FlightGlobal.com
Home
Premium
Archive
Video
Images
Forum
Blogs
Jobs
Shop
RSS
Email Newsletters
You are in:
Home
Aviation History
1997
1997 - 3435.PDF
\IR TRANSPORT The Star Alliance now embraces five continents Varig's health measured in constant purchas ing power increased dramatically in 1996, a trend which Pinto is naturally eager to encour age. Stockholder equity increased from Real 334.4 million in 1995 to Real 431.6 million in 1996, a rise of 26%. Net income for the year similarly rose, from a loss of Real 7.5 million in 1995 to the Real 97.1 million profit in 1996. "Of course, we continue to look for increasing efficiency in the airline and we have adopted a plan called 'Challenge 800', which is very- important for us. We hope to have reached a level of around Real 800 million equity before tax by 1999 or 2000," says Pinto. ECONOMIC THREAT One constant threat to V'arig's plans, and one which it has come to live with, is the vagaries of Brazil's national economy. Although it has been relatively robust in recent years, the sudden doubling of interest rates (to 40%) earlier this year was a reminder of die "bad old days" when the economy was essentially in freefall. "Four years ago, we had a very high rate of inflation (around 2,400%] and that was difficult for us because we had to find a way of adjusting the ticket prices all of the time. Now, that has gone away and we're living with inflation which should be around 5% this year, and we expect die same or lower next year," adds Pinto. The sudden rise in interest rates has damp ened forecasts for rapid growth, however. "The rate more than doubled, from 18%, which was crazy. We expect it will eventually drift down to around 12% as it is already down to about 36%," he says. Although the rate has little direct effect on die aircraft leases or purchases, which are all arranged outside Brazil, it will affect the country's general economy and reduce travel. "We are concerned because of the reduction in growth which was forecast originally to be 4% to 5% in terms of GDP [gross domestic prod uct]. Now, the feeling is about 2%, so we will slow down and have reduced our growdi fore cast accordingly. We would have been growing bv about 8% this year, but now it will be down by2%or3%". Fortunately for Varig, the recent changes to the airline mean that it is in unexpectedly good shape to take the impact. With the bulk of its restructuring plan in place and bolstered by the prospect of new business through the Star Alliance, Varig is also experiencing a lull in fleet re-equipping. "In the near term, we have only two new Boeing 737s to be delivered at the beginning of 1998 and two [Boeing] MD-1 Is," says Pinto. "At the same time, we are re-adjust ing a lot of our international services and increasing frequency on diem. In that case, we are not planning to reduce anything, but rather to improve the service. We have to expect a lower seat-occupancy on those aircraft, so of course we are looking for more efficiency." In 1996, international traffic formed 72.1% of Varig's business in passenger-kilometres. Of this total, Furope accounted for 27.6%, North America 19.7% and Asia some 14%, although this is expected to show growth with the contin ued expansion of the codeshare deal linking Brazil with Japan in association with Japan Airlines. The heavily competitive routes within Latin America, on the other hand, produced only 10.8% of Varig's international traffic. The next major fleet purchase for Varig will be of the Next Generation 737-700/800/i'he order was converted from an earlier deal for 14 737-300s, and will begin with the hand-overof the first five -800s in 1999. A further five will follow in 2000, with the first -700 expected in late 1999, says Pinto. Further orders and options could eventually extend Varig's total Next Generation purchase to 32. In larger-scale aircraft, the trend ".. .will be to increase the Boeing 767-300 fleet and reduce the [McDonnell Douglas] DC]-10s. This will be a slow trend, however, because the DO 10 is a very good aircraft. We've also revamped the interiors so much that passengers can't tell them apart from the MD-11 s and the crews call them DC-11 s." Varig operates eight DC- 10-30s, the eighth aircraft being delivered back from lease to Uruguayan carrier Pluna in 1996. Varig also has two DC-10-30 freighters. Varig's passion for tri-jets is alive and well with its MD-11 fleet, which it intends to retain and even to grow. "We have nine MD-1 Is in Pinto: Stargazing service now, and will have 11 by the end of 1998," says Pinto, who hints that the fleet could grow to 14 within a few years. "It fits perfectly for us. It has just the correct cargo and passenger capacity for our routes, and this means we can take off with full loads and no restrictions from all our destinations. It is very important for us that Boeing kept the line open," he adds. BOEING FLEET There are no changes planned to the Boeing 747-300 fleet, which includes three passenger versions and two combis. The 767 fleet, although earmarked for future growth, will stay at the present level for now, says Pinto. Varig operates four -200FRs and six -300ERs, and is "...quite interested in the -400FR", he adds. The airline has also begun low-level studies of "an airliner for the next century", says Pinto, who adds that this is most likely to be in the Boeing 777/Airbus A340 class. Varig is therefore in confident mood. It faces its eighdi decade in a healthier state than per haps ever before in its long history. Yet die air line's optimism is tempered by knowledge of die fragility of both its national and regional economies. As Varig begins to workcloselv with its new partners for die first time around the fes tive season, it may well be wishing on a star for its future prosperity. 3 FLIGHT INTERNATIONAL 17 - 23 December 1997 31
Sign up to
Flight Digital Magazine
Flight Print Magazine
Airline Business Magazine
E-newsletters
RSS
Events
