The revolving door at Varig keeps spinning. Manuel Guedes lasted only five months as president before resigning in April. Robert Macedo becomes Varig's fourth head in eight months. Like his predecessors, he must find a way to work with the defiant Ruben Berta Foundation (FRB), which owns 87.5% of Varig on behalf of employees.

No announcement followed Guedes's resignation, but sources blame dissension within the FRB for his decision to quit. Elements within the FRB continue to oppose Varig's integration with TAM, Brazil's second carrier.

The FRB could clarify its intent in late May when it votes on a plan for internal reorganisation. Yutaka Imagawa, the controversial chairman who resigned under apparent pressure in March, is seeking a comeback as president of the FRB's proposed new governing council. Imagawa, who blocked Varig's restructuring last year, is seen as hostile to integration with TAM.

But the government demands that the FRB resolve its differences and focus on solving Varig's crisis. The government-owned economic development bank is pushing Varig toward a deal with TAM by offering to act as guarantor for Varig debts or help capitalise a holding company for Varig and TAM. Bank officials insist it is not willing to support Varig alone.

Under pressure, the FRB has agreed on a set of conditions for integration with TAM. One of them is that TAM would not majority control the proposed holding company.

Source: Airline Business