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| Founded | 1927, Porto Alegre, Brazil, as Viação Aérea Rio-Grandense S.A later Flex Linhas Aéreas 2006, Rio de Janeiro, Brazil, as VRG Linhas Aéreas S.A. |
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|---|---|---|---|---|
| Hubs | Guarulhos Int'l Airport Congonhas-São Paulo Airport Galeão International Airport Brasília International Airport |
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| Frequent flyer program | Smiles | |||
| Member lounge | Business Class, Smiles Gold and Diamond Members Lounges | |||
| Fleet size | 27 | |||
| Destinations | 20 | |||
| Parent company | Grupo Áurea | |||
| Headquarters | Rio de Janeiro, Brazil (as an independent company), São Paulo, Brazil (as a Gol subsidiary) | |||
| Key people | Constantino Oliveira (CEO) | |||
| Website | www.varig.com | |||
VRG Linhas Aéreas S.A., operating as VARIG (an acronym for Viação Aérea RIo Grandense), is a Brazilian airline owned by Gol Linhas Aéreas Inteligentes (parent company of Gol Transportes Aéreos) based in São Paulo, Brazil. From the 1960s until the mid-2000s, it was Brazil's leading international airline. In 2005, the airline went into judicial reorganisation (similar to the American concept of bankruptcy protection). “VARIG’s Productive Unit” (UPV) was acquired in an auction by the Volo do Brasil consortium, which included former cargo subsidiary, VARIGLOG. A new company emerged and was named as VRG Linhas Aéreas in October 2006, but continued to operate under the VARIG brand.
Contents |
History
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1927-1946
VARIG was the first airline in Brazil, established on May 7, 1927, at the Porto Alegre Commercial Association meeting. It was there that Otto Ernst Meyer, a German immigrant, signed the certificate declaring VARIG an airline company. It was established as a daughter of the German company Condor Syndikat and shares the same origin as Syndicato Condor, later named Serviços Aéreos Cruzeiro do Sul. VARIG's first aircraft was a nine-passenger Dornier Wal flying boat, transferred from the assets of Condor Syndikat. This aircraft, named Atlântico, was also the first aircraft registered in Brazil as P-BAAA. Its first employee, the Hungarian Ruben Berta, later became the airline's President and led the airline until his death in 1966. The airline started operations on 15 July 1927. VARIG's first flight was from Porto Alegre to Rio Grande, stopping in Pelotas.
VARIG initially operated local services in southern Brazil, but added its first international route to Montevideo on 5 August 1942.
1946-1997
In 1949 the Brazilian government granted to Varig the concession to fly to the United States, since the original airline which had the concession, Cruzeiro do Sul, was unable to operate the services.
In 1961, the airline took over the Real-Aerovias-Nacional consortium. This purchase not only made Varig the largest airline in South America but also granted routes to the West Coast of the United States and to Japan.
European services started in February 1965, when the military government ordered the shutdown of Panair do Brasil, the only Brazilian operator to Europe until then.
Later, in June 1975 Varig acquired a controlling interest in Cruzeiro do Sul, which was fully integrated into VARIG in January 1993.
VARIG had also shareholdings in Nordeste Linhas Aéreas Regionais (99%) and Rio Sul Serviços Aéreos Regionais (97%), which later where merged into Varig. The brands were however kept separate.
It was headquartered in Rio de Janeiro in 1985.[1]
In June 1995, Varig bought 49% of the shares of Pluna Uruguayan Airlines.
In November 1997 Varig joined Star Alliance.
1997-2006
From 1945 until the sale to Volo do Brasil, VARIG was majority owned by the Ruben Berta Foundation (RBF),[2] a not-for-profit foundation formed in 1945 to provide health, financial, social and recreational benefits to the employees of the companies. RBF controlled VARIG through a holding company, FRB-Par Investimentos S.A.
Long-running discussions to merge VARIG with TAM Airlines (TAM Linhas Aéreas) ended unsuccessfully in 2004.
As of May 2005, VARIG had 87 aircraft (76 passenger, 11 cargo), with an average age of 13.2 years. 83 of the 87 had operating leases; the remaining four had finance leases. As of June 2005, VARIG had a negative net worth of approximately US $2.5 billion, with balance sheet debt of $2.8 billion and off-balance-sheet debt of $2.0 billion.
On 17 June 2005, VARIG applied to the Commercial Bankruptcy and Reorganization Court in Rio de Janeiro for the commencement of "judicial reorganization" proceedings pursuant to the New Bankruptcy and Restructuring Law of Brazil, Law No. 11.101, which had become effective only eight days earlier. Under the NBRL, debtors like VARIG are permitted to remain in possession and control of their businesses and properties. VARIG did however continue to provide service to and from Brazil despite its financial troubles.
In order to raise funds, the Bankruptcy and Reorganization Court decided to sell two of Varig's valuable subsidiaries: in November 2005 the maintenance centre VEM Maintenance & Engineering was sold to a consortium presided by the Portuguese airline TAP Portugal; in December 2005 the cargo division VarigLog was sold to Volo do Brasil for US$48.2 millions. Volo group is a consortium started by Matlin Patterson and Brazilian investors (Marco Antonio Audi, Marco Hapfel and Luiz Gallo). The negotiation was concluded in June 2006, after regulatory approval. The National Civil Aviation Agency imposed several demands to approve Volo's purchase.
On 9 May 2006, the judicial administrator of VARIG's assets announced that VARIG was to be auctioned for a minimum bid of US$860 million. If the minimum price would not be reached, the company could be divided and its assets sold separately.[3]
On 25 May 2006, because VARIG did not pay the leasing fees, one of its Boeing 777 aircraft (PP-VRE) was seized at John F. Kennedy Airport in New York City by its lessor, US Bank.
On 8 June 2006, an auction of VARIG's assets (minus its debts) was held in Rio de Janeiro. The first round of bids, with a minimum amount of US$860 million, ended with no bids. On the second round, which had no minimum bid limit, a group of VARIG employees under the name NV Participações placed the only bid, offering US$449 million for the airline. Since the amount was well below the minimum bid, the decision to sell the airline fell upon bankruptcy judge Luiz Roberto Ayoub. The next day, the bankruptcy judge issued an injunction forcing the airline to stop operating its fleet and to return the active jets to the owners by June 16. The order also called for VARIG to return planes not in active use by July 1.
On 20 June 2006, the Brazilian judge approved the sale to TGV, the consortium representing the airline workers. However, by June 21 VARIG had cancelled 180 of its 356 flights. The airline officially announced these flights would be cancelled through June 28. Also, a US bankruptcy judge had allowed the airline to continue flying 16 leased planes until June 21. If the company ceased to exist before the World Cup in Germany was over, the government and other airlines were looking into providing transport for the Brazilian team and the fans back to Brazil. Since TGV did not meet the first deposit for US$75 million on Friday, June 23, the Brazilian judge annulled the auction.
Because of those two unsuccesful attempts, the bunkruptcy court decided to split the airline in two and sell one of its portions, while the other would keep a number of assets to pay its debits. The split was made as follows:
- The first portion included a brand new airline called VRG Linhas Aéreas, comprising the brands Varig and Rio Sul, Varig's route rights, all aircraft but one and the Smiles mileage program. For the sake of clarity, VRG Linhas Aéreas is informally known as the "new Varig".
- The second portion, informally known as "old Varig", is the original airline. It then comprised the brand Nordeste, one aircraft, debts, liabilities, legal disputes, and various assets, concessions and properties. Since "old Varig", could not use the name Varig anymore, the company had to use either the brand-name Nordeste or chose a new name. After using the brand-name Nordeste for a while, the airline was rebranded as Flex.
On 26 June 2006, VarigLog made a bid for $500 million, including an immediate $20 million payment for which $3 million were paid the same day, to keep the company afloat.
Finally VRG Linhas Aéreas, the "new Varig", was bought on an auction held on July 14, 2006 by VarigLog. On 20 July 2006, the transaction was finalized and Volo do Brasil paid $24 million for VRG Linhas Aéreas. Volo did not inherit VARIG's previous debts but committed to complete financial reforms in order to bring the airline up again. The "old VARIG" and its debts remained as Nordeste Linhas Aéreas Regionais. The next day, the "new VARIG" canceled all its flights, except for Rio de Janeiro-São Paulo shuttle service. The airline reported it needed more time to bring additional planes into service and all flights were canceled until further notice.
2006-Present ("old Varig")
"Old Varig" is related to the original Varig Brazilian Airlines and the brand Nordeste Linhas Aéreas, which was later renamed Flex Linhas Aéreas. It remained under bankruptcy protection until 2 September 2009.
On 21 December 2006, VARIG Brazilian Airlines, or "old" Varig" was suspended from membership in Star Alliance as of 31 January 2007 because it did not fulfill membership requirements.[4]
Also in December 2006 "old Varig" sold its participation in PLUNA (49% of the shares) to the Uruguayan Government.
Since 23 October 2007, "old Varig" ceased to use the name Nordeste Linhas Aéreas and started to use the marketing brand FLEX Linhas Aéreas. "Old Varig" could not use the marketing name Varig since July 2006, since it was part of the package bought by VarigLog. It is now specialized in providing non-regular charter flights.
2006-Present ("new Varig")
"New Varig" is related to the new airline VRG Linhas Aéreas, formed in 2005, which includes the brand Varig.
On 28 July 2006, the "new VARIG" announced it was cutting 60% of its staff. VRG Linhas Aéreas laid off 5,500 of the 9,485 jobs, with a remaining workforce of only 3,985.
On 23 August 2006, VRG Linhas Aéreas announced plans to lease 50 new Embraer ERJ 190/195 aircraft under the BNDES Bank in Brazil. The "new Varig" also claimed it was in negotiations with aircraft manufacturers Boeing and Airbus.
On 13 September 2006, the "new VARIG" announced its intentions to resume more international flights in two stages, when given authorization by federal aviation authorities. In the first stage, the "new Varig" planned to resume flights to Mexico, Peru, and the UK within 180 days. In the second stage, flights to Chile, United States, and Portugal were expected.
On 29 November 2006, the "new VARIG" announced expansion to its domestic routes for the Brazilian summer season. VRG Linhas Aéreas would begin seven new routes (including three new destinations) starting December 18, 2006, and lasting through March 4, 2007. [5]
On 14 December 2006, under a deal worked out between "new VARIG," the bankruptcy court, the two agencies regulating commercial aviation and VarigLog the new owners of VARIG, new air operators certificates (Certificação de Homologação de Empresas de Transporte Aéreo - CHETA) were granted by Brazil's National Civil Aviation Agency (ANAC) to new VARIG (VRG Linhas Aéreas)[6][7]. VarigLog purchased the ailing airline in July 2006 for $24.5 million. Soon after the certificates´ arrival, orders for 16 aircraft were announced, to bring the fleet to 31 aircraft.[8]
The "new VARIG" had struggled to find a strategic partner, after relaunch in December 2006, with aircraft, network and personnel inherited from the old airline. Lack of market credibility and the suspension of domestic and international routes led to monthly losses as high as US$20 million. In January 2007 LAN Airlines of Chile offered a US$17.1 million loan, in an unsuccessful attempt to acquire a 20% stake in the airline.[9]
On 28 March 2007, Gol Linhas Aéreas Inteligentes, the parent company of budget carrier Gol Transportes Aéreos, purchased the "new VARIG" (VRG Linhas Aéreas) for US$320 million. Gol announced that VRG Linhas Aéreas, the operator of the brand VARIG, would continue to operate under its original name. The fleet of 17 aircraft was to be increased to 34, consisting of 20 Boeing 737 and 14 Boeing 767. With the new fleet VARIG would operate to 12 international destinations: Buenos Aires, Bogotá, Caracas, Frankfurt, London, Madrid, Milan, Paris, New York, Miami, Mexico City and Santiago. VARIG's international flights would no longer have First Class, therefore consisting only of Economy Class and Business (Executive) Class. Key domestic services would be operated, including the Rio de Janeiro to São Paulo shuttle, using VARIG's 124 slots at Congonhas-São Paulo International Airport.
On 21 June 2007, Constantino de Oliveira Jr., the CEO of Gol Transportes Aéreos announced VARIG's immediate future plans for its fleet and destinations. The plan included the acquisition of nine of the more fuel efficient Boeing 737-800 model and 10 Boeing 767. Constantino also announced that the airline was in negotiations with both Boeing and Airbus for the acquisition of either Boeing 787 or Airbus A350 aircraft. The plan also included flights to Madrid, London, Paris, Milan, Rome and Mexico City by the end of 2007, and New York City and Miami in 2008. [10] In January 29, 2008, however, VARIG stated that it would end flights to Frankfurt, Rome, and London[11]. And, in April 10 the same year, the company announced it would suspend operations in Mexico City, Madrid and Paris, therefore focusing its routes network in Brazil and South America.
In 2009 Gol was merged into VRG Linhas Aéreas and thus VRG Linhas Aéreas became one airline with two different brands: Varig and Gol. As a consequence, as of mid-April 2009, VARIG's online booking service was integrated into Gol's and the Smiles frequent flyer program was reformulated to include Gol.
As of June 2009, the brand Varig ceased to operate its own flights. Instead it operate flights for parent company Gol Transportes Aéreos under Gol flight numbers.
Since 2006 "new Varig" is obliged by contract to purchase a minimum of 140 hours/month of services from "old Varig". Therefore, presently, some of VRG Linhas Aéreas flights operated with Gol flight numbers are actually flown with chartered aircraft from Flex.
Statistics
As of 2004, combined with its subsidiaries Rio-Sul and Nordeste, VARIG carried approximately 13 million passengers annually and had over 11,000 full-time employees. As of December 31, 2004, VARIG had total operating revenues of $3.4 billion, of which about $3.15 billion was from flight operations. As of May 2005, VARIG's share of passengers flying into or out of Brazil was 43% for the South American market, 17% for the United States market, 35% for the European market, and 48% for the Asian market. As of February 2007, VARIG held 4.54% of the domestic Brazilian market, doubling its previous 2.2% share of August 2006, but still well below the 25.02% held in August 2005, and only 21.64% of the International market, compared to 76.06% one year before. As of May 2008, VARIG held 7.97% of the Brazilian domestic market and 16.68% of the international market.
Destinations
Fleet
Current
The Varig fleet consists of the following aircraft (at 30 September 2009): [12]
| Aircraft
|
|---|
| Boeing 737-700 |
| Boeing 737-800 |
| Boeing 767-300ER |
Previously retired aircraft
Rio-Sul and Nordeste retired aircraft:
| Aircraft |
|---|
| Boeing 737-300 |
| Boeing 737-500 |
| Boeing 737-700 |
| Embraer EMB-110 |
| Embraer EMB-120 |
| Embraer ERJ-145 |
| Fokker F-27 |
| Fokker 50 |
Incidents and accidents
Since 1962:
- 27 November 1962: flight 810, crashed into a mountain near Lima, Peru after missing the approach to the airport while repeating the approach. There were 97 fatalities.
- 9 June 1973: a cargo Boeing 707-327C registration PP-VLJ flying from Campinas to Rio de Janeiro, crashed shortly before touch-down. Out of the crew of four, two survived.
- 11 July 1973, Flight 820, near Paris, France, made a forced landing due to fire in a rear lavatory. There were 123 deaths and 11 survivors (10 crew, 1 passenger). The aircraft landed 5 kilometers short of the runway, in a full-flap and gear down configuration. The majority of passengers died of smoke inhalation.
- 30 January 1979, a 707-323C freighter, registration PP-VLU. Flown by the same captain as Flight 820, disappeared over the ocean 30 minutes after taking off from Tokyo. No wreckage or bodies were found. The aircraft was carrying 153 paintings by the Japanese Brazilian artist Manabu Mabe, worth USD 1.24 million.
- 3 January 1987, Flight 797, near Abidjan, Côte d'Ivoire. Crashed after an engine failure, 50 deaths, 1 survivor. The Boeing 707 took off in its last Varig flight to Rio. The plane hit the ground with 3 survivors. Two of those survivors died minutes later.
- 3 September 1989, Flight 254, near São José do Xingu, Brazil. Pilot navigational error led to fuel exhaustion and a forced landing in the jungle. Twelve of the 48 passengers were killed in the crash. The survivors were discovered two days later.
- 14 February 1997, Flight 265, at Carajás Airport, Brazil. The aircraft overran the runway and hit some trees while landing in bad weather. The first officer died on impact, the 51 others on board survived.
See also
Serviços Aéreos Cruzeiro do Sul
Bibliography
- Pereira, Aldo (1987). Breve história da aviação comercial brasileira. Europa Empresa Gráfica e Editora. (in Portuguese)
References
- ^ "World Airline Directory." Flight International. March 30, 1985. 130." Retrieved on June 17, 2009.
- ^ Ruben Berta Foundation
- ^ O Globo
- ^ "VARIG leaving Star Alliance" 21 December 2006
- ^ "Varig começa a operar mais 7 rotas em dezembro," Folha Online
- ^ Agência Nacional de Aviação Civil 14 December 2006
- ^ "Varig recebe certificado de homologação e concessões da Anac," Folha Online
- ^ Flight International 12-18 December 2006
- ^ Jackson Flores (2007-04-03). "Brazil's Gol nets ailing Varig successor". Flight International: p. 8.
- ^ Interview-The Expansion of Varig (in Portuguese) 21 June 2007
- ^ "VRG Redefines its Business Strategy," PR Newswire
- ^ Gol Transportes Aéreos and VARIG Fleet
External links
- Varig
- Varig in the world
- Revista VARIG inflight magazine
- Varig Bankruptcy News, Issue 1, June 18, 2005
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