling debts. The company sought bankruptcy protection in June.

In 2005, paying passengers flew a total of 33.70 billion kilometers, up 19.4% from 2004. Over the year, TAM registered a 43.5% market share, Gol had a 27.3% market share and Varig had a 26.7% slice.

The number of kilometers flown by paying passengers on international flights run by Brazilian companies dropped to 2.025 billion in December, down 2.5% on the year. Varig maintains its leadership in this market, accounting for 75% of all kilometers traveled.
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Old January 10th, 2006, 04:13 AM   #93
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Brazil's Varig Resumes Payments, But Outlook Still Cloudy
By Alastair Stewart
9 January 2006

SAO PAULO (Dow Jones)--As a court-ordered six-month moratorium on debt payments ended Monday for Brazil's embattled flagship airline, Viacao Aerea Rio-Grandense, or Varig, (VAGV4.BR), the future of the company remained extremely unclear.

Six months ago, a Rio de Janeiro bankruptcy court afforded Varig the breathing space to set up a restructuring plan to relieve the company's debts, which are estimated at over 7 billion Brazilian reals ($3.1 billion), and to stem its day-to-day operational losses.

But there remains no clear operational strategy to turn the company around as it now faces resumed debt servicing, analysts said.

"Without any clear signal from the Finance Ministry, the major creditor and potential debtor, no meaningful deal is possible," said Marcelo Ribeiro, aviation analyst at the local Pentagono brokerage.

Varig owes approximately BRL3 billion in taxes. On the other hand, the company has won a series of court decisions in support of claims against the government of around BRL4 billion. But the administration of President Luiz Inacio Lula da Silva has given no indication that it will bail out Varig.

"This being the case, Varig's administration will try to extend the restructuring process to next year, when there may be a new government, which can help," said Ribeiro. Brazilians go to the polls in October to elect members of congress, state governors and a president and vice president.

Varig President Marcelo Bottini declared last week Varig gained little from the court protection as it lacked cash to make any meaningful changes in operations. As a result, wages continued to be paid behind schedule and suppliers have reduced the payment periods from over a month to immediately upon delivery.

However, practically speaking, Varig had had little choice but to seek court protection, as the company was losing $1 million a day and faced having its airplanes seized in the U.S., Omar Carneiro da Cunha, former Varig president told the local daily Estado de Sao Paulo in an interview published Monday.

On Dec. 19, Varig's major creditors accepted a plan to convert the carrier's debt into shares of a new company. All creditors, including government agencies, suppliers and the company's pension fund, have accepted a 36-month moratorium on payments. Labor unions, however, will be paid over a period of twelve months.

The company also plans to increase the number of operating aircraft to 63 in the first half of 2006 and 75 by the end of 2007.

With losses of BRL1 billion in the first eleven months and cash flow falling, the company is in need of outside investors, said Bottini.

At present, investment proposals focus on the profitable logistics and maintenance subsidiaries rather than an overall restructuring.

In November, Varig closed a deal to sell the cargo and maintenance units to a consortium led by Portuguese airline TAP (TAP.YY) for $62 million to avoid the repossession of a number of its jets in the U.S.

However, the deal included a clause that allows Varig to sell to a higher bidder at a later date, although a fine must be paid to TAP. That looked like a possibility last week, but a bid by U.S. investment fund Matlin Patterson to buy the logistics wing for $55 million was withdrawn because of delays, while a bid of $139 million by local investment fund Docas Investimentos for the logistics and the maintenance subsidiaries was rejected by Varig since it was unclear where the funds would come from, said the local business daily Valor Economico on Monday.

The deal would have allowed the company to pay debts with aircraft leasing companies but it still wouldn't have resolved the immediate problems, said Pentagono's Ribeiro.

Meanwhile, the company continues to steadily lose market share in a year of fantastic growth for the industry as a whole. The industry's total number of kilometers traveled by passengers on domestic flights rose 25% in December compared with the year before, but Varig passenger kilometers fell 14% year-on-year to 705 million.

The principal factor in the fall was the end of the code sharing deal with rival airline TAM SA (TAMM4.BR).

"The end of that deal was like a knife in the heart of Varig," said Pantagono's Ribeiro.

Under Brazil's new bankruptcy law, the Rio de Janeiro bankruptcy court will oversee the restructuring over the next 24 months. However, on Friday, a New York bankruptcy court is due to review a case filed by airplane leasing companies to recover a loan of $56 million. Varig's Bottini said last week that it will make the payment before the end of the week.

For years, Varig has been the leading Brazilian airline. It remains the dominant international carrier but increased competition from low-cost rival Gol Linhas Aereas AS (GOL) meant it lost second place in the Brazilian domestic market in September.
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Old January 13th, 2006, 05:20 PM   #94
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Brazil's Varig Wins Bankruptcy Extension
12 January 2006

SAO PAULO, Brazil (AP) - Brazil's struggling airline Viacao Aerea Rio-Grandense SA, or Varig, said Thursday it paid $56 million to U.S. aircraft leasing companies and won an extension of its bankruptcy protection.

A New York court extended protection to Varig until March 17, when Judge Robert Drain will assess the progress of the company's restructuring plan, Varig said in a statement.

The company will present the plan to creditors on Jan. 31, Varig said.

Burdened with debts of more than 7 billion reals ($3.1 billion), Varig sought local bankruptcy court protection in June. But leasing companies filed separate cases in New York.

Varig raised money by selling its cargo unit VarigLog to the U.S.-based fund Matlin Patterson. On Thursday, the airline announced the sale of its maintenance subsidiary VEM to the Portuguese airline TAP for $72.2 million.

Varig remains the dominant Brazilian carrier on the international market but has fallen behind TAM Linhas Aereas SA and the no-frills airline Gol Linhas Aereas Inteligentes SA on the domestic market.
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Old January 27th, 2006, 05:12 AM   #95
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Brazil's Gol Says It's Breaking Even On New Routes
26 January 2006

SAO PAULO (Dow Jones)--Brazil's no-frills airline Gol Linhas Aereas (GOL) has already reached the break-even point on its new routes in South America, company President Constantino de Oliveira Junior told a conference call with investors Thursday.

"We have been seeing some very positive news in this area," he said.

He said the company, which has been flying for only five years, is looking to increase its share of the Brazilian international air market from its current level of 5.8% to 8.2% by 2007.

The company currently flies between Brazil and Argentina, Bolivia, Paraguay and Uruguay.

Local Gol shares rallied sharply following the news. At 1720 GMT, the local preferred stocks stood up 9.37% at 66.39 Brazilian reals ($29.64).

Gol is currently the No. 2 airline on the domestic market.
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Old February 13th, 2006, 04:45 PM   #96
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Brazil airline TAM posts lower Q4 profit on costs

BRASILIA, Brazil, Feb 13 (Reuters) - Brazil's leading airline, TAM Linhas Aereas , reported on Monday a steep drop in quarterly profit as soaring fuel prices drove up operating costs, offsetting an increase in passenger traffic.

The Sao Paulo-based carrier made a net profit of 65.3 million reais ($30.1 million) in the fourth quarter, down from 83.3 million reais in the same period in 2004 and 93.3 million reais in the third quarter of 2005.

For the whole of 2005, TAM posted a net profit of 187.4 million reais, down 45 percent from earnings of 341.1 million reais in 2004.

TAM said a sharp increase in operating costs hurt its bottom line in the fourth quarter. Total costs rose 21.4 percent in the quarter from a year earlier to 1.44 billion reais, led by a 59.7 percent increase in fuel costs.

Net revenue, however, rose in the quarter as TAM carried more passengers and added new routes. Revenue totaled 1.58 billion reais last quarter, up 17.6 percent from 1.34 billion reais in the same period in 2004.

The airline carried 5.4 million paid passengers in the fourth quarter, up from 3.95 million in the year-earlier period. In 2005 the total number of paid passengers was 19.6 million, a 44.7 percent increase over 2004.

Part of that increase was due to the addition of routes. TAM, founded in 1961 as a small cargo carrier, added flights last year to Paris and Buenos Aires and also began offering service in November to New York.

Domestically, TAM finished the year in the top spot with 46.1 percent of the Brazilian aviation market, followed by the fast-growing low-cost carrier Gol Linhas Aereas Inteligentes and Varig , respectively.

TAM's average market share in 2005 was 43.5 percent, a 7.7 percentage point increase over 2004. The domestic aviation market expanded 24 percent last year, helping TAM lift its load factor, or occupancy rate, to 70.6 percent from 66 percent in 2004.

On the operating level, earnings before interest, taxes, depreciation and amortization, a measure of cash flow known as EBITDA, fell to 322 million reais in the fourth quarter from 337.3 million reais in the same period in 2004.

($1 = 2.17 reais)
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Old February 14th, 2006, 04:16 PM   #97
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Brazil's Gol airline starts service to Paraguay
14 February 2006

SAO PAULO, Brazil (AP) - Brazilian airline Gol is adding Paraguay to its list of international destinations, continuing a steady push toward boosting its presence across South America, the company said Tuesday.

Gol Linhas Aereas Inteligentes SA will begin daily service to Asuncion, Paraguay, from the Argentine capital of Buenos Aires starting Wednesday, the company said in a statement.

It will be Gol's sixth international destination. The company flies to three cities in Argentina and one each in Bolivia and Uruguay, though most of its 430 daily routes are still concentrated in Brazil.

The wildly successful low-frills Gol launched in 2001 with service to just six Brazilian cities. It has since overtaken Brazil's Viacao Aerea Riograndense SA, or Varig, to become the second-largest carrier in the country after TAM Linhas Aereas SA.

Gol also plans to start service to the Chilean capital of Santiago, and to Venezuela's Caracas. The company is making plans to participate in a joint venture to launch a Mexican airline that will serve the domestic market with an eye toward expansion to U.S. destinations.
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Old March 10th, 2006, 05:17 AM   #98
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Strike Staged Against Aerolineas Argentinas
9 March 2006

BUENOS AIRES, Argentina (AP) - Two unions representing pilots and mechanics launched a 24-hour strike against Aerolineas Argentinas on Thursday, one day after Argentina's flagship carrier rejected workers' wage increase proposals.

The pilots union posted a Web site statement declaring it would completely halt activities until midday Friday.

The pilots and a mechanics union had gone on strike for eight days late last year to demand higher wages. The unions and the company negotiated a 90-day truce that expired Monday, and subsequent negotiations have been rocky.

Aerolineas Argentinas issued a brief statement late Thursday saying the strike grounded 10,100 of the 19,500 passengers that had tickets booked for the day. The company canceled 29 flights.

The carrier didn't estimate the financial damage nor say how many passengers would be affected Friday.

In the U.S., the airline flies to Miami and New York.

Late Wednesday, Aerolineas Argentinas rejected union counterproposals for a solution.
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Old March 11th, 2006, 01:51 AM   #99
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Brazil's Gol airline expects to boost domestic market share
10 March 2006

SAO PAULO, Brazil (AP) - Brazil's no-frills airline Gol expects to boost its share of the country's domestic air travel market to at least 35 percent from the current 29 percent share by the end of this year, executives said Friday.

Gol Linhas Intelligentes SA plans to add 16 jets to its fleet this year to reach that goal, and recently offered seats on selected flights for 50 Brazilian reals (US$23.36) to get more Brazilians flying, said Richard Lark, Gol's vice president of finance.

The fleet additions will give Gol 58 planes, all of them Boeing 737s. Lark said about 9 million Brazilians take passenger flights every year, but the market could reach 20 million if airlines offer low enough prices to get more Brazilian travelers off long-haul buses and onto planes.

"There is an enormous number of people who travel on buses, who could switch if the price is low enough," Lark told analysts in a conference call.

Gol started service in 2001 and has since overtaken Brazil's Viacao Aerea Riograndense SA, or Varig, to become the second-largest domestic carrier in the country after TAM Linhas Aereas SA.

Gol's domestic market share in February was 29 percent while TAM's was 44 percent.

Lark said later Friday that Gol also is preparing to start flights to Santiago, Chile; Caracas, Venezuela; and Lima, Peru.

"We are busy trying to fill the holes in the continental network," Lark said.

He said the company has no plans to expand beyond Latin America for now.

Originally conceived as a domestic carrier in 2001, the company began international flights in 2005. In January, it added flights to Cordoba and Rosario in Argentina, Montevideo in Uruguay and Asuncion in Paraguay.
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Old March 16th, 2006, 02:55 AM   #100
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Sao Paulo brothers lead low-cost revolution
Tom Phillips
16 March 2006
The Guardian

It must have seemed the strangest of ideas when the Folegatti brothers decided to go into the tourism business in 1987. Humberto was a physicist and Walter an engineer. By their own admission, neither knew the first thing about tourism.

"We didn't even know where the airport was," says Walter Folegatti, now the vice-president of BRA, one of the fastest-growing budget flight operators in Brazil. Twenty years on and the Sao Paulo-based brothers are heading a low-cost airline revolution that is sweeping across South America.

Brasil Rodo-Aereo, known as BRA, is part of a new generation of discount airlines changing the face of travel in the South American country. Having morphed from an airport transport company into an air operator in 1999, the business has seen ticket sales rocket in recent years and commands 6.3% of the domestic market.

The idea, says Mr Folegatti, is to create a new market by "popularising" air travel in one of the world's most unequal countries. "Any human being, no matter how humble or how little he has studied, would prefer travelling for three hours rather than for three days. Unfortunately, in Brazil we have 40 million people going hungry . . . We also have 40 million who are super-fortunate."

This leaves a potential market of about 100 million, he says, many who have never travelled by air before. It is a market into which BRA has made huge leaps since it began operating regular flights in November. Its fleet has grown from one to 10 planes in four years and, with 632 monthly flights, BRA is Brazil's largest charter service.

Brazil's low-budget air movement was born in 2001 with the foundation of Gol, a Brazilian answer to Ryanair.

Gol opened a new market in a country where plane travel has traditionally been out of the reach of all but a small elite. Gol's president, Constantino de Oliveira, recently said 11 % of his passengers were first-time flyers - people who had previously braved bus journeys of up to 78 hours on Brazil's badly maintained road network.

Recently, other companies such as BRA have entered the fray, undercutting Gol with flights to cities across Brazil. Gol operates about 430 flights daily, including routes to Argentina, Bolivia and Uruguay. It has branched out further, adding Paraguay to its list of destinations, with Caracas, the Venezuelan capital, and Santiago, Chile, expected to follow.

BRA is catching up fast. In 2005 it carried about 1.6 million passengers, an 80% rise on the 2003 figure. By next year the Folegatti brothers hope to be operating regular flights to Britain, Italy, Portugal, Spain and the Netherlands, reaching a market of 10 million people.

Constantino de Oliveira, chief executive of Gol, which grew from a bus company to an airline carrying 23 million people.
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