Brazil's Vasp airline on the brink of collapse

Airline Industry Information, Oct 7, 2004

AIRLINE INDUSTRY INFORMATION-(C)1997-2004 M2 COMMUNICATIONS LTD

Brazil's fourth largest airline Vasp is on the brink of collapse after two General Electric maintenance service companies called for the airline to file for bankruptcy.

GE Celma and GE Varig Engine Service have petitioned a local bankruptcy court in a bid to force the airline to declare itself insolvent, a move which would almost certainly lead to its liquidation. The Brazilian government has also increased pressure on the airline by setting a deadline of 8 October 2004 for it to produce a debt payment plan or be grounded.

Vasp has debts not only to private companies but also to the government itself, including airport fees. A spokesperson for the Brazilian government said that unless a plan is produced the airline will lose its government certification. The airline is set to cut 380 employees from its workforce of 5,100 but it could already be to late, reports CBC News.

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