Varig completes sale of VEM, VarigLog
Jan. 16, 2006
Varig paid $56 million owed to aircraft leasing companies last Thursday, eliminating the threat that 40 of its aircraft--around 70% of its fleet--would be repossessed.
The carrier, which has been operating under Brazilian bankruptcy protection since last June, also announced that it completed the sale, announced in December, of two subsidiaries for $72 million. A portion of the proceeds from the sales was used to pay off the lessors.
VEM-Varig Engineering & Maintenance went to Aero-LB, a consortium led by TAP Portugal. VarigLog, its cargo and logistics subsidiary, also went to TAP, which then sold it to Volo Brasil, a consortium headed by US-based Matlin Patterson, a private equity fund.
Both consortia, according to Varig, also committed to play important roles in the recovery of the carrier, whose restructuring plan was approved by its creditors' committee Dec. 19.
The ongoing recovery plan includes an increase of the fleet from 57 to 66 aircraft by April through addition of one 777, one 767, five 737s and two MD-11s. The plan also calls for a route network readjustment.