JACKSON FLORES / RIO DE JANEIRO
Brazilian carriers TAM and Varig have agreed to postpone their merger for at least two years, proposing instead to found a joint venture airline to operate codeshare flights.
The two airlines say the merger is still a long-term objective, but local observers say the announcement effectively writes off a full merger as originally planned. During a meeting with anti-trust authorities, TAM and Varig said that, as well as the difficulties of paying off their heavy debts, combining their fleets and personnel would entail huge operational problems.
The two airlines instead outlined a proposal to establish and manage a 50-50 joint venture which would operate all domestic services now being codeshared between the carriers - roughly 60% of the two airlines' total schedules.
According to Banco Fator, consulting on the merger, the new enterprise would start flying within 120 days of deal approval by the anti-trust authorities.
TAM, which operates Airbus and Fokker aircraft, and Varig, which has an all-Boeing fleet, argue that the new airline could be a stepping stone towards a full merger. The current codeshare agreement has improved the financial performance of both airlines, with Varig recently posting its first profitable quarter in almost 10 years.
Source: Flight International
