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Interview By Folha With Varig's CEO  
User currently offlinePPVRA From Brazil, joined Nov 2004, 8875 posts, RR: 40
Posted (8 years 10 months 16 hours ago) and read 2141 times:

Ok, so here goes my translation from the article (for those who can speak portuguese and would like to skip my attempt in translating this, skip to the bottom of the page for the link):

Folha de S. paulo is SP's main newspaper and one of the most respected nationwide.



Folha: Is there an alternative for RG, after TP pulled out?

David Zylbersztajn (DZ from now on): TP was one of the alternatives, but not the solution. From the moment RG entered the "chapter 11" process the previous model [RG+TP] did not make sense anymore. RG's problem is strictly financial. The company has a huge debt. The Ruben Berta Foundation [RG's main shareholder] is conscious about the problem and accepts selling their share on the company. RG is operationally equilibrated and healthy. In the first trimester RG had a result of BRL 150 million, which is better than the other companies together. The problem comes when you factor in the debt,a negative patrimony of BRL 6 billion, and debts that goes from BRL 7 to BRL 9 billion, depending on the index of correction (help in translating this last sentence plz!). The government holds 65% of the debt. The company has credits to receive from the govt. worth some BRL 4 billion.

[skipping a long comparison]

[talking about BR fuel, stated owned creditor]... Varig is a "megaclient." Only from BR, we buy USD 600 million worth in fuel per year. You don't waste a USD 600 million client.

Folha: Why did RG opt for the bankruptcy filling?

None of the proposals we received assured of short-term capital investments. A solution like TP's would need new capital. As this capital didn't come, trying to cancel off debt with with government would take took long, we decided for the restructuring law.

Folha: The [ a govt. body, don't know how to translate "Fazenda"?] refused the canceling of debts deal?

DZ: No. They worked a lot with us. They proposed a deal, but it would take too long. But they did collaborate and are giving support for RG's recuperation.

[Skipping unimportant political rumors dismissal part]

Folha: What guarantees that the Ruben Berta Foundation will not change their minds later and not sell their shares?

Quick explanation:The govt. has stated that no "canceling off debts" deal will happen if FRB doesn't lose control of the airline

DZ: RG is creating a trustee that will take care of those shares and be able to sell them afterwards. In the new RG, the FRB will only have a minority stake. Only as an investor. Our proposal is that the trustee be formed by 4 counselors and 3 members. The four counselors would include me... [three others brought by DZ to RG's board]. The idea is that FRB would in the end only hold 10% of the shares. This way, RG will n theory not be owned by any single group, demanding a much stronger type of management. If from the 90% to be sold, 20% will go to a foreign investor, which is the limit by law, plus another 30% to a strategic investor, and the other 40% to would go to the market.

Folha: But how is an investor going to be interested in a company in debt and with a negative patrimony?

The model we re studying takes into consideration reducing substantially our debts. It's not magic, but a societary reorganization. Like any creditor, the government, if there is an agreement they will lose some, as it is normal in a situation like this. If RG stops flying, the government will lose 100%. We must measure an equilibrium point between the possibility of paying and what there is to receive. If the creditor wants to receive everything, they won't get any.

[Skipping unrelated comments about the competition]

Folha: Will there be many layoffs?

I can't negate that possibility. I can't say there won't habve any, but there are also other alternatives. RG's pilot association told us that, if they go for layoffs, they would be ok with paycuts instead.

[End of interview, skipping personal comments...]

Link: http://www1.folha.uol.com.br/folha/dinheiro/ult91u97548.shtml

So there you go guys. As for why I took the time to translate all this? It's because I love you guys! No, just kidding, I couldn't sleep, so I figured what the hell...

Cheers,
PPVRA


"If goods do not cross borders, soldiers will" - Frederic Bastiat
12 replies: All unread, jump to last
 
User currently offlineThe777Man From United States of America, joined Jul 1999, 6403 posts, RR: 55
Reply 1, posted (8 years 10 months 16 hours ago) and read 2117 times:

Many thanks for the insight to what's going on with Varig. Hope to that they will come out a lot stronger after this..

The777Man



Need a Boeing 777 Firing Order....Further to fly...T5, CI, MU, LX and LH 777s
User currently offlinePPVRA From Brazil, joined Nov 2004, 8875 posts, RR: 40
Reply 2, posted (8 years 10 months ago) and read 2073 times:

Quoting The777Man (Reply 1):
Many thanks for the insight to what's going on with Varig. Hope to that they will come out a lot stronger after this..

I agree.

No comments from Brazilian A.netters?



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineJrosa From Brazil, joined Jun 2005, 367 posts, RR: 11
Reply 3, posted (8 years 9 months 4 weeks 1 day 20 hours ago) and read 2041 times:

RG increased its sales by 3% this week. This is great, it shows that the costumers trust RG, but also it is the result of price reductions. For instance, the shuttle service (SDU-CGH) had its price reduced in approximately R$100,00* each leg, a reduction of approximately R$200,00* in the round trip ticket. Also, this is not internet price reduction or any special deal, because I bought such (SDU-CGH-SDU) ticket yesterday at the airport counter.

*For easy reference US$1,00 worth approximately R$2,39.


User currently offlineFlyguy1 From United States of America, joined Jun 1999, 1736 posts, RR: 4
Reply 4, posted (8 years 9 months 4 weeks 17 hours ago) and read 1984 times:

I have noticed that during the last few days, JFK is back to the 777. IS PP-VRA/B back in service, or just one?


727, L1011, MD80, A300, 777-200, 737-300, 737-700, 747-400, 757-200, 737-800, A320. E190, E135, 767-200, CRJ9
User currently offlinePPVRA From Brazil, joined Nov 2004, 8875 posts, RR: 40
Reply 5, posted (8 years 9 months 4 weeks 17 hours ago) and read 1987 times:

Quoting Flyguy1 (Reply 4):
I have noticed that during the last few days, JFK is back to the 777. IS PP-VRA/B back in service, or just one?

RG will keep B777 service to JFK, now whether they are VRA/B I do not know... RG kept Alpha and Bravo in the fleet, not very sure about all of their 757s and 737s though, but I think so...

Cheers,
PPVRA



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineJrosa From Brazil, joined Jun 2005, 367 posts, RR: 11
Reply 6, posted (8 years 9 months 4 weeks 6 hours ago) and read 1951 times:

RG will keep all of its planes! There are 2 judicial orders granting it, one in Rio de Janeiro and the other one in NYC. Also, RG is planning to put back in service soon some of the 6 737 that are on ground due to maintenance.

User currently offlineLipeGIG From Brazil, joined May 2005, 11365 posts, RR: 59
Reply 7, posted (8 years 9 months 4 weeks 2 hours ago) and read 1926 times:
AIRLINERS.NET CREW
FORUM MODERATOR

Quoting PPVRA (Reply 5):
RG will keep B777 service to JFK, now whether they are VRA/B I do not know... RG kept Alpha and Bravo in the fleet, not very sure about all of their 757s and 737s though, but I think so...

Service to JFK nowadays keeps with M11 and daily light flight GRU-JFK. 777 service is schedulled for july 1st. There are 2 RG 777 out of service. Update on RG 777 operations:

PP-VRI and VRJ - GIG-FRA / GIG-BSB-MAO
PP-VRE and VRF - GRU-FRA / GRU-SCL
PP-VRA - GRU-LIS
PP-VRB - Out of service
PP-VRC - Bad configuration / GRU-MEX (?)
PP-VRD - Bad configuration / Seems to be out of service too (?)

Quoting Jrosa (Reply 3):
RG increased its sales by 3% this week. This is great, it shows that the costumers trust RG, but also it is the result of price reductions. For instance, the shuttle service (SDU-CGH) had its price reduced in approximately R$100,00* each leg, a reduction of approximately R$200,00* in the round trip ticket. Also, this is not internet price reduction or any special deal, because I bought such (SDU-CGH-SDU) ticket yesterday at the airport counter.

*For easy reference US$1,00 worth approximately R$2,39.

Loads on SDU-CGH on the last days increased so much. Todays flights are full since 2 pm on SDU-CGH. Even with the fare reduction, profit for this route keeps it as number 1 for RG (and i believe for JJ and G3 too). It's quite incredible US$ 100,00 for a 35/40 minutes flight. I book a JFK-MIA 3 hours flight for just US$ 115,00 !
Also, SDU-CGH is a very high density (around 100 flights per day) route, even bigger than BCN-MAD.

Rgds,
Felipe



New York + Rio de Janeiro = One of the best combinations !
User currently offlinePPVRA From Brazil, joined Nov 2004, 8875 posts, RR: 40
Reply 8, posted (8 years 9 months 4 weeks 1 hour ago) and read 1908 times:

Quoting LipeGIG (Reply 7):
I book a JFK-MIA 3 hours flight for just US$ 115,00 !

That's a very good deal! You never find RT ATL-MIA (+/- 2 hours flight)for less than US$ 250,00! Who are you flying with?

Quoting Jrosa (Reply 6):
RG will keep all of its planes!

So they never really returned any aircraft? Cool  cool 

Chers,
PPVRA



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlinePPVRA From Brazil, joined Nov 2004, 8875 posts, RR: 40
Reply 9, posted (8 years 9 months 3 weeks 6 days 19 hours ago) and read 1879 times:

Quoting LipeGIG (Reply 7):
Loads on SDU-CGH on the last days increased so much. Todays flights are full since 2 pm on SDU-CGH. Even with the fare reduction, profit for this route keeps it as number 1 for RG (and i believe for JJ and G3 too). It's quite incredible US$ 100,00 for a 35/40 minutes flight.

No kidding! I counted the SDU-CGH-SDU flights for June/27 at infraero's website, and the numbers are at 84 round-trips on a sunday!!! And that's between 6am and 11 pm (CGH has a curfew).

JJ seems to have a flight every 30 minutes, while RG has theirs between 30-45 minutes. G3 varies more, from an average of 30 to 60 minutes depending on the time of the day.

Very interesting!

Cheers,
PPVRA

Note: Numbers do not take into account GRU/GIG (!).



"If goods do not cross borders, soldiers will" - Frederic Bastiat
User currently offlineThowman From United Kingdom, joined Jul 2004, 363 posts, RR: 3
Reply 10, posted (8 years 9 months 3 weeks 6 days 10 hours ago) and read 1848 times:

I am going to be flying from BOG-GIG and return in August. There are two options, Varig or Avianca.

At the moment I am inclined to go with Varig as one of the legs will be flown by an MD-11. The return ticket is quite pricey, at 500UKP on Expedia. Will my money be safe? Also, I am Star Alliance Gold, so I'd get some nice miles from the flights.

Cheers
A


User currently offlineTAP1972 From Portugal, joined Dec 2003, 396 posts, RR: 3
Reply 11, posted (8 years 9 months 3 weeks 6 days 4 hours ago) and read 1798 times:

Apart from the fact that TAP cannot interfere in the process, it's still interested on a strategic partnership.

User currently offlinePPVRA From Brazil, joined Nov 2004, 8875 posts, RR: 40
Reply 12, posted (8 years 9 months 3 weeks 6 days 1 hour ago) and read 1775 times:

Quoting Thowman (Reply 10):
The return ticket is quite pricey, at 500UKP on Expedia.

RG is under protection form the government for 160 days, so ya, you should be fine. Enjoy your trip in the MD-11 if you chose RG, great plane!

Cheers,
PPVRA



"If goods do not cross borders, soldiers will" - Frederic Bastiat
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