Past objections to a Varig-TAM merger or integration have come from Varig's Ruben Berta Foundation, but TAM officials have raised their own doubts, and these could undercut critical government support.

Wagner Ferreira, marketing vice-president, was the first TAM official to question the merger. Improved economic conditions, he argues, make it unnecessary. He has been followed by Ruy Amparo, TAM's technical and operations vice-president, who reveals that the carrier is looking at "other forms of co-operation besides a merger".

The most forthright statement to date comes from TAM's interim president, Antonio Teixeira, who says a merger as now planned is "almost impossible". He told local media: "We know it, Varig knows it, and the government is aware of it."

The government is sending mixed signals. Officials still insist a merger is the only long-term answer, especially for debt-ridden Varig. But a labour ministry official has called for suspension of the merger process, and defence minister Jose Viegas, whose portfolio includes civil aviation, says he would consider alternatives to a merger.

Source: Airline Business