The merger between Brazilian flag carrier Varig and the country's largest private carrier TAM has been approved by Varig majority shareholder Fundação Rubem Berta (FRB) and is awaiting regulatory clearance. Shareholders have published a plan under which the new airline would retain the Varig brand, merging the fleets and pilot pool from both airlines and associated regional affiliates. FRB will retain a 5% shareholding in the new airline and TAM will hold a 35% stake. Brazilian development bank BNDES, representing domestic creditors, is likely to refinance the airline in the short term with an injection of about R$1.8 billion ($600 million) and will become the airline's largest shareholder with a 40% stake. Foreign creditors such as GE Capital Aviation Services and Boeing will receive the remaining 20% of the new airline's stock, and Varig's $1.2 billion debt will be re-negotiated by BNDES.

Source: Flight International