Facing bankruptcy, Brazilian airline Varig lands on auction block

0 Comments | AFP, June, 2006

RIO DE JANEIRO (AFP) — Varig, Brazil's flagship carrier, will land on the auction block to avoid bankruptcy, pricing its fleet and international and domestic routes at a minimum bid of 860 million dollars.

The airline is saddled with debt of more than three billion dollars and has been operating under bankruptcy protection for a year.

Sixty-five percent of the debt is owed to public services like airports authority Infraero and fuel distributor BR Distribuidor.

Pressure has mounted on Varig recently as it failed to honor contracts on leased aircraft, which make up 80 percent of its fleet.

And like other airlines, Varig is flying against high oil prices. Surging fuel costs are expected to drive the airline industry into deeper-than-estimated losses in...