Hammer still to fall in Varig auction

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The much-heralded auction that was supposed to save Brazilian flag carrier Varig proved to be inconclusive. The only bid, from an employee group called TGV, was well below the $860 million minimum. With only $125 million in cash, the bid consists of claim waivers and wage concessions, and would pay creditors out of future airline profits.

The bankruptcy judge has not rejected it, but local reports say he has delayed ruling in hopes of finding a better deal. This has encouraged others who apparently were not willing to meet the minimum, but are interested in Varig at a lower price. Several investment funds say they would beat the TGV bid, but still for less than $860 million. However, a week after the auction, the workers’ group was scrambling to make a partial payment, while others such as TAP Portugal watched to see if TGV could come up with the cash.

Meanwhile, Varig cancelled many routes in a manoeuvre to keep lessors from repossessing aircraft. ■