Brazilian flag carrier Varig has reported the worst results in its 74-year history. The airline made a net loss of 481 million real ($207 million) in 2001, from sales of 6.1 billion real, compared with 2000 net losses of 179 million real on sales of 5.3 billion real.
Varig blamed the disastrous losses on the slowdown of the regional economy and the corresponding high exchange rate - many of its aircraft are leased from US lessor General Electric Capital Aviation Services. A sale and leaseback deal with Boeing helped the company make a 127 million real profit in the last three months of the year.
The airline suffered a 35%drop in load factor on US routes after the 11 September attacks. Varig is laden with debt - servicing costs alone were 380 million real in 2001 - prompting majority owner, the FRBPar Group, to seek a buyer for up to 20% of the airline to raise $900 million. There have been local media reports on a possible creditor protection move by Varig, a suggestion rejected by the carrier.
Meanwhile, fellow Brazilian carrier TAM suffered a 50.8 million real loss for the year on revenues of 2.7 billion real.
Source: Flight International
