Manuel Guedes, Varig's third chief executive in three months, has stepped into the middle of a crisis. His appointment follows the resignation of chief executive Arnim Lore and three other directors after the Ruben Berta Foundation (RBF), Varig's main shareholder, refused to support their restructuring plan. With suppliers now demanding daily payments, Varig faces a cash squeeze.
If anyone can solve this crisis, it is Guedes. He has been Varig's comptroller and investor relations director for years. Starting as assistant to the financial director in 1989, Guedes has been on the front lines through Varig's crisis in dealing with creditors and Brazil's national development bank.
Guedes has already reached a deal with Infraero, the airport authority, to end its daily deposit demands. Next he hopes to convince Varig's fuel supplier to drop similar demands by assigning credit card receipts to it in lieu of cash. In the long term, Guedes aims to restart talks with other creditors and the RBF on a plan to restructure the airline's debt, now estimated at $670 million.
The national bank holds the ultimate solution. It is willing to inject $300 million once Varig presents an acceptable restructuring plan. The bank appeared ready to accept the previous one before the RBF objected. The RBF has also raised eyebrows by re-appointing Yutaka Imagawa, who has been involved in earlier controversies over reforms as its president.
DAVID KNIBB SEATTLE
Source: Airline Business
