The presidents of Varig, Vasp, Transbrasil and TAM have met to discuss ways of overcoming Brazil's recent economic difficulties, prompting speculation that the four carriers are about to merge into two companies.

Brazil's airlines have been severely hit by the country's economic crash at the start of the year. A massive devaluation in the Brazilian real against the US dollar has undermined outward international traffic and driven up fuel and aircraft lease rates.

Flag carrier Varig relies on the home market for 80% of its traffic, and about two-thirds of its fleet is leased in.

The justice ministry has suggested that Varig, with a 41.2% share of the domestic market, would make a good match for smaller carrier TAM, which controls only 16%. This would leave VASP to partner Transbrasil, with each enjoying a 21% share of local traffic.

Source: Flight International