Brazilian aviation authorities open window for Varig to be sold

Brazilian aviation authorities on Saturday approved the sale of the cargo unit of the country's bankrupt flagship airline, opening a window for the carrier to be saved and international travel chaos for ticket holders to end.

Photo: Brazilian aviation authorities open window for Varig to be sold

The decision by Brazil's National Civil Aviation Authority blessing the sale of VarigLog to Volo do Brasil came a day after Volo offered US$500 million (Ђ399.9 million) for Viacao Aerea Rio-Grandense SA, or Varig, Brazil's largest international airline, the authority said in a statement.

Volo earlier this year announced its intention to buy VarigLog, but the transaction was held up amid claims that Volo is controlled by foreign investors. Foreigners are allowed to own only 20 percent of Brazilian airlines.

But Volo says its majority owners are Brazilians, and the decision by aviation authorities to allow the cargo unit sale to the company means Brazil's government doesn't have a problem with Volo's ownership structure. That suggests that Volo would also be in a good position to buy Varig itself.

Judge Luiz Roberto Ayoub still has the final say over the airline's restructuring, and is analyzing the Volo proposal over the weekend to determine its viability as thousands of Brazilians who went to Germany for the World Cup are starting to return home, many of them on flights operated by Varig.

He told Brazil's CBN radio Saturday that the government's approval of VarigLog's sale to Volo overcame one of the biggest hurdles Volo faces in trying to buy Varig.

The proposal also will be reviewed by Varig's creditors and Ayoub said he will not consider liquidating the company unless creditors ask him to do so.

The judge on Friday rejected a US$449 million (Ђ359 million) bid offer for Varig from a workers group that failed to come up with a US$75 million (Ђ60 million) first payment, the authority said in a statement, reports AP.

O.Ch.