The beleaguered airline, which has cut several international routes and returned four Boeing MD-11s, nearly had its landing rights suspended at Brazilian airports when it repeatedly failed to pay its airport taxes. Then came news of the end of its codesharing agreement with Continental Airlines. Finally, employees staged a 2h stoppage at Sao Paulo after only 50% of their wages for January were deposited in their bank accounts.
VASP, which last year abandoned several international routes, scrapped its four weekly flights to New York and Toronto in February and returned four leased MD-11s. The airline has also reduced the frequency of its Sao Paulo-Brussels flights from three to two a week and laid off 100 flight attendants. The company blames strong competition from US carriers.
Almost simultaneously, Continental announced an end to its year-long code-sharing agreement with VASP, saying the decision had been made at VASP's request.
VASP says it is restructuring and turning its attention back to the domestic market. It has added a new route to the Amazonian outpost of Acre and begun an aggressive pricing policy on some routes. This represents a sharp about-turn for company president Wagner Canhedo, who bought a controlling stake when the Sao Paulo state government privatised the airline in the early 1990s. In the first half of the last decade, Canhedo focused his attention on an ambitious international expansion.
At one point VASP flew to destinations as diverse as Athens, Seoul, Osaka, Buenos Aires, Aruba and Casablanca, as well as buying controlling stakes in airlines in Bolivia (LAB), Ecuador (Ecuatoriana) and Argentina (TAN).
Analysts and the Brazilian media believe the company is in serious difficulties. VASP's debts are estimated at around $1.79 billion, most of it owed to various government bodies.
Its image is at a low ebb. Brazil's airports authority Infraero threatened to stop VASP using its airports until it paid outstanding landing fees; VASP settled the debt one day before the deadline, but has been excluded from the SITA communication systems for non-payment of dues.
The airline was then faced with a 2h lightning strike from its employees, who were furious on discovering that the company had paid up only half of their wages. VASP, which blamed temporary cashflow problems caused by the carnival holiday, deposited the remaining money two days after the strike.
Source: Airline Business
