The manager of the Brazilian football team knows his job is never safe in a land where defeat is viewed as a national catastrophe. The situation appears to be little different for Fernando Pinto, the president of Varig. Pinto is the fourth Varig president in the last six years and Brazilian aviation sources say he has recently avoided an attempt to unseat him.

The company's administrative council has rejected a proposal to remove Pinto, who took over three years ago after a successful period in charge of Varig subsidiary Rio Sul. A subsequent shareholders meeting was held in March to discuss the future of both Pinto and the members of the administrative council. Although Pinto survived, the incident reveals the fragility of his position as well as an apparent struggle for power within the company.

The administrative council consists of nine members, some of whom represent Varig creditors, such as Boeing and General Electric, and others who represent the Rubens Berta Foundation, holders of 87% of Varig's shares. On this occasion, sources say, it was the representatives of the Rubens Berta Foundation who saved Pinto's skin.

Pinto's opponents are apparently disgruntled at the way in which Varig was caught cold by the economic crisis which hit the country at the start of the year and caused the Real currency, previously pegged and overvalued at 1.20 to the US dollar, to collapse to around two to the dollar by the end of March. Most of the company's $1.8 billion debt is in dollars, as are the lease payments of two thirds of its 95 aircraft.

Pinto, however, has found backing in other quarters, including the pilots' association APVAR, for his restructuring plan. In the last three years, Varig has modernised its image dramatically and increased productivity. The aircraft have been refurbished inside and out; some 6,000 jobs have been eliminated; and less profitable routes have been abolished. Pinto has also brought Varig into the Star Alliance, launched a mileage programme and introduced first class on domestic routes. At the same time, he has begun renewing the fleet with an order for 20 new generation Boeing 737-700s.

Source: Airline Business