The race is on to take over Transbrasil's routes and fill the vacuum left by the Brazilian carrier's likely demise.

TAM and Varig have both applied for Transbrasil's routes, which legally became available on 3 January when a 30-day dormancy period expired. The Brazilian department of civil aviation (DAC), however, refused to enforce the rule that quickly.

Instead, the DAC gave Transbrasil another month to come up with a viable operations plan.ÊThis follows on the heels of another issue that could dash all comeback hopes. A São Paulo labour court has ordered Transbrasil to pay wage arrears to around 1,400 employees - or face seizure of all its assets.

Rivals are not waiting to see what happens. Gol Transportes Aereos, the low-fare start-up that celebrated its first anniversary in January, has already hired 58 ex-Transbrasil pilots.

Less than two weeks after Transbrasil's grounding, TAM said it would order or accelerate delivery of eight more Airbus A320s or A319s, and may convert a memorandum of understanding for more A319s into firm orders. With at least 12 new jets arriving this year, TAM plans to fill the gap left by Transbrasil, and expand its own leadership in the domestic market, where it now commands 31%.

Daniel Mandelli Martin, who became TAM president after Rolim Amaro died in an accident last year, has openly expressed interest in taking over Transbrasil operations. Martin has made no formal offer, but he says TAM would like to "absorb" Transbrasil's 1,200 remaining employees and 47 routes, plus hangars and terminal concessions at various airports. Varig is also interested in Transbrasil routes and assets.

Unlike TAM, however, Varig is preoccupied with putting its own house in order. In an attempt to cut $1.2 billion in debts, Varig has sold and leased back six jets for $370 million, and is working on a $1 billion deal with Boeing and GECAS to stretch payments in exchange for making them exclusive suppliers for up to 200 aircraft over 10 years.

Source: Airline Business