Varig

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VRG Linhas Aéreas

IATA RG	ICAO VRG	Callsign Varig
Founded		1927
Hubs		Guarulhos Int'l Airport Congonhas Int'l Airport
Focus cities		Galeão International Airport
Frequent flyer program		Smiles
Member lounge		Business Class, Smiles Gold and Diamond Members Lounges
Fleet size		18
Destinations		19
Parent company		Gol Transportes Aéreos
Headquarters		Rio de Janeiro, Brazil
Key people		Guilherme Laager (CEO)
Website: http://www.varig.com.br

VRG Linhas Aéreas, or Varig (Viação Aérea RIo Grandense) is an airline 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 third largest airline in Brazil.

The "new" Varig operates to 15 cities in Brazil and 5 countries. Its main hubs are Guarulhos International Airport (GRU) and Congonhas International Airport (CGH), São Paulo, with a secondary hub at Galeão International Airport (GIG), Rio de Janeiro.

1 History
2 Financial situation
3 Statistics
4 Incidents and accidents
5 Destinations
6 Fleet
7 External links
8 References

[edit] History

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 Mecânica, Varig's maintenance centre, was sold to a consortium presided by Portuguese airline TAP Portugal.

Varig Boeing 737-300

Varig McDonnell Douglas MD-11

Boeing 767-300ER (Charter Division)

[edit] Financial situation

Since 1945, Varig has been majority owned by the Ruben Berta Foundation (RBF),^[1] 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 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.^[2]

On May 25, 2006, due to Varig not paying the leasing fees, one of Varig's Boeing 777 aircraft (PP-VRE) 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. [1]

December 14, 2006 Under a deal hammered out between new Varig, the bankruptcy court, the two agencies regulating commercial aviation and VarigLog the new owners of Varig, new air operators certificates (Certificação de Homologação de Empresas de Transporte Aéreo - CHETA) were granted by Brazil's National Civil Aviation Agency (Agência Nacional de Aviação Civil - ANAC) to new Varig (VRG Linhas Aéreas)^[3] [2]. VarigLog purchased the ailing airline in July 2006 for $24.5 million. Soon after the certificates´ arrival, orders for 16 aircraft will go forward, to bring the fleet to 31 aircraft.^[4]

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.^[5]

On March 28, 2007 Varig was officially purchased by Gol Transportes Aéreos for the amount of US$275 million. Gol announced that Varig will continue to operate under its current name. The current fleet of 17 aircraft is to be increased to 34, consisting of 20 Boeing 737 and 14 Boeing 767. With the new fleet Varig will operate to 12 international destinations: London, Madrid, Milan, Paris, New York, Miami, Mexico City, Santiago; and Frankfurt, Caracas, Bogotá, and Buenos Aires, currently served by the airline. Varig's international flights will no longer have First Class, therefore consisting only of Economy Class and Business (Executive) Class.^[6]

[edit] Statistics

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 American market, 17% for the United States market, 35% for the European market, and 48% for the Asian market. Varig is the only Latin American member of the Star Alliance and employs 3,985 staff. As of February 2007, Varig held 4.54% of the domestic Brazilian 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.

[edit] Incidents and accidents

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 5km 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 navigational 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.