Air Canada Negotiates Stake In Brazil's Varig - Report
Thursday August 24th, 2006 / 15h56
SAO PAULO -(Dow Jones)- Air Canada is expected to announce shortly it will buy a stake in Brazil's embattled airline Viacao Aerea Rio-Grandense (VAGV4.BR), or Varig, according to the local daily O Estado de S. Paulo.
According to unnamed sources, Air Canada, via its parent company ACE Aviation Holdings (ACE.B.T), is in talks to buy a 10% stake in the new Varig.
Last month, Volo do Brasil, a group of investors involving U.S. fund Matlin Paterson, bought the operations of Varig, rescuing the former flagship airline from a possible bankruptcy. Volo has pledged $500 million to allow the company to pay operating debts.
However, Air Canada's involvement in the deal is dependent on approval of the Volo purchase by local aviation authorities. The National Civil Aviation Agency, or Anac, is expected to rule on the deal Friday, according to the report.
A Volo spokesman said that Air Canada has no stake in Varig but he didn't deny it is a possibility in the future.
Meanwhile, John Reber, an ACE Aviation spokesman, told the newspaper that the company is always looking at new business opportunities.
Varig has been in financial trouble for years, with debts of around 8 billion Brazilian reals ($3.6 billion). More recently, it has not been able to pay basic operating expenses, including fuel bills, airport fees and plane-leasing payments.
Currently, the company is only flying around 12 planes and a small portion of its former routes.
According to the report, the draft deal involves transferring part of Air Canada's Boeing 767 fleet to Varig. In addition, Air Canada will transfer at least six orders for E190 planes with local aircraft manufacturer Empresa Brasileira de Aeronautica SA (ERJ), or Embraer.
Air Canada has ordered 45 E190 planes, of which 11 were already delivered by June.
However, Air Canada's involvement in Varig would still need to be approved by Anac. Brazilian law limits foreign interest in airlines to 20%. U.S. investment fund Matlin Paterson is a key investor in Volo.
-By Alastair Stewart, Dow Jones Newswires; 5511 3145 1479; alastair.stewart@dowjones.com
Thursday August 24th, 2006 / 15h56
Air Canada and Varig.
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There's less flying in the winter then there is in the summer.well if they feel they can get by with fewer 767s for the winter and by next summer there will be some 777s aboard I suppose it makes sense?
There's less domestic flying in the winter then there is in the summer.
There's less international flying in the winter then there is in the winter.
You guys are getting more EMB's, right? I would think that you could take some older 767's out of operation and transfer them to Varig and fill the holes with EMB's or Airbus aircraft. If you're growing international operations next year it only stands to reason that with added EMB and 777 aircraft a possible slowdown this winter might be good for you guys to catch up with pilot hiring and training (or is that even a problem?).
