New Varig parent in talks for single-fleet 50 aircraft to rebuild fleet of troubled Brazilian carrier

Rio de Janeiro
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VarigLog completed arrangements last week to request $1.7 billion in funding from Brazil's state bank BNDES for the acquisition of 50 aircraft to help rebuild the country's troubled flag carrier Varig, writes Jackson Flores.

Varig is owned by VarigLog's parent Volo do Brasil, and VarigLog aims to rebuild the airline around a single-type fleet of 50 aircraft to serve domestic routes. Varig is currently operating with a fleet of 12 aircraft and only a small portion of its old network.

VarigLog is in negotiations with Airbus, Boeing and Embraer about its fleet requirments, and according to Volo do Brasil chairman Antonio Audi, the aircraft will be in the 115- to 135-seat category. Audi adds that he does not intend to opt for a mixed fleet, so final negotiations will be with only one manufacturer.

The 15-year, $1.7 billion financing deal represents around 85% of what VarigLog requires to secure the aircraft deal that it is negotiating. The remaining 15% - around $250-300 million - will be footed by VarigLog. VarigLog's management held a meeting last week with BNDES personnel - which was also attended by Embraer representatives.

Meanwhile, Varig's president - Marcelo Bottini - stood down last week.