Varig may have to cut routes unless debt solution is found soon - claim

Airline Industry Information, Jan 7, 2005

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Carlos Luiz Martins, CEO of Brazil's Varig airline, has said that it may have to cut domestic routes soon unless an agreement is reached between the airline and government officials.

Varig and the government need to reach an agreement regarding a reduction of the company's debt. The airline has said that it wants to reduce the debt with proceeds from a court decision in December 2004, expected to give it about USD741m for losses caused by airline ticket price controls imposed by the Brazilian government. The price control was imposed in the late 1980s and early 1990s.

The country's government wants to appeal the decision, but Varig will have to cut routes if a solution cannot be reached soon, according to Agencia Brasil, a news service.

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