Transbrasi, one of Brazil's four major airlines, has found itself grounded, and will need fresh cash if it to fly again.
In the first collapse of a major Latin carrier since 11 September, Transbrasil stopped flying in early December after suppliers cut off its fuel deliveries. It claims the grounding is temporary, but the airline, which has slid from second to fourth place among Brazilian carriers, faces a host of problems.
In a scramble to find cash, officials are studying whether Transbrasil may be entitled to a refund of 51 million Real ($21 million) for taxes paid to Brazil's states between 1989 and 1994. The officials are looking into whether the states can be convinced to pay the refunds, whether other airlines would have similar claims, and what procedures might be needed to secure the potential cash.
Even if they can resolve these issues in time to rescue Transbrasil, it will not address the deeper problems that plague Transbrasil, specifically, and all Brazilian airlines generally. According to one senior aviation official, at least two others are also "technically bankrupt".
Storm clouds have been gathering for several years. Transbrasil's condition worsened sharply after Brazil's 1999 currency crisis. It has been bleeding ever since, despite deep cuts in its routes, fleet, and work force. Last July lessor GECAS tried to put Transbrasil into receivership, but a Brazilian court refused its plea.
Litigation is pending with another lessor over an aircraft repossession in Miami. Transbrasil cancelled all international flights a few months ago and has only nine operable aircraft left, including five Boeing 737-300s and four Embraer EMB-120 turboprops operated by regional affiliate Interbrasil.
Some local analysts see Transbrasil's salvation in convincing creditors to capitalise their 900 million Real in debts. Others foresee more fundamental challenges typified by the low-cost start-up, Gol, which is attracting new traffic but also diverting passengers from others.
Underlying all problems is an urgent need for Brazil's airlines to consolidate. There have been several attempts. TAM and Transbrasil abandoned alliance discussions a year ago. TAM and Varig have since been engaged in similar talks. VASP, Brazil's other major airline, faces such a survival struggle of its own that potential partnerships seem unlikely. It seems that even if Transbrasil stages a comeback, it faces the prospect of flying alone.
Source: Airline Business
