VASP crisis deepens following REFIS exclusion

Madrid
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Brazilian carrier VASP faces an uncertain future after being expelled from a national scheme providing favourable payback rates for outstanding debts and could now see its aircraft seized by the Government.

The move had appeared increasing likely after Brazil’s National Social Security Institute (INSS) last month called for the airline’s exclusion from the REFIS scheme, when the airline continued to default on payments.

Under the scheme, a $250 million tax and social security debt was split into 100 monthly payments of $2.5 million. However VASP's failure to pay punctually the full amount created a legal obligation to withdraw the payment deferral benefits and to execute legal procedures for an immediate payment of the outstanding debt.

REFIS associate director Valdir Moyses Simao, says that on 23 February VASP was excluded from receiving the benefits and as soon as the ruling has been published in Brazil's official state bulletin, the legal procedure to seize the aircraft offered as collateral will be initiated. VASP had used its aircraft as guarantees against the debt.

No VASP executive was immediately available for a comment, but a local industry observer suggests that the airline’s position is now critical, commenting. "VASP's bankruptcy may be imminent now. Probably the whole fleet they own is not worth all that money, so if a court decides to ground it, I don't see how VASP could survive that. But VASP's president Canhedo is a survival specialist and perhaps he is still planning a surprise move to save the carrier.”

Following the REFIS ruling VASP announced it was cutting most of its fares during March by around 50% - a move interpreted by market observers as a desperate action to generate cash flow during the low season.

A year ago VASP only narrowly avoided being grounded after reaching an eleventh hour agreement with Brazilian airport authority Infraero over its failure to pay landing charges.