Paul Lewis/WASHINGTON DC
Varig will reduce its heavy reliance on leased aircraft as part of a planned fleet rationalisation of the mainline Brazilian carrier and its regional subsidiaries, which will include the acquisition of additional Boeing 777s and Embraer ERJ-145 and the retirement of the MD-11s.
The airline operates a fleet of 91 aircraft, all but 10 of which are leased and which proved prohibitively expensive to finance during Brazil's recent economic difficulties and the crash of the Real. "We want to increase our assets by not leasing aircraft," says Varig president Ozires Silva.
Varig is now seeking financing to take delivery of its first two purchased Boeing 777-200ERs in 2004. The carrier ordered four of the General Electric GE90-powered aircraft in 1998, along with six more 767-300ERs and 14 737-700/800s, but subsequently delayed delivery.
The airline now intends to build up its fleet of 777s to replace 15 leased Boeing MD-11s which includes two recently acquired ex-Vasp aircraft from Tombo. It plans to lease an interim two 777-200ERs from International Lease Finance which will be available in the fourth quarter of 2001.
"We intend, over the next five to six years, to replace all the MD-11s with the new generation of aircraft. We'll have to order at least 15," says Silva. The airline is considering converting two of its 767-300ER positions to 777s and has been briefed by Boeing on the growth -200LR and -300ER versions.
Varig is also discussing acquiring another 15 ERJ-145s to supplement the 30 its subsidiary Rio Sul already has in service or on order. Silva says that there is also interest in Embraer's planned ERJ-190-200 as a way of adding frequency to its trunk routes between Rio de Janeiro, Sao Paulo and Brasilia.
As part of the fleet rationalisation, the carrier has transferred all five of its Boeing 727-100s and two remaining McDonnell Douglas DC-10-30Fs to its new start-up cargo subsidiary VarigLog and is looking for additional capacity. Silva expects regulatory approval soon to transfer routes to VarigLog and allow it to begin flying. He adds that Varig is looking for partners to invest in the new operation.
Varig claims to have reduced its debt from $1.6 billion to $900 million. Rising fuel costs added 100 million Reals ($53 million) to costs this year. It showed a 80 million Real profit in this year's first half after a $94 million loss in 1999.
Source: Flight International
