('''V'''iação '''A'''érea '''RI'''o '''G'''randense) is an
Airline owned by
Gol Transportes Aéreos based in
Rio De Janeiro ,
Brazil . Until recently, it was
Brazil 's leading international
Airline . In 2005, however, the
Airline went into judicial reorganization (similar to
Bankruptcy Protection ) and in 2006 downsized substantially, making it the second largest
Airline in
Brazil , combined with
Gol .
Varig was the first
Airline in
Brazil , established on
May 7 1927 at the
Porto Alegre Commercial Association meeting. It was there that
Otto Ernst Meyer , a
German immigrant, signed the certificate declaring Varig an
Airline company.
Varig's first plane was a nine-passenger
Dornier Wal flying boat. Its first employee, the
Hungarian Ruben Berta , later became the
Airline 's President and led the
Airline through great expansion until his death in 1966. The
Airline started operations on
15 July 1927 . Varig's first flight was from
Porto Alegre to
Rio Grande , stopping in
Pelotas .
It originally operated local services in southern
Brazil , but added its first international route to
Montevideo on
5 August 1942 .
Transatlantic services were started in February 1965, when the military government decided to shutdown
Panair Do Brasil , the country's flag carrier up until then. The
Airline took over the giant
REAL consortium in 1961, making it the largest
Airline in
South America . It acquired a controlling interest in
Cruzeiro Do Sul in June 1975, which was fully integrated into Varig in January 1993.
Varig had shareholdings in
Nordeste Linhas Aereas Regionais (99%),
Rio Sul Serviços Aéreos Regionais (97%), and
Pluna (49%). Its
Cargo subsidiary, ''
VarigLog '', was sold to the ''
Volo Brasil '' consortium in January of 2006. Another subsidiary, ''
VEM -
Varig Engenharia E Manutenção '', Varig's maintenance centre, was sold to a consortium presided by
Portuguese Airline TAP Portugal .
Since 1945, Varig has been majority owned by the Ruben Berta Foundation (RBF),
Ruben Berta Foundation a not-for-profit foundation formed in 1945 to provide health, financial, social and recreational benefits to the employees of the companies. RBF controls VARIG through a holding company, FRB-Par Investimentos S.A.
Long-running discussions to merge Varig with
TAM Linhas Aéreas ended unsuccessfully in 2004.
As of May, 2005, Varig had 87 aircraft (76 passenger, 11 cargo), with an average age of 13.2 years. 83 of the 87 had operating leases; the remaining four had finance leases. As of June 2005, Varig had a negative net worth of approximately US $2.5 billion, with balance sheet debt of $2.8 billion and off-balance sheet debt of $2.0 billion.
On
June 17 ,
2005 , Varig applied to the Commercial Bankruptcy and Reorganization Court in
Rio De Janeiro for the commencement of "judicial reorganization" proceedings pursuant to the New Bankruptcy and Restructuring Law of Brazil, Law No. 11.101, which had become effective only eight days earlier. Under the NBRL, debtors like Varig are permitted to remain in possession and control of their businesses and properties.
Varig does however continue to provide service to and from Brazil despite its financial troubles.
On
May 9 ,
2006 , the judicial administrator of Varig's assets announced a decision had been reached about a recovery plan for the company. Varig is to be auctioned for a minimum bid of
USD 860 million. If the minimum price is not reached, the company may be divided and its assets sold separately.
O Globo
On
May 25 ,
2006 , due to Varig not paying the leasing fees, one of Varig's
Boeing 777 aircraft () was seized at
John F. Kennedy Airport in
New York City by its lessor,
US Bank .
On
June 8 ,
2006 , an auction of Varig's assets (minus its debts) was held in
Rio De Janeiro . The first round of bids, with a minimum amount of
USD 860 million, ended with no bids. On the second round, which had no minimum bid limit, a group of Varig employees under the name ''NV Participações'' placed the only bid, offering USD 449 million for the airline. Since the amount was well below the minimum bid, the decision to sell the airline fell upon bankruptcy judge Luiz Roberto Ayoub. The next day, the bankruptcy judge issued an injunction forcing the airline to stop operating their fleet and to return the active jets to the owners by June 16. The order also called for Varig to return planes not in active use by July 1.
As of
June 20 ,
2006 , the Brazilian judge approved the sale to TGV, the consortium representing the airline workers. However, by
June 21 Varig had cancelled 180 of its 356 flights. The airline officially announced these flights would be cancelled through
June 28 . Also, a US Bankruptcy judge had allowed the airline to continue flying 16 leased planes until
June 21 . If the company ceases to exist before the World Cup in Germany is over, the government and other airlines are looking into providing transport for the Brazilian team and the fans back to Brazil. Since TGV did not meet the first deposit for US$75 million on Friday,
June 23 , the Brazilian judge annulled the auction.
On Monday,
June 26 , VarigLog (previously bought by Volo and a US investment fund Matlin Patterson) made a bid for $500 million, including an immediate $20 million payment for which $3 million were paid the same Monday to keep the company afloat.
On
July 20 ,
2006 Varig was finally sold to Volo for $24 million. Volo will not inherit Varig's previous debt but will have to complete several financial reforms in order to bring the airline up again. The "old Varig" and its debts will be acquired by
Nordeste Linhas Aereas Regionais . The next day the new Varig cancelled all its flights except for Rio de Janeiro-São Paulo flights. The airline reported it needs more time to bring additional planes into service and all flights are cancelled until further notice.
On
July 28 ,
2006 Varig announced they were cutting 60% of their staff. Varig laid off 5,500 of the 9,485 jobs, with a remaining workforce of only 3,985.
On
August 23 ,
2006 Varig announced plans to lease 50 new
Embraer ERJ 190/195 aircraft under the BNDES Bank in Brazil. Varig also claims it is negotiating with aircraft manufacturers
Boeing and
Airbus .
On
September 13 ,
2006 Varig announced its intentions to resume more international flights in two stages, when given authorization by federal aviation authorities. In the first stage, Varig plans to resume flights to
Mexico ,
Peru , and
England within 180 days. In the second stage, flights to
Chile ,
United States , and
Portugal are expected.
On
November 29 ,
2006 Varig announced periodic expansions to its domestic routes for the Brazilian summer season. Varig will begin these 7 new routes (including 3 new destinations) starting
December 18 2006 and lasting through
March 4 ,
2007 .
{Link without Title}
12-18 December 2006
On
December 21 ,
2006 It was announced that VARIG Brazilian Airlines (or "old" VARIG) will no longer be a
Star Alliance member as of
31 January ,
2007 due to not fulfilling membership requirements.
VARIG leaving Star Alliance 21 December 2006
The new Varig had struggled to find a strategic partner, after relaunch in December 2006, with aircraft, network and personnel inherited from the old airline. Lack of market credibility and the suspension of domestic and international routes let to monthly losses as high as US$20 million. In January 2007
LAN Airlines of
Chile offered a US$17.1 million loan, in an unsuccessful attempt to acquire a 20% stake in the airline.
1
On .
On
June 21 ,
2007 Constantino de Oliveira Jr., the CEO of
Gol Transportes Aéreos announced Varig's immediate future plans for its fleet and destinations. The plan includes the acquistion of nine of the more fuel efficient
Boeing 737-800 model and 10
Boeing 767 . Constantino also announced that the airline is in negociations with both
Boeing and
Airbus for the acquisition of either
Boeing 787 or
Airbus A350 aircraft.The plan also includes flights to
Madrid ,
London ,
Paris ,
Milan ,
Rome and
Mexico City by the end of 2007, and
New York City and
Miami in 2008.
Interview-The Expansion of Varig (in Portuguese) 21 June 2007
As of 2004, combined with its subsidiaries
Rio-Sul and
Nordeste , Varig carried approximately 13 million passengers annually and had over 11,000 full-time employees. As of
December 31 ,
2004 , Varig had total operating revenues of $3.4 billion, of which about $3.15 billion was from
Flight operations. As of May 2005, Varig's share of passengers flying into or out of
Brazil was 43% for the
South America n market, 17% for the
United States market, 35% for the
Europe an market, and 48% for the
Asia n market. Varig employs 3,985 staff. As of February 2007, Varig held 4.54% of the
Domestic Brazil ian market, doubling its previous 2.2%
Share of August 2006, but still well below the 25.02% held in August 2005, and only 21.64% of the
International Market , compared to 76.06% one year before.
Varig has had five relevant events since 1970:
- 11 July 1973 , Flight 820 , near Paris , France , Forced Landing due to Fire in a rear Lavatory , 123 deaths and 11 survivors (10 crew, 1 passenger). The Aircraft landed 5 km short of the Runway , in a full-flap and gear down configuration. The majority of passengers died of Smoke Inhalation .
- 30 January 1979 , Varig 707-323C Freighter , registration PP-VLU. Flown by the same Captain of Flight 820 disappears over the Ocean 30 minutes after taking off from Tokyo . No sign of the Crash ( Wreckage or bodies) was ever found. The Aircraft was carrying 153 Paintings by the Japanese Brazilian artist Manabu Mabe, worth USD 1.24 million.
- 3 January 1987 , Flight 797 , near Abidjan , Côte D'Ivoire , engine failure, 50 deaths, 1 survivor.
- 3 September 1989 , Flight 254 , near São José Do Xingu , Brazil . Pilot Navigation al error led to fuel exhaustion and a forced landing in the jungle. Twelve of the 48 passengers were killed in the crash. The survivors were discovered two days later.
- 14 February 1997 , Flight 265 , at Carajas Airport, Brazil . Aircraft overran the Runway and hit some trees while landing in bad weather. The First Officer was killed on impact. The 51 others on board survived.
See article ''.
Aircraft retired due to financial crisis in June of 2006:
Previously retired aircraft:
