Varig source confirms tie-up talks with Air Canada parent ACE

Source: Flightglobal.com
This story is sourced from Flightglobal.com

Rainer Uphoff / Madrid

Brazilian flag-carrier Varig’s holding company, VarigLog, is discussing with Air Canada's parent company ACE a close co-operation in such areas as the recovery of Varig’s fleet.

Officially the carrier is ocnfirming only “talks to establish a tighter co-operation” with Star Alliance partner Air Canada in a number of areas, including the fleet and frequent-flyer programmes, but a senior Varig executive is more specific.

“Air Canada could pay some cash for our frequent flyer programme ‘Smiles’ and lease some of its Boeing 767-200 aircraft to us to enable Varig to re-establish its intercontinental network quickly,” he says.

He admits that there is an urgency to the situation, in order to ensure that Varig avoids “losing route authorities and airport slots” but also to ensure that it “continues being a full and respected member of Star Alliance”.

Local press reports also suggest that Air Canada could transfer some of the early Embraer 190 delivery slots to Varig, should a proposal go ahead for Varig to receive financing from local development bank BNDES to acquire up to 50 Embraer 195s to re-establish its domestic and regional network.

However, the Varig source could not confirm reports that VarigLog has offered Air Canada a 10% shareholding in exchange for this support package.

“I only know that they are talking about this kind of co-operation, but I am unaware of the price Varig will have to pay for it,” he says.

Struggles over airport slots, route authorities and airport check-in space abandoned by Varig are continuing. The Rio de Janeiro bankruptcy court dealing with Varig’s case has ordered Brazilian civil aviation administration ANAC not to put these assets out for tender as long as Varig continues to operate under bankruptcy administration.

But ANAC argues, in response to the court order, that it is an autonomous Government body which is not required to obey rulings from lower court instances, particularly as the law obliges it to make available to all airlines unused route authorities through a public tender process.