JACKSON FLORES / RIO DE JANEIRO
Varig's new interim chief executive Manuel Guedes has vowed to get the ailing airline back on its feet by trying again for a state rescue package. It follows the resignation of the entire board, including chairman and chief executive Arnim Lore, after the airline's majority owner threw out its latest recapitalisation plan. The Brazilian flag-carrier's problems have been compounded by a major supplier, demanding payment in advance.
Lore resigned last week after submitting the company's recapitalisation bid to Brazil's state-owned BNDES development bank. The Ruben Berta Foundation (FRB), which controls 87% of Varig, rejected the plan, sparking an internal dispute which led to the resignation of Lore and the rest of the board. Guedes, the airline's former investor relations director, has resolved to restart talks with BNDES and present a new restructuring plan in an attempt to gain state aid.
The plan aimed to reduce Varig's $900 million debt burden by transferring controlling stock to six of the largest creditors - reducing FRB's stake to 20%. FRB complained that it had been "politically and economically pressured" and refused to approve the plan, submitted in mid-November.
Lore and other board members say that they are "perplexed and surprised by FRB's decision". Lore says that the FRB's "persistently stubborn absence" throughout the negotiations engendered near-insurmountable obstacles. "There is no professional way to manage a company in which the major shareholder refuses to be helped," says former board member José Roberto Mendonça de Barros.
Adding to Varig's troubles, aviation fuel supplier Petrobras says it will only supply Varig and its subsidiaries VarigLog, Rio Sul and Nordeste if paid daily in advance. Moreover, it will also start collection proceedings on the airline's $38.7 million fuel debt.
The outgoing government has ruled out state aid for Varig. The new administration, which takes office in January, has promised to look into the matter, but has ruled out aid without ownership restructuring.
Source: Flight International
