BRAZILIAN AIRLINE Varig is to dispose of five Boeing 747s because of the cost of its Japanese yen financing, which has left the airline showing losses for the first half of the year.
Financial director Carlos Ebner claims that Varig lost almost $71 million on the financing deal because of the devaluation of the yen against the dollar. Overall, the airline showed a net loss of Reals 96 million ($104 million) loss in the first half.
Ebner says that the airline owes $400 million to Japanese creditors, but says that the debt will be reduced with the sale later this year of three 747-300s and two 747-200s on lease from Japanese companies.
The sale will not affect Varig's routes, as the carrier has an excess of aircraft and will replace its 747-300s with McDonnell Douglas MD-11s on the Sao Paulo-Hong Kong route.
Varig posted a profit on operations in the first six months, helped by the effects of 1994's restructuring, in which nine aircraft were handed back to leasing companies, while payments on another 50 aircraft were renegotiated. Leasing costs were down 17% over the half. Passenger numbers grew by 7%.
Source: Flight International
