Mario Fonseca/RIO DE JANEIRO

Brazilian carrier Varig has created a dedicated cargo airline as part of a wider reorganisation aimed at restoring the health of the country's flag carrier.

The new operation, to be known as VarigLog - short for Varig Logistica - is to take over the cargo assets of the airline when it gets under way in the fourth quarter of this year. Employing five Boeing 727-100C/F freighters and two converted McDonnell Douglas DC-10-30F cargo aircraft, the company has also agreed a deal to acquire up to five Boeing 747-200Fs. Lufthansa is believed to be the supplier of the aircraft, although it is not clear whether they will be passenger conversions or freighters being phased out of the Lufthansa Cargo fleet.

VarigLog will absorb Varig Airlines' domestic air cargo route network, along with 25 international destinations. The new company is expected to require investment of nearly $100 million over the next two years.

José Carlos Rocha Lima, VarigLog's new chief executive, says the company's goal "is to raise air freight revenues from the present 16% of the group's overall income to 30%" within the next three to five years. Annually grossing around $274 million, air cargo operations represent 0.3% of the group's scheduled services, and Lima intends to raise that to 12% within five years.

Creation of VarigLog is the latest of a series of restructuring moves by Varig in the last few months. Assets have been distributed among two new holding companies responsible for airline and non-airline services and placed under the ultimate control of an operation known as FRB-Par (Varig Group).

Previously, Varig was controlled directly by the Foundation Ruben Berta. FRB-Par has already launched a charter operation using the resources of Varig and its regional carriers Nordeste and Rio Sul.

Source: Flight International