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Old March 20th, 2006, 06:13 PM   #101
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Brazil Creates New Civil Aviation Agency
20 March 2006

SAO PAULO (Dow Jones)--Brazil's President Luiz Inacio Lula da Silva will swear in the first directors of his new National Civil Aviation Agency, or Anac, on Monday, thus officially opening the agency.

The new agency takes over from the military-run Civil Aviation Department, which has ruled over civil aviation in Brazil for the past 75 years.

The creation of a new agency is expected to bring aviation politics closer to the center of the political agenda and limit military influence.

However, it will take time for the agency to operate fully - it still needs to fill 394 posts. DAC will slowly hand over control of the sector. The government has given Anac five years to replace all military officials in control of the sector.
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Old April 8th, 2006, 05:43 AM   #102
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Brazil's Varig airline asks to delay payments to some creditors
By VIVIAN SEQUERA
7 April 2006

BRASILIA, Brazil (AP) - Brazil's financially strapped flagship airline has asked the government to delay payments to some of its creditors but is not in danger of grounding flights, the company's president said Friday.

Varig's President Marcelo Bottini met with Brazil's Defense Minister Waldir Pires in Brasilia, the nation's capital, and asked the government for a three-month delay to pay Infraero, Brazil's airport authority, and a two-month delay to pay BR Distribuidora, an affiliate of Brazil's state-owned oil company Petrobras.

Bottini denied reports, however, that Varig, or Viacao Aerea Rio-Grandense SA, has been forced to cancel flights and might soon stop flying altogether.

"I have no doubt: Varig will not stop flying," he told reporters after meeting with the minister. "Varig means too much for Brazil. It has been flying for 80 years."

The Brazilian newspaper O Globo on Friday reported the company's financial troubles had forced it to cancel several flights Thursday, but Varig said those flights were canceled because of technical difficulties.

According to figures released Friday by the Brazilian civil aviation department, Varig's share of the domestic market dropped to about 19 percent in March compared with 28 percent in March 2005. In February, the company's market share was just above 19 percent.

While Varig maintained its leadership in Brazil's international market, it's share of flights slipped to 70 percent from 79 percent in March 2005 and 71.5 percent in February.

Varig is saddled with an estimated US$3.3 billion (2.7 billion) in debt, and the federal airport administration has threatened to ground the airline if it fails to pay its airport fees before each flight.

Brazil's Finance Minister Guido Mantega said Friday that there will be no federal cash bailout for the airline.

"There is no money in the federal budget for this," he told the local Agencia Estado news service.

According to reports in the local press, Varig is in talks with Brazilian carrier OceanAir Lineas Aereas and government officials to initiate a code-sharing agreement that might allow OceanAir to assume some of Varig's loss-making routes.

OceanAir, owned by Brazil's Sinergy group, was set up as an air taxi firm to serve Brazil's oil industry but has expanded to operate regional routes to more than 30 cities.

Earlier this week, VarigLog, OceanAir's former cargo wing, made a US$350 million (287 million) proposal for Varig's commercial operations.
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Old April 9th, 2006, 08:03 PM   #103
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Star Alliance aims to boost ailing Brazilian member Varig

ZURICH, April 7, 2006 (AFP) - The Star Alliance of 16 international airlines hopes to help its struggling Brazilian member Varig by trying to boost business in South America, senior executives said Friday.

Wolfgang Mayrhuber, the boss of German carrier Lufthansa, one of the founder members of the decade-old and expanding alliance, said Varig's woes were a concern for all Star Alliance carriers.

"Like in any good family, you don't only share the sunshine but also the hailstorm, and the best thing we can do is share our best practices, helping them by driving business into their area," Mayrhuber told reporters.

"Clearly, every partner that joins Star has customers who want to go to South America, that want to go to Brazil. That's the way we can help them," he said during a ceremony in Switzerland to mark the arrival of the latest member, Swiss International Air Lines.

Varig has been under bankrupcty protection since June 2005.

It has recently been unable to honour contracts on leased aircraft, which make up 80 percent of its fleet.

The carrier also owes 116 million reais (50 million dollars) to Infraero, Brazil's airport authority, and has reportedly faced an ultimatum to pay up.

In 2005, Varig lost its second place in the domestic flight market in Brazil to low-cost competitor Gol.

Varig was Brazil's leading domestic carrier until it was overtaken more than two years ago by TAM. Its market share has dropped to just under 27 percent.

Glenn Tilton, the boss of the US carrier United Airlines, another Star Alliance member, said he could understand Varig's problems.

Chicago-based United recently emerged from three years of bankruptcy protection during which it dramatically reduced the size of its fleet, laid off 20,000 employees and slashed 7.0 billion dollars from costs.

"We've been through a complex restructuring for three years and come out significantly stronger," Tilton told reporters.

"I think that the process is one that unfortunately the alliance is familiar with. Varig is going to have to go through it."

"Investment in restructuring is an investment for the alliance," he added.

One proposal to save Varig foresees a cut in staff numbers from 11,000 to 5,000, and a smaller fleet of 48 aircraft against the current 71. But that has not been well-received by the airline's creditors.
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Old April 11th, 2006, 04:54 PM   #104
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Brazil's Fin Min Rules Out Cash Bailout For Varig -Estado
7 April 2006

SAO PAULO (Dow Jones)--Brazilian Finance Minister Guido Mantega said Friday that there will be no federal cash bailout for ailing airline Viacao Aerea Rio-Grandense (VAGV4.BR), or Varig, according to the local Estado newswire

"There is no money in the federal budget for this," he said during a press conference in Rio de Janeiro.

The flagship airline has racked up debts, which are estimated at over 7 billion Brazilian reals ($3.3 billion), and is currently in the restructuring phase of bankruptcy proceedings.

Varig's lack of credit means it is late on key operating payments. As a result, the airline has been canceling flights and runs the risk of having its planes grounded for nonpayment of airport fees in Brazil.

Mantega said that he doesn't see what the government can do about Varig.

The government is Varig's main creditor and owns the main agencies with which the airline is behind on operating payments, including Infraero, the National Airport Authority, and BR Disribuidora, Varig's main fuel supplier.

The workers and some creditors have been holding out in the expectation that the government won't let Brazil's main international carrier die.

Presidential Chief of Staff Dilma Rousseff said late Friday that the government will complete its analysis of the Varig situation next week but there is no chance that Varig will stop flying in the short term.

Earlier in the day, Varig President Marcelo Bottini met with new Defense Minister Waldir Pires in Brasilia where he asked help in securing a $200 million loan from Brazil's National Development Bank, or BNDES, and a moratorium on bill payment to government agencies for three months.

"The idea is that we get credit until we negotiate with a new investor," he told journalists.

He said the $200 million loan would allow Varig to pay the airplane leasing companies, among other costs.

Varig faces a battle against time. Cash restrictions mean it can't pay for vital plane maintenance and only 54 of its 71 planes are currently flying. Meanwhile, customers are losing confidence in the airline.

Bottini said the company and the creditors are assessing a number of offers for its operations.

Earlier this week, VarigLog, its former cargo wing, made a $350 million proposal for Varig's commercial operations. VarigLog, which is owned by a group of Brazilian businessmen and U.S. investment fund Matlin Patterson, proposed setting up a new Varig to take over operations, leaving the company's massive debts with the old company.

Meanwhile, he confirmed the company is in talks with Brazilian airline OceanAir over a code share deal.
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Old April 12th, 2006, 06:24 AM   #105
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Authorities block deal to aid troubled Brazil airline
11 April 2006

RIO DE JANEIRO, Brazil (AP) - Aviation authorities blocked a deal that would have thrown a lifeline to Brazil's troubled flagship airline as employees held protests in the nation's capital on Tuesday calling for a federal bailout.

Brazil's Civil Aviation Authority shot down a proposed deal that would have let a small local airline, OceanAir, take over some of the unprofitable routes of Viacao Aerea Rio-Grandense, or Varig, the company's press office said.

The deal was vetoed on the grounds that flight slots and airport space cannot be negotiated, the Varig press office said.

Varig is reeling under an estimated US$3.3 billion (2.7 billion) in debt and is currently in the restructuring phase of bankruptcy proceedings.

In recent days, the airline has been forced to cancel flights because it cannot meet operating payments. It also risks having its planes grounded for nonpayment of airport fees in Brazil.

On Tuesday, some 300 Varig employees boarded a chartered jet to Brasilia, the nation's capital, to call on the federal government to bail out the company, which employs 11,000 people.

On Friday, Varig President Marcelo Bottini went to Brasilia to seek a moratorium on debt payments and a cash injection in the company.

However, Brazilian Finance Minister Guido Mantega said separately Friday that there will be no federal cash bailout, causing Varig stocks to slide.

Government officials are still assessing what can be done for the flagship firm.

Varig's former cargo operation, VarigLog, last week offered US$350 million (287 million) for Varig's commercial operations. VarigLog, which is owned by a group of Brazilian businessmen and U.S. investment fund Matlin Patterson, proposed setting up a new Varig to take over operations, leaving the company's massive debts with the old company.

Meanwhile, Varig is studying plans to cut costs by returning 15 planes to leasing companies. It is currently only running 54 of its 71 planes because it lack funds to maintain all of them. It is also looking at cutting loss-making regional flights.
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Old April 13th, 2006, 06:27 PM   #106
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Brazil Officials Discuss Varig Closure Contingency Plans
13 April 2006

SAO PAULO (Dow Jones)--Brazilian civil aviation officials met with Presidental Chief of Staff Dilma Rousseff on Wednesday to discuss contingency plans in case Brazil's ailing flagship airline Viacao Aerea Rio-Grandense (VAGV4.BR), or Varig, folds, a National Civil Aviation Authority, or Anac, spokesman said Thursday.

Varig has been in trouble for some time, weighed down by debts of approximately 7 billion Brazilian reals ($3.3 billion), and is currently in the restructuring phase of bankruptcy proceedings.

Varig's lack of credit means it is late on key operating payments and can't afford vital maintenance on a number of its planes. A large portion of these operating debts are with state-owned companies but government officials, including Finance Minister Guido Mantega, have said public money won't be used to bail out the company.

Meanwhile, on Wednesday, the Social Security Ministry announced it would take over the administration of the Aerus pension fund, which manages pensions for Varig workers and is a major creditor, to ensure the funds aren't used to prop up the firm.

Creditors could lodge court requests to wind up the company as soon as next week, said the local daily Estado de Sao Paulo on Thursday.

Analysts agree the tendency will be for local airlines TAM SA (TAM) and Gol Linhas Aereas Inteligentes (GOL) to take over most of the local routes currently run by Varig should the company fold. However, they can't fill many of the international routes immediately and foreign airlines would step in there.

TAM and Gol have already submitted contingency plans to Anac, should Varig stop flying, said the paper report.

Varig creditors are still assessing a proposal from VarigLog, its former cargo unit, to buy commercial operations for $350 million. VarigLog proposed setting up a new Varig to take over operations, leaving the company's massive debts with the old company.

VarigLog was bought by a company called Volo do Brasil for $46 million in January. At the time it was reported that Volo do Brasil was created by U.S. investment fund Matlin Patterson to buy the asset. However, a VarigLog spokesman maintained that Volo do Brasil is led by Brazilian businessmen Marco Antonio Audi, Marcos Haftel and Luiz Eduardo Gallo, while Matlin Patterson has a stake of under 20%.

Varig workers have resisted restructuring plans over the last five years in the belief the government would bail out the flagship airline.
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Old April 15th, 2006, 06:55 AM   #107
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Brazil's indebted Varig recommends VarigLog offer

RIO DE JANEIRO, Brazil, April 14 (Reuters) - The management of troubled Brazilian airline Varig will recommend that its Administrative Council accept a higher offer from its former freight subsidiary VarigLog, Varig's press office said.

Burdened by about 7 billion reais ($3.3 billion) in debt, Varig has been struggling to find ways to stave off collapse.

The decision, late on Thursday, was taken after VarigLog, raised its offer for Viacao Aerea Rio-Grandense S.A. (Varig) by $50 million to $400 million, Varig said.

VarigLog, owned by a group of Brazilian businessmen and U.S. investment fund Matlin Patterson, said that its offer will ensure that Varig has sufficient funds to keep operating.

VarigLog said it planned to service 17 Varig planes currently grounded due to lack of maintenance and to settle the payments backlog on leased planes. Varig had been considering the return of 15 planes to leasing companies to cut costs.

As Brazil's former flagship carrier, Varig is one of the country's best-known companies globally.

But it has been struggling for years, racking up debt and losing market share to rivals such as TAM Linhas Aereas and Gol Linhas Aereas Inteligentes .

Last June, Varig became the first major company to seek protection from creditors under Brazil's new bankruptcy law, which lets companies work out reorganization plans.

VarigLog's offer still has to be approved by Varig's creditors, which include General Electric Co. , Boeing Co. and several state-owned entities, such as oil giant Petrobras and the government's airport authority Infraero.
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Old April 19th, 2006, 04:47 PM   #108
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Brazil's Aviation Agency Vetoes VarigLog Sale To Volo
19 April 2006

SAO PAULO (Dow Jones)--Brazil's National Civil Aviation Authority, or Anac, announced late Tuesday that it had vetoed the sale of VarigLog, the profitable logistics arm of ailing airline Viacao Aerea Rio-Grandense (VAGV4.BR), or Varig, to Volo do Brasil in a move that further complicates the restructuring of the airline.

Volo do Brasil closed the deal to buy VarigLog for $46 million in January. However, Anac ruled that the deal had gone ahead without necessary government approval, said an Anac spokeswoman.

The announcement potentially scraps a $400 million bid made by VarigLog, on behalf of Volo, for Varig's operations. This is the only bid for the company that is currently having trouble meeting its operational payments due to a lack of credit and desperately needs a cash injection.

Varig entered into bankruptcy protection in June and is currently struggling under a debt load of around 7 billion Brazilian reals ($3.3 billion).

In January, it was reported that Volo do Brasil was created by U.S. investment fund Matlin Patterson to buy the asset. However, a VarigLog spokesman maintained that Volo do Brasil is led by Brazilian businessmen Marco Antonio Audi, Marcos Haftel and Luiz Eduardo Gallo, while Matlin Patterson has a stake of under 20%. Foreign firms aren't allowed to own more than 20% of Brazilian airlines.

The ownership situation led the National Airline Companies Association, or Snea, to ask Anac to review the deal.

A VarigLog spokesman, speaking on behalf of Volo, said the company is studying the decision but Anac's issues with the deal appear to be of a bureacratic nature.

However, the true reason for the veto was that Marco Antonio Audi has pending tax issues with the inland revenue department and Volo do Brasil's capitalization of $1 million is incompatible with the purchase of VarigLog, Anac President Milton Zuanazzi told the local business daily Valor Economico.
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Old April 22nd, 2006, 06:51 PM   #109
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Brazil's Varig workers demand govt aid for rescue

RIO DE JANEIRO, Brazil, April 21 (Reuters) - Staff from Brazil's Varig protested on Friday in Rio de Janeiro ahead of a visit by President Luiz Inacio Lula da Silva, demanding help to save the indebted airline.

Lula was due to attend a ceremony at the Natural History Museum to celebrate Brazil's self-sufficiency in oil.

Burdened by debts of about 7 billion reais ($3.3 billion), Brazil's former flagship carrier has been struggling to stave off collapse.

"We're taking the opportunity of Lula's visit to make clear that we're not demanding public money," Varig pilot Bruno Parga, one of the protest leaders, told Reuters by phone. "We want to use our pension fund to save the company as well as credit to keep it flying."

Earlier, pilots and ground staff marched along Rio's famous tourist beaches calling for public support.

They demanded that the government grant a two-month delay to pay for fuel supplied via state oil company Petrobras as well as a five-month delay to settle airport taxes.

Varig used to be Brazil's biggest airline, but since 2003 its share of the passenger market has fallen to under 20 percent -- less than half that of current market leader TAM .
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Old April 25th, 2006, 07:17 PM   #110
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Gol's 1st-Quarter Profit Climbs 37% on Rising Sales

April 24 (Bloomberg) -- Gol Linhas Aereas Inteligentes SA, Brazil's biggest airline by market value, said first-quarter profit rose 37 percent as sales increased and the carrier gained market share.

Net income rose to 179.8 million reais ($85 million), or 92 centavos a share, from 131 million reais, or 70 centavos, a year earlier, the Sao Paulo-based company said in an e-mail statement, citing U.S. accounting standards. Net revenue jumped 47 percent to 863 million reais, and operating profit rose 28 percent to 303 million reais.

Sales at Gol were bolstered by faster growth in South America's biggest economy and fares that are on average 25 percent lower than those of competitors. The airline's domestic market share rose to 30 percent in the first quarter Gol said. The carrier said its market share may rise to 35 percent this year from 27 percent in 2005 as Viacao Aerea Rio-Grandense SA cut service while trying to reorganize its debt under bankruptcy protection.

During the first quarter, Gol added three aircraft to its fleet, 55 daily flights and four new international destinations in Argentina, Uruguay and Paraguay.

Gol's shares fell 2.21 reais today at the Sao Paulo stock exchange to close at 74.29 reais before the earnings were released.

link: http://www.bloomberg.com/apps/news?p...d=aamZcZIe7ISU
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Old April 26th, 2006, 12:24 AM   #111
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Brazil Gol to add Peru, Chile, more local flights

RIO DE JANEIRO, Brazil, April 25 (Reuters) - Brazil's No. 2 airline Gol plans to start flying to Peru and Chile and add more domestic flights amid growing demand and while traditional flagship carrier Varig is suffering a profound crisis.

Gol Linhas Aereas Inteligentes Chief Executive Constantino de Oliveira also said on Tuesday the low-cost airline would offer more international flights on existing routes.

He expected to start flying to Chile in six months and to Peru possibly later this year. Gol already flies to Argentina, Paraguay and Uruguay. De Oliveira also said a plan to set up a joint venture in Mexico with an unspecified Mexican partner was likely to go ahead in the second half of this year.

Set up in 2001, the airline, whose business model is based on low-cost, low-fare carriers in the United States and Europe, expects to double its current fleet to 90 aircraft by 2011. It will receive 13 planes this year alone.

On Monday, Gol posted a record net profit of 179.8 million reais ($85 million) in the first quarter of 2006, up 37 percent from a a year earlier level. Net revenue in the quarter grew 46.5 percent from the year before to 863 million reais.

Gol said its domestic market share reached 30 percent in March and its slice of the international market rose to 5 percent. Its occupancy rate was 71 percent in the period.

Restricting his comments on the financial and operating problems at Varig, which had been the market leader up to 2003 and is now third-ranked after Gol and No. 1 TAM , de Oliveira only said his company was vying, along with other airlines, for routes abandoned by Varig.

He also said Gol's development plan did not take into account Varig's demise. The heavily indebted Varig is operating under bankruptcy protection.
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Old April 27th, 2006, 06:07 PM   #112
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Brazil's BNDES Could Help Varig Airline - Govt Official

SAO PAULO (Dow Jones)--Brazil's embattled flagship airline Viacao Aerea Rio-Grandense, or Varig (VAGV4.BR), could receive financing from Brazil's National Development Bank, or BNDES, to help in its restructuring, Presidential Chief of Staff Dilma Rousseff said late Wednesday.

"Without doubt, the BNDES is willing to help," she told journalists in Brasilia.

The comments represent an about-face in government policy. Previously, several government officials had said there was no public money available to bail out the airline.

Varig has been in trouble for some years amid mounting debts, which have spiraled to more than 7 billion Brazilian reals ($3.3 billion). The airline recently had to ground planes and cancel flights because it couldn't meet operating payments, and it risks having all its domestic flights stopped for nonpayment of airport fees and fuel suppliers in Brazil.

If public money is put into the airline, it is fundamental that the company is taken over and run by an investor that can make it work, Rousseff added.

Varig creditors are considering a $400 million bid from VarigLog, the airline's former cargo wing. VarigLog is owned by a group of Brazilian businessmen and U.S. investment fund Matlin Patterson. Varig creditors have also been asked to consider an offer to finance the recuperation of the company made by Jaime Toscano, a consultant, on behalf of a group of investors.

Despite the operational problems, Varig remains the dominant Brazilian carrier on the international market. However, it has fallen behind TAM SA (TAMM4.BR) and no-frills airline Gol Linhas Aereas Inteligentes SA (GOL) on the domestic market.
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Old May 26th, 2006, 02:13 AM   #113
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Brazil Airline Varig Plane Is Seized In NY For Non-Payment
25 May 2006

SAO PAULO (Dow Jones)--Brazil's ailing airline Viacao Aerea Rio-Grandense (VAGV4.BR), or Varig, confirmed leasing company Bristol Associates seized a Boeing 777 in its service at JFK Airport in New York due to non-payment, a Varig spokesman confirmed Thursday.

The plane had been out of action for 43 days, awaiting maintenance, and therefore won't immediately be missed.

"Varig had not been officially notified of the repossession. Representatives of the leasing firm seized the plane on Wednesday after presenting themselves to authorities as the owner of the aircraft," said a Varig spokesman.

Varig has been in trouble for several years amid mounting debts that total about BRL8 billion. The company sought bankruptcy protection in July 2005.

The airline recently had to ground planes and cancel flights because it couldn't meet operating payments, such as airport fees and fuel bills.

A number of leasing firms have sought to reclaim planes because of non-payment through the New York courts, and other leasing firms are expected to do so in coming days.

At present, the New York bankruptcy court judging the case has not authorized repossession in order to allow Varig time to restructure.

Varig administrators plan to try to sell off the airline's operations at an auction slated for July 1.

Under the terms of the auction, Varig's domestic and international operating assets will be put up for sale for a minimum price of $860 million. The commercial wing of the company won't be sold and will be left with the company's debts.

Alternatively, the company's domestic assets could be sold, with a minimum price of $700 million.

Varig remains Brazil's leading airline on international routes, but has fallen behind TAM and Gol domestically as cash-flow considerations have forced it to reduce operations.
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Old June 3rd, 2006, 05:47 PM   #114
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Auction of bankrupt Brazilian airline Varig postponed
By MICHAEL ASTOR
2 June 2006

RIO DE JANEIRO, Brazil (AP) - A bankruptcy court judge has postponed Monday's scheduled auction of Brazil's debt-ridden flagship airline Viacao Aerea Rio-Grandense, or Varig, the company said Friday.

The auction was rescheduled at the request of potential buyers, Varig said in a statement.

Eleven companies, including Portugal's TAP, were expected to bid for the planes, routes and offices of Varig, which has been under bankruptcy protection since July 2005.

The company is saddled with debts estimated at US$3.5 billion (euro2.7 billion), and under the rules of the auction it was not clear whether the buyer would be free from that debt.

"I was expecting this, because in truth the model proposed for the auction leaves a lot of things unclear," said Ameriles Romano, an economic analyst at Tendencias Consultores in Sao Paulo.

Several Brazilian carriers, including TAM, Gol Linhas Aereas Inteligentes, BRA, Webjet and OceanAir, had picked up the tender document giving them the right to bid, Varig said.

Varig's domestic and international operating assets will be put up for sale for a minimum US$860 million (euro670 million). If that minimum bid is not met, the company's domestic assets could be sold, for at least US$700 million (euro550 million).

The proceeds would be used to pay debts on operating expenses to allow the airline to continue flying.

Varig remains Brazil's leading airline on international routes, but has fallen behind TAM and Gol domestically as cash-flow problems have forced it to reduce operations.

The auction, originally scheduled for July, was moved ahead because the airline was in danger of shutting down.
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Old June 8th, 2006, 02:37 AM   #115
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Brazil's Varig airline headed for the auction block
By MICHAEL ASTOR
7 June 2006

RIO DE JANEIRO, Brazil (AP) - Six companies were expected to bid at an auction for Brazil's embattled flagship airline on Thursday, despite uncertainty over whether the new owner would be saddled with the carrier's debt.

The auction of Viacao Aerea Rio-Grandense, or Varig, had been scheduled for Monday but was postponed at the request of bidders uncertain about conditions of the sale under Brazil's new bankruptcy law.

Judge Luiz Roberto Ayoub, who is overseeing the airlines' restructuring under bankruptcy protection declared in July 2003, said Tuesday that the new owner was not at risk of assuming all or part of the company's estimated US$3.5 billion (euro2.7 billion) in debt.

But many lawyers said the law was unclear, and only six bidders indicated interest in the carrier, down from 11 last week.

"We have good expectations for the auction even though the company is broke," said Edson Hydalgo Jr., a trader at the Sao Paulo-based Intra brokerage. "What the market is looking at is if the buyer is ready to clean up the company and invest in aviation."

Hydalgo said despite the failure of several big Brazilian carriers over the past decade, it is still possible to make money in Brazil's aviation sector.

"It's not all bad, there are airlines like Gol that are working and making money," he added, referring to one of Brazil's new low-cost airlines modeled after U.S. carriers, like JetBlue.

Several Brazilian carriers, including TAM, Gol Linhas Aereas Inteligentes, BRA, Webjet and OceanAir, had picked up documents allowing them to bid, Varig said.

Varig's domestic and international operating assets will be put up for sale for a minimum of US$860 million (euro670 million). If that bid is not met, the company's domestic assets could be sold, for at least US$700 million (euro550 million).

Under Brazil's new bankruptcy law, if the airline is not sold Thursday it will be liquidated.

The proceeds would be used to pay debts on operating expenses to allow the airline to continue flying.

Varig remains Brazil's leading airline on international routes, but has fallen behind TAM and Gol due to financial problems.
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Old June 8th, 2006, 10:30 PM   #116
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From: http://au.news.yahoo.com/060608/19/zar8.html
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Friday June 9, 03:31 AM
Bankrupt Brazilian airline Varig fails to sell at auction

RIO DE JANEIRO (AFP) - Brazil's bankrupt flagship carrier Varig failed to sell at auction, attracting a single offer that was half the lowest asking price.
The failure to sell the assets of what was once Brazil's top airline could force liquidation.

The sole bid came from a group representing Varig employees, which offered the equivalent of 449 million dollars for the financially-strapped airline's international and domestic routes and 52 aircraft.

The minimum bid price was set at 860 million dollars.

Bankruptcy Judge Luiz Roberto Ayoub said he would study the bid in the next 24 hours, before deciding whether to accept it.

In a first round of bidding, there were no offers that met the minimum price of 860 million dollars.

A second round of bidding, for the airline's domestic routes and 30 aircraft at a minimum price of 700 million dollars, also failed.

When the auctioneers offered to sell the company to the highest bidder, the employees group, Participacoes, stepped forward with its cut-rate bid for all of Varig's assets, Varig Operacional.

Unions representing the airline's 10,600 employees and Varig's major creditors have warned they would take legal action if the company's purchase price is too low.

Judge Ayoub has 24 hours to decide whether the price is fair. If he accepts it, Participacoes must deposit 75 million dollars within three days to put the sale on track.

Varig is saddled with debt of more than three billion dollars and has been operating under bankruptcy protection for a year.

Sixty-five percent of that debt is owed to public services like airports authority Infraero and fuel distributor BR Distribuidor, and the company has more than one billion dollars in unpaid taxes.

Varig Operacional would be sold debt-free, its debt assumed by a company called Varig Relacionamiento.

The beleagured airline recently has failed to honor contracts on leased aircraft, which make up 80 percent of its fleet.

Four potential buyers had submitted sealed bids for Thursday's auction, according to sources close to the matter.

By late Wednesday, six bidders had paid fees to have access to all the data of the failed airline.

The six potential bidders were Gollinhas Aereas Inteligentes (GOL); TAM; TAP-Portugal; OceanAir; Aero-Lob, formed by TAP and Brazilian investors from Macau; global booking company Amadeus; and Canadian investment fund Brookefield, according to media reports.

Founded in 1927, Varig, or Viacao Aerea Rio-Granadense, became the face of Brazil in the skies in the 1970s when it won a monopoly on international flights.

Its 111 agencies worldwide became virtual embassies for Brazilian travelers and international sales represented 70 percent of revenue.

But Varig hit turbulence in the 1980s. The government froze airfares between 1986 and 1991 to combat runaway inflation. The airline has taken court action to seek compensation for the estimated two billion dollars in losses generated by that policy decision.

Varig was Brazil's leading domestic carrier until it was overtaken more than two years ago by TAM. Last year it lost its second-place ranking to low-cost competitor Gol.

Varig now has only a 16.7 percent share of the domestic market but remains the leading Brazilian carrier on the international market, with a 66.4 percent share.
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Old June 15th, 2006, 12:09 AM   #117
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From: http://www.canada.com/nationalpost/f...1-d1ac169cd3ee
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Brazil's Varig asks ACE for bailout
Seeks financial partners

Chris Sorensen, Financial Post
Published: Wednesday, June 14, 2006
Air Canada parent ACE Aviation Holdings Inc. has been asked to help bail out Brazilian airline Varig SA, a debt-ridden Star Alliance partner that is facing bankruptcy.
Sources familiar with the situation told the Financial Post Air Canada's parent was recently contacted by Brazil's biggest carrier, which is trying to secure financial partners to help lift it out of bankruptcy proceedings.
"They have been approached," confirmed one source, who added Air Canada has a reputation for investing in troubled airlines and is therefore an "obvious phone call."
The fact that Varig, which has been under bankruptcy protection for over a year, is a member of the Star Alliance group of airlines, of which Air Canada is a founding member, may be among the reasons Varig sought Air Canada for financial aid, the source said.
Media in Brazil have reported representatives from Air Canada, a U.S. investment fund and TAP Portugal, another Star Alliance member, met earlier this week at Varig's headquarters, fuelling speculation the group may be preparing a bid.
An Air Canada spokesman said the airline's parent routinely looks at airline investments, but does not comment on specific situations.
Varig, which has seen its business suffer amid rising costs and increased competition from low-cost carriers, said yesterday it had received an offer of US$450-million from an unidentified "Brazilian airline industry investor," according to Bloomberg. That tops a single previous bid of US$449-million made by a group of the company's employees during an auction. Both bids are well below a minimum price of $860-million set by the Brazilian court handling Varig's bankruptcy proceedings.
It would not be the first time members of the Star Alliance have moved to bail out one of their own. One observer, who did not want his name used, noted Germany's Lufthansa and United Airlines agreed to undertakings worth hundreds of millions of dollars to help Air Canada fend off a hostile takeover attempt from Onex Corp. in 1999.
"It might make sense to save the carrier just to maintain the Star Alliance network," said Horst Hueniken, an analyst at Westwind Partners. He added ACE chief executive Robert Milton has expressed interest in investing in troubled airlines or purchasing their assets during bankruptcy proceedings, providing there is little risk to Air Canada.
ACE invested US$75-million in US Airways last year as that carrier was struggling to exit bankruptcy proceedings through a merger with America West Airlines. The value of the investment has since tripled. Air Canada also profited from a decision in 1992 to buy a 20% stake in Continental Airlines Inc. while it was undergoing Chapter 11 proceedings.
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Old June 17th, 2006, 05:15 AM   #118
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Landing gear breaks on jet flown by Brazil's troubled Varig airline
By ALAN CLENDENNING
16 June 2006

SAO PAULO, Brazil (AP) - The landing gear on a Varig airlines jet broke as it touched down in Brazil's capital, but the plane landed safely, the airline said.

None of the 108 passengers was injured, Brazil's flagship airline, which is in the midst of bankruptcy proceedings, said in a statement. But Friday's incident prompted officials to close the airport for nearly two hours, and other flights were diverted to another city.

The MD-11 jet was headed from Rio de Janeiro to the Amazon jungle city of Manaus, with a stopover in Brasilia, 850 kilometers (530 miles) north of Sao Paulo.

Varig, or Viacao Aerea Rio-Grandense SA, said it was examining the defective part, which was scheduled for maintenance in 2009.

The airline, teetering financially for years, is faced with huge questions about whether it will survive or be broken up in liquidation. It owes about US$3.5 billion (2.75 billion) and its domestic market share has plunged in Latin America's largest country.

Varig has recently been canceling up to about 20 flights daily as the bankruptcy proceedings drag on, though it has said the cancelations are due to bad weather and regular plane maintenance.

On Friday, the airline canceled 30 flights, according to Brazil's official Agencia Brasil news agency. All passengers were being placed on flights by other airlines, but customers said the disruptions were making travel difficult.

Argentine passenger Henrique Gutierrez was repeatedly told before heading to Sao Paulo's international airport that his flight to Buenos Aires would leave as scheduled. When he arrived, he found out it had been canceled.

"They told us everything was fine," Gutierrez told the Brazil's Agencia Estado news agency. "They lied."

An investment group led by Varig workers last week bid US$449 million (353 million) to take over the domestic and international operations of the 79-year-old airline.

A bankruptcy court judge on Wednesday postponed a final decision on Varig's future to study the possibility of new investors joining the workers' group, reportedly including Portugal's state-owned TAP Portugal SA airline.

Varig flies daily to 36 Brazilian and to 21 foreign destinations.
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Old June 21st, 2006, 04:24 AM   #119
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Varig's future far from certain a day after Brazil judge approves sale
By MICHAEL ASTOR
20 June 2006

RIO DE JANEIRO, Brazil (AP) - Brazil's embattled flagship airline Varig canceled 67 of its 180 daily flights Tuesday and aviation authorities prepared to distribute the carrier's routes to other airlines, a day after a bankruptcy court approved the carrier's sale to a workers' group.

Judge Luiz Roberto Ayoub's decision Monday night to approve the sale of Viacao Aerea Rio-Grandense, or Varig, to the TGV consortium saved the company from immediate liquidation. But the airline's future seemed far from certain.

Local media reported the group was appealing to Brazil's National Development Bank for a $75 million loan to cover the first deposit required for the sale.

If TGV does not make the deposit by Friday, the bankruptcy auction will be declared void, the judge said in a statement.

According to the Estado news agency, representatives from TGV were meeting with the National Development Bank Tuesday to try to arrange a bridge loan, claiming their investors might not have enough time to convert their assets into cash by the Friday deadline.

TGV has claimed to have the backing of several large investors ever since it made the only bid for Varig at a June 8 bankruptcy auction, but has so far declined to name them.

Meanwhile Tuesday, Brazil's national airport authority said it would begin demanding Varig pay its airport fees in cash daily, and the country's civil aviation authorities were meeting with other airlines to divide up Varig's routes should the carrier cease to fly.

Varig had been selected as the official airline of Brazil's World Cup team, and aviation officials said they were making provisions to bring players and fans back from the tournament in Germany on other carriers should Varig be forced to halt service.

In recent days, judges in New York have ordered Varig to return 16 planes to creditors.

Varig has been in financial trouble for several years amid mounting debt of some $3.5 billion. It has been under protection from its creditors since June 2005, when it became one of the first companies to use Brazil's new bankruptcy law, similar to U.S. Chapter 11 proceedings.
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Old June 21st, 2006, 05:21 PM   #120
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From: http://news.bbc.co.uk/1/hi/business/5101002.stm
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Last Updated: Wednesday, 21 June 2006, 05:50 GMT 06:50 UK
Brazilian airline cancels flights

Rival airlines are already discussing how to share out Varig's routes
The embattled Brazilian airline Varig has been forced to cancel 67 of its 180 daily flights amid mounting fears of financial collapse.
The move came just a day after a bankruptcy judge agreed to sell the airline to a consortium of Varig workers and two foreign investors.

This saved Varig from immediate liquidation, but the consortium must now find $75m (40m) by Friday.

The judge has warned that without this first payment the buyout will fail.

The NV Participacoes, which represents Varig workers and two foreign investors, has agreed to pay $449m for the struggling airline.

Reports in the Brazilian media say it is appealing to Brazil's National Development Bank for a loan to cover the first deposit required for the sale.

Brazil's national airport authority has said it will begin demanding that Varig pays its airport fees every day, in cash.

The news came as the country's civil aviation authorities met other airlines to divide up Varig's routes should it cease to fly.

Increased competition

Varig has been under bankruptcy protection for a year.

It was the top airline in Brazil until 2004, but was then overtaken by TAM and later by Gol.

The airline has suffered years of financial problems because of rising costs and growing low-cost competition.

It now has just 16.7% of the domestic market, but remains the leading Brazilian carrier internationally, with a 66.4% share.
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