Manufacturing Industry
Brazilian government to take over Varig - report
Airline Industry Information, Dec 16, 2004
AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD
The Brazilian government plans to take over Varig, the largest Brazilian airline, in order to keep it operating during restructuring, according to a spokesperson for the government's airport authority.
Varig has been struggling to manage its huge debt, which is estimated at BRL6bn (USD2.2bn).
The takeover could occur as soon as Friday (17 December) if the President of Brazil issues a decree that would require the non-profit Rubem Berta Foundation, which represents Varig employees and has an 87% stake in the company, to surrender control of the airline.
The move would allow thousands of workers to keep their jobs, said the spokesperson, but no details were disclosed as to whether Varig would be reorganized or dismantled.
On Tuesday (14 December) the airline won a court decision giving it BRL2bn (USD740m) in damages for losses from government-imposed price controls on airline ticket prices in the late 1980s and early 1990s. The government said that it would appeal to the Supreme Court.
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