Brazilian Justice Sequesters Varig’s Money to Pay Workers’ Compensation

    The US$ 75 million that VarigLog, the new owner of Brazilian airline Varig, deposited just last Monday, July 24, to keep the company alive, have been blocked by a labor court in Rio de Janeiro.

    Judge Múcio Nascimento Borges, from the 33rd Labor Court, has issued a temporary injunction in favor of the Simarj, Rio’s Civil Aviation Union, which had requested the action so that 5,500 workers who were just fired may receive severance compensation. 

    Friday, July 28, Varig announced that it was firing 5,500 workers while keeping 3,895 of them. According to the ailing airline, it would need US$ 117 million to pay working compensation to those dismissed and an extra US$ 49 million for late salaries to all the 9,495 workers. Some of them haven’t received their wages for four months.

    Varig and VarigLog  weren’t commenting the court’s decision, alleging that they hadn’t yet received any notification regarding the case.

    The US$ 75 million, the first installment deposited to secure the purchase of Varig by VarigLog, a former subsidiary of Varig, was supposed to be used for maintenance of airplanes and improvements in the company and not to pay personnel, according to the auction announcement that led to bankrupted Varig’s purchase.

    For Uébio José da Silva, president of the São Paulo’s Civil Aviation Union (Sindicato dos Aeroviários de São Paulo) the decision of the court should be celebrated: "This may be limited but it is still a victory. Even if the money is not enough to pay everything this is a victory for the workers. We are sure that Varig’s employees will not end up empty handed like those from Transbrasil and Vasp."

    Silva estimates that Varig owes its employees about US$ 460 million. He also made it clear that the court favorable decision does not prevent Varig’s workers from starting a strike to pressure the airline to pay all it owes.

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