VARIG dipped into the red during 1995 after shouldering the cost of widespread redundancies, but the Brazilian carrier has outlined plans to expand again this year.
After making a profit of around $209 million in 1994, the airline slipped to a deficit of just under $7 million 1995, but Varig cites the price of its cost-reduction programme, which included the shedding of some 2,000 employees, as reason for the loss. Revenues were also down by around 10%, dropping to less than $3.2 billion.
Despite the loss, Varig is proceeding with plans to lease two McDonnell Douglas MD-11s with which to increase flights to Europe and North America. President Fernando Pinto says that the airline is negotiating with lessors GPA and General Electric Capital Aviation Services.
The airline plans to invest $40 million this year in new routes and improved services, and is forecasting a 3% revenue increase for 1996, to $3.2 billion. Varig also plans to improve revenue by increasing business-class seats on long-haul flights from 32 to 60.
Pinto says that Varig, which has codesharing agreements with Delta Air Lines, Japan Airlines, Lacsa and Lufthansa, is studying an alliance with Lauda Air.
Varig is awaiting Brazilian Government approval to begin service to Beijing, in China. Rival airline Transbrasil, meanwhile, has made an application to begin a service to London.
Source: Flight International
