Doubt has been cast on the merger of Brazil's TAM and Varig, as the latter has proposed an extended codesharing deal, writes Jackson Flores.
Both posted relatively positive financial results for the first three quarters of 2003, which is attributed to their pre-merger codesharing deal and improving market conditions. Varig is now suggesting maintaining and expanding the codeshare agreement, active on 60 routes, as an alternative, with a holding company overseeing their activities.
While neither airline has scrubbed the merger outright, Varig is hoping the Brazilian government will review the plan in view of market changes since the merger was first proposed. Domestic traffic was up 4.7% in October, while international traffic rose by 5.4%, and a near 20% drop in the US dollar exchange rate has lowered costs.
The codesharing deal would require reassessment should it be extended and Brazilian anti-trust agencies would need to examine the deal.
Meanwhile, TAM has reduced its Fokker 100 fleet from 50 to 13 through returns or subleases, and the remainder will be withdrawn next year. Uruguayan start-up U-Air, which launches charter and scheduled services this month to Argentina and Brazil, is initially using two ex-TAM Fokker 100s, with a further two to be delivered in December.
Varig is planning to lease two ex-British Airways Boeing 777-200s soon, while divesting itself of the 15 Embraer ERJ-145ERs operated by Rio Sul.
Source: Flight International
