SAO PAULO, Brazil (AFX) - Brazilian aviation authorities on Saturday rapidly approved the sale of Varig SA, the country's bankrupt flagship airline, opening a window for the carrier to be saved and international travel chaos for ticket holders to end.
The decision by Brazil's National Civil Aviation Authority blessing the sale of Varig to Volo do Brasil for US$500 million (euro399.9 million) came a day after a bankruptcy judge rejected a slightly lower offer by a workers group that failed to come up with a US$75 million (euro60 million) first payment, the authority said in a statement.
Volo earlier this year bought VarigLog, the airline's former cargo unit, but the transaction was criticized 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 sale of the carrier to the company appeared to indicate Brazil's government doesn't have a problem with Volo's ownership structure.
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, Brazil's largest international carrier.
The proposal also will be reviewed by creditors of Viacao Aerea Rio-Grandense SA, or Varig, and Ayoub said he will not consider liquidating the company unless creditors ask him to do so.
But the 79-year-old company _ renowned only recently for stellar service and for being a source of deep pride for Brazil _ seemed on the verge of collapse this week, after canceling hundreds of flights and suspending dozens of international and domestic routes.
In Germany, Brazilian soccer fans who had originally flown into Paris; Milan, Italy; and Munich, Germany, found out that the company had suspended service to those destinations, and were instructed to try to get home by heading to Frankfurt, one of the few European destinations now served by Varig, the Agencia Estado news wire service said.
Paying on their own to arrive over land, they were put on long waiting lists for seats just as the heavy summer travel season is getting under way.
The judge indicated the entry of Volo as a new suitor means that another auction will probably have to be held to give other investors a chance at making bids.
Varig's cancellations came as the airline ran short of money to pay for fuel, with planes grounded amid demands by leasing companies for overdue payments.
Varig, Brazil's largest international carrier, has routes throughout Latin America and to Europe and the United States. Many passengers did manage to get on flights Friday despite the carrier's cancellations, but said they faced delays ranging from hours to days.
The government estimated earlier this week that 28,000 people are abroad with Varig tickets between this week and June 30.
Brazil's Air Force said five planes would be available if the government is forced to mount a mission with military flights to rescue stranded passengers.
The airline has been under protection from its creditors since June 2005, and its domestic share of the market in Latin America's largest country slumped in recent years as its financial problems worsened.
Before heading into bankruptcy, Varig repeatedly appealed for a government bailout to save the airline, but top Brazilian officials said they wanted a free market solution for the carrier.
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