After initially postponing a meeting at which they planned to review a $500 million bid from freight and logistics company VarigLog due to reported changes in the offer, Varig creditors late Monday decided to reject the bid, forcing the Sao Paulo stock exchange to suspend trading in Varig stock briefly after a rush to sell, according to press reports, and leaving Brazil's flag carrier on the cusp of liquidation.

The Associated Press reported that aircraft leasing companies were united in opposition to the bid, which was arranged by VarigLog parent Volo do Brasil (ATWOnline, July 12).

Varig management said it will continue to attempt to auction off the airline's assets while the Rio de Janeiro bankruptcy court handling the case decides whether or not to seek a third bidder--an initial offer from a consortium of employees and investors failed last month--or put the floundering airline out of its misery. VarigLog will challenge the decision in court, according to press reports, claiming the majority of creditors had given their consent to the bid.

At present, Varig is operating only 13 aircraft and has seen an 80% plunge in monthly revenues to $32 million, according to a statement from a Varig attorney cited by AP. Reuters reported that the carrier canceled 86 of 139 flights scheduled for yesterday, the last day of an emergency plan implemented by Brazil's civil aviation administration calling for other airlines to honor Varig tickets. That plan may be extended.

Volo do Brasil has spent $13-$14 million to keep the carrier afloat. Varig was given until Friday to return 25 aircraft to leasing companies (ATWOnline, June 30).