Brazilian Government Sees Bankrupcy-Bound Varig Airline at Brink of Precipice

    Once powerful and monopolistic Varig Airlines’s debt to the Brazilian Airport Infrastructure Company (Infraero) grows by US$ 424.600 (R$ 900 thousand) every day.

    This information was provided today (25) by Infraero’s president, lieutenant general José Carlos Pereira. The debt refers to the use of airport facilities for landings and takeoffs and is supposed to be charged on a daily basis.

    Altogether, the airline owes Infraero US$ 242.98 million (515 million reais). Of this total, US$ 62.75 million (133 million reais) represent outstanding debts, while the rest is sheltered by the company’s process of legal recovery.

    The president of Infraero, who participated in a joint public hearing conducted by four Senate commissions, affirmed that a decision in favor of complying with the law and charging Varig the daily fees may be published in the Federal Registry in the next few days.

    The legal basis is a ruling by the Federal Accounting Court (TCU). "The TCU and the Ministry of Defense have expressed an enormous concern, but it winds up running afoul of what the law permits," Pereira declared. For Pereira the Varig’s "situation is getting to the brink of the precipice."

    According to Pereira, there is an interest in keeping Varig in the air. "If Varig goes broke, we won’t receive anything, and there will be one fewer airline. It is in the public interest to keep Varig in the air." He said that "the government has definitely made an effort," but he emphasized that "contributing public funds is something else."

    For the general director of the National Civil Aviation Agency (ANAC), Milton Zuanazzi, Varig’s problems should be solved on the basis of the legal recovery process the company is currently engaged in.

    In his view, what is most relevant at the present moment is for the company to have a cash flow, instead of a reckoning of what the company owes the federal government versus what it is owed by the federal government.

    The latter approach is espoused by the Workers of the Varig Group (TGV). Varig’s total debt currently amounts to US$ 3.30 billion (R$ 7 billion), while the federal government owes it US$ 2.12 billion (R$ 4.5 billion).

    When asked whether a contingency plans exists in the event that Varig ceases to operate, Zuanazzi replied:

    "A regulatory agency that lacks a contingency plan is an irresponsible agency, and a regulatory agency that discusses a contingency plan while Varig continues to operate is equally irresponsible."

    Agência Brasil

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    Brazilian Shoe Maker Launches US$ 2 Sandal to Beat the Chinese

    A young businessman from the southern Brazilian state of Rio Grande do Sul has ...

    Former President Cardoso Says Brazil Lost Leadership in the Mercosur

    Mercosur is agonizing and the situation could worsen if any of its members signs ...

    Brazil Gives Up Reaching Oil Self-Sufficiency This Year

    Brazilian Petroleum S.A., Petrobras, intends to turn Brazil into a net exporter of petroleum, ...

    Best-seller books, plays & movies

    PLAYS Rio O Burguês Ridículo (Ridiculous Bourgeois) — Adapted from a Molière’s comedy. Directed ...

    Letters

    Black awareness I would like to congratulate BRAZZIL – News from Brazil for the ...

    Brazilian gets vaccine against yellow fever

    In Brazil, Yellow Fever Scare Brings Fear of an Epidemic

    Brazil's Health Minister, José Gomes Temporão, used a radio and TV pool this Sunday, ...

    Companhia Vale do Rio Doce

    Brazil’s Mining Giant CVRD Posts Record Net Profit, a 97% Boost

    Companhia Vale do Rio Doce, in the mining sector, announced this week that it ...

    3% Fewer Brazilian Women Call Themselves Black

    White women form the majority of female heads of households in Brazil. This finding ...

    Weighing money

    Brazil’s Plan to Guarantee 4% Growth in 2009

    Brazil announced a series of measures to stimulate the economy and try to strengthen ...

    100 Days of Lula and No Cardoso

    Former President Fernando Henrique Cardoso treated the audience, which had paid a lot of ...