Former banker Arnim Lore has replaced Ozires Silva as president of ailing Varig Brazilian Airlines at a critical time in the carrier's bid to restructure financially.
Lore, the 62-year-old chief financial officer of Varig's Rio Sul regional unit, is a former director of Brazil's central bank and spent 17 years with Unibanco, a private Brazilian bank that is one of Varig's creditors.
"It is clear that with the current financial structure, the company won't survive," Lore said on his first day on the job, adding that the airline needed to quickly raise $300 million to ensure its viability. He noted that Varig previously had set up a committee to work with Brazil's national development bank (BNDES) aimed at backing for a $300-million shares issue to help restructure its debt.
The outgoing 71-year-old Silva had been seeking to reverse Varig's fortunes since he came on board in May 2000, but had recently come under increasing pressure as the carrier's losses mounted despite the return of leased aircraft and a reduction in staff.
Varig was buffeted by the worldwide recession, a sharp drop in traffic after 11 September and a continuing and wrenching devaluation - almost 30% this year alone - of the Brazilian Real. With 85% of Varig's debt and all its lease agreements US dollar-denominated, its payment burden kept increasing. n
Source: Airline Business