Brazil's VASP has suspended its last remaining transborder flights, is spinning off its cargo division and squeezing cash from an airline subsidiary in what appears to be a growing cash crisis. After lessors repossessed its Boeing MD-11 fleet and forced VASP to suspend all long-haul routes in April, the only foreign route it still served was Sao Paulo-Buenos Aires. In early October, however, it suspended that route too and laid off its staff in Argentina.

Working with Brazil's national development bank, VASP has announced plans to spin off its express cargo and courier subsidiary into a publicly held company called Vaspex sometime before the end of this year. Vaspex expects annual sales of some $130 million, but VASP has not indicated how much it expects the sale to generate or how the proceeds will be used. It has debts with various public agencies.

A sign of its desperation is the action VASP recently took against its subsidiary, Ecuatoriana. To pressure that airline into paying overdue management fees, VASP withdrew the Airbus A310 it had wet-leased to Ecuatoriana, depriving the subsidiary of its main revenue source.

Source: Airline Business