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LAN Injects Money Into Varig  
User currently offlineAF086 From France, joined Jan 2007, 1059 posts, RR: 8
Posted (7 years 7 months 3 days 3 hours ago) and read 3368 times:

This just came up. LAN has injected US$ 17,1 million into VARIG (the new one) and might become a shareholder of the company.

Here's the full article by Reuters - Latin American Edition (spanish only)

[Edited 2007-01-31 17:38:51]


Please insert a "smart" joke here.
33 replies: All unread, showing first 25:
 
User currently offlinePdpsol From United States of America, joined Feb 2004, 1115 posts, RR: 5
Reply 1, posted (7 years 7 months 3 days 3 hours ago) and read 3339 times:

Wow, this is big news for the aviation sector in Brasil. LA has vast experience with operating subsidiaries in regional countries; experience that will very valuable should they convert this USD 17 million into a direct equity stake in RG.

However, there is one caveat here. RG's parent company is VarigLOG, which, in turn, is already 20%-owned by a foreign entity; the US investment fund, MatlinPatterson.

Should LA convert its debt into VarigLOG equity, it may create an issue with Brasil's 20% foreign ownership threshold. It appears, however, that LA's investment is in RG directly, not in the parent company.

Nonetheless, very interesting news given all the dramatic changes currently ocurring in the Brasilian commercial aviation sector.


User currently offlinePdpsol From United States of America, joined Feb 2004, 1115 posts, RR: 5
Reply 2, posted (7 years 7 months 3 days 2 hours ago) and read 3332 times:

Additional post:

Having read LA's press release, the Chilean carrier is investing directly in RG, not the parent, VarigLOG. This makes much more sense.

RG is the "new Varig" that acquired the carrier's operating assets and routes during last year's bankruptcy process.

The market has responded very favorably to this news, with LA shares on the NYSE up over 5% today.


User currently offlineEMB195ER From United Kingdom, joined Sep 2004, 254 posts, RR: 8
Reply 3, posted (7 years 7 months 2 days 20 hours ago) and read 3090 times:

I see Varig saying good bye for StarAlliance forever and joining One World soon!!!

User currently offlineEMB195ER From United Kingdom, joined Sep 2004, 254 posts, RR: 8
Reply 4, posted (7 years 7 months 2 days 20 hours ago) and read 3091 times:

I see Varig saying good bye for StarAlliance forever and joining One World soon!!!

User currently offlineERAUgrad02 From United States of America, joined Nov 2005, 1227 posts, RR: 0
Reply 5, posted (7 years 7 months 2 days 19 hours ago) and read 3067 times:

Maybe Varig will order some 767s. Who knows. lol...


Desmond MacRae in ILM
User currently offlineViscount724 From Switzerland, joined Oct 2006, 25170 posts, RR: 22
Reply 6, posted (7 years 7 months 2 days 19 hours ago) and read 3061 times:

It sounds like LA may have plans to convert RG into LAN Brazil, like their current LAN Argentina, LAN Peru and LAN Ecuador operations which are legally separate companies with majority ownership in the 3 countries concerned to comply with legal requirements etc., but for marketing purposes are promoted as virtually one carrier along with LAN itself in Chile.

Sounds like a very smart move to me as LAN can establish a sigificant presence in the Brazil market at lower cost than starting a completely new carrier. Will be interesting to see how this develops.


User currently offlineZschocheImages From United States of America, joined Sep 2006, 150 posts, RR: 0
Reply 7, posted (7 years 7 months 2 days 19 hours ago) and read 3051 times:

Good for both of them. It is great to see RG get a new beath of life.


Why fly with 2 engines when you can have 3?
User currently offlineLipeGIG From Brazil, joined May 2005, 11436 posts, RR: 58
Reply 8, posted (7 years 7 months 2 days 18 hours ago) and read 3019 times:
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Quoting AF086 (Thread starter):
This just came up. LAN has injected US$ 17,1 million into VARIG (the new one) and might become a shareholder of the company.

Good move for LA, i can't remember a loan that produced a 5% increase on share price... just the valuation for today paid the loan!!!
Expect that it could also help new Varig to develop itself (and also to obtain more widebodies)

Felipe



New York + Rio de Janeiro = One of the best combinations !
User currently offlineKiwiandrew From New Zealand, joined Jun 2005, 8553 posts, RR: 13
Reply 9, posted (7 years 7 months 2 days 13 hours ago) and read 2902 times:
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OW already has a frightening level of dominance in Latin America with LAN Chile , Peru and soon Argentina and one other ( Ecuador , I think ? ) together with AA from North America and IB from Europe - if RG becomes LAN Brasil it really will be very difficult for either of the other alliances to gain ground - the rest of Star Alliance must be cursing SK for divesting themselves of their stake in LA several years ago


Moderation in all things ... including moderation ;-)
User currently offlineZvocio79 From United States of America, joined Nov 2006, 172 posts, RR: 0
Reply 10, posted (7 years 7 months 2 days 12 hours ago) and read 2884 times:

Quoting LipeGIG (Reply 8):

Good move for LA, i can't remember a loan that produced a 5% increase on share price... just the valuation for today paid the loan!!!
Expect that it could also help new Varig to develop itself (and also to obtain more widebodies)

Felipe

I told you LipeGiG, before Varig joins One World, there will be a LAN Brazil.


User currently offlineEMB195ER From United Kingdom, joined Sep 2004, 254 posts, RR: 8
Reply 11, posted (7 years 7 months 2 days 10 hours ago) and read 2828 times:

I don't think they will change Varig's name. Varig is stronger in Brazil than a possible LAN Brasil.

User currently offlineCXfirst From Norway, joined Jan 2007, 3060 posts, RR: 1
Reply 12, posted (7 years 7 months 2 days 10 hours ago) and read 2816 times:

If Varig did change their name into LAN Brasil, would this help in getting internaltional passengers as the LAN brand is stronger than Varig internationally.

Quoting EMB195ER (Reply 11):
Varig is stronger in Brazil than a possible LAN Brasil.

Couldn't the Brasil part bring in a lot of potential passengers from Brazil. I don't see this as much less numbers of passengers.

-CXfirst



From Norway, live in Australia
User currently offlineJJMNGR From Brazil, joined May 2004, 1018 posts, RR: 15
Reply 13, posted (7 years 7 months 2 days 7 hours ago) and read 2731 times:

Seems to me a stupid move if the intention is to turn VARIG into LAN BRASIL. They are not using their minds.

The own ABSA and ABSA is an airline with authorization to carry cargo and passengers. Much more easy for them to invest in ABSA now as a pax airline.


User currently offlineAF086 From France, joined Jan 2007, 1059 posts, RR: 8
Reply 14, posted (7 years 7 months 2 days 7 hours ago) and read 2731 times:

Quoting CXfirst (Reply 12):
If Varig did change their name into LAN Brasil, would this help in getting internaltional passengers as the LAN brand is stronger than Varig internationally.

Disagree. VARIG's brand is known worldwide not like LAN. And also one of the VARIG''s best assets is it's brand so I guess that LAN wouldn't just throw it away. Remembering that LA has a large part of brazilian cargo airline Absa and they didn't change it's name to LAN Brazil Cargo or anything like it.

The difference between LAN Argentina and VARIG is that LAN Argentina was built from zero different from a possible LAN takeover at VARIG that has a stablished brand (and a valuable one).

Quoting EMB195ER (Reply 11):
I don't think they will change Varig's name. Varig is stronger in Brazil than a possible LAN Brasil.

Agree.



Please insert a "smart" joke here.
User currently offlineBrasuca From Brazil, joined Mar 2004, 717 posts, RR: 11
Reply 15, posted (7 years 7 months 2 days 7 hours ago) and read 2720 times:

Quoting CXfirst (Reply 12):
If Varig did change their name into LAN Brasil, would this help in getting internaltional passengers as the LAN brand is stronger than Varig internationally.

No it isn't. LAN is of course better known around Spanish Latin America and Australia than VARIG is. But as far as Europe and North America are concerned VARIG is no doubt a stronger brand than LAN has ever been.



Varig, Varig, Varig
User currently offlineRJ_Delta From Chile, joined Oct 2000, 1944 posts, RR: 12
Reply 16, posted (7 years 7 months 2 days 5 hours ago) and read 2663 times:

The money injected by LAN is a type to starts its way to introduce in the Brazilian markets. Since a couple years ago, LAN has looking the brazilian market to start a subsidiary there. However the Brazilian allows only the 25% of foreing investment in a national company. Also LAN today has a internal limitations to start a new company, like a very limited fleet with demands to place a orden of new aircraft very soon, and a not consolidate LAN Argentina.

Since the end of 2005, LAN Airlines has designed a few routes to start a LAN Brazil in the future or when exist betters conditions. They includes destinatios as Rio de Janeiro, Porto Alegre, Belo Horizonte, Curitiba, Florianopolis, Brasilia and Salvador Bahia.


User currently offlineBongo From Colombia, joined Oct 2003, 1863 posts, RR: 5
Reply 17, posted (7 years 7 months 2 days 5 hours ago) and read 2641 times:

One World´s LAN Brasil, hummm...sounds nice!


MDE: First airport in the Americas visited by the A380!
User currently offlinePEET7G From Hungary, joined Jan 2007, 695 posts, RR: 0
Reply 18, posted (7 years 7 months 2 days 4 hours ago) and read 2618 times:

Great move by LAN if done smartly! Excellent entry point to the Brazilian market, however I wonder what will happen with the branding... LAN Brazil would be a logical and unifying choice, but as stated before me VARIG is a well established brand all over the world.

Even to me (who knows more of the many shameful troubles of the dieing VARIG) it is a brand of good memories and wonderfull flights taken with them in the late 80's and early 90's... nothing beats those days...jumpseating on their DC10's... man, do I miss those days!!!  hissyfit 



Peet7G
User currently offlineAwysBSB From Brazil, joined Sep 2005, 561 posts, RR: 0
Reply 19, posted (7 years 7 months 2 days 3 hours ago) and read 2543 times:

At least ANAC has not received any official solicitation for a partnership Varig-LAN yet.
I hope that partnership does not succeed and Varig finds good Brazilian investors.


User currently offlineBA787 From United Kingdom, joined Jun 2006, 2596 posts, RR: 7
Reply 20, posted (7 years 7 months 2 days 2 hours ago) and read 2536 times:

Good news for LAN. I hold the view that they are the best Latin American carrioer by far, so any expansion is excellent


As for Varig rebranding etc, doubt it will happen. Varig has a very well recognised brand image and is a well respectyed airline. LA is also well respected, but doing a TUIfly type thing wouldnt be great for RG, they have a loyal following which LA wont want to compromise. Still watch this space, I see a bigger investment in the near future, I don't think VARIGLOG will and ever were in it for the long-haul


User currently offlinePdpsol From United States of America, joined Feb 2004, 1115 posts, RR: 5
Reply 21, posted (7 years 7 months 2 days 2 hours ago) and read 2526 times:

Quoting AwysBSB (Reply 19):
Varig finds good Brazilian investors

What's wrong with a good Chilean investor like LA? LA has vast experience operating affliates in the region and could turn RG into a wonderful domestic and international carrier.

Brasil's financial markets [and Chile for that matter] are flush with investment capital right now and I have no doubt local private investors would express interest in RG should it produce a viable business plan developed by an experienced strategic investor, such as LA.


User currently offlineBlsbls99 From United States of America, joined Sep 2004, 345 posts, RR: 0
Reply 22, posted (7 years 7 months 2 days 2 hours ago) and read 2497 times:

I thought I had read somewhere that Varig was going to be rebranded as Nordeste?


319 320 313 722 732 733 735 73G 738 739 742 752 763 772 CRJ D9S ERJ EMB L10 M88 M90 SF3 AT4
User currently offlineAwysBSB From Brazil, joined Sep 2005, 561 posts, RR: 0
Reply 23, posted (7 years 7 months 2 days 2 hours ago) and read 2481 times:

Quoting Pdpsol (Reply 21):
What's wrong with a good Chilean investor like LA?

I would not like to see RG's network being conditional to LA's network. 4M, LP and XL have given up some growth opportunities because of LA's network limitations.
Furthermore, Latin American air market needs more competition, not consolidations!

Quoting Blsbls99 (Reply 22):
I thought I had read somewhere that Varig was going to be rebranded as Nordeste?

That was a press' mistake.

[Edited 2007-02-01 19:12:36]

User currently offlineRJ_Delta From Chile, joined Oct 2000, 1944 posts, RR: 12
Reply 24, posted (7 years 7 months 2 days 1 hour ago) and read 2441 times:

It's possible that in the near future we'll see a Varig as an associate airline to LAN 's network, not a subsidiary as LAN Peru, LAN Ecuador or LAN Argentina.

Now if LAN participates as a Varig shareholder, LAN will acces to request permission as a brazilian national carrier, similar as LAN Cargo is doing with Absa Cargo.


25 Wazobia : As some one who books groups space to Brazil I have seen our cost greatly increase and service decrease since Varig stopped flying to the US. I hope
26 LipeGIG : IMO, you're right about LAN Brazil, but i don't think that it will be thru Varig. Disagree, Varig brand is stronger in Brazil and is where they alway
27 Zvocio79 : Guys from Brazil are been nationalist instead of rational.....you can say Varig was bigger than LAN and serviced more cities, but you can’t never sa
28 Post contains images Acontador : I can see quickly a new Varig rising from the ashes. I suspect they will keep the brand name, but in all other terms it will become a LAN Brazil. Mayb
29 FMAL : I read this "option" to convert the loan into Varig's stock as a way for LAN to wait out the possible change in Brazilian Legislation authorizing larg
30 Gemini573 : Yeah, look at where they are now? $63.00 a share!!! They are definitely doing something right. I bought some at $33.00.
31 United787 : Assuming Varig becomes Lan Brasil or something similar and joined OneWorld, what would happen with TAM? Could Star Alliance pick them up?
32 WA707atMSP : TAM has said they don't want to join an alliance at this point. If they do join, I think they're more likely to join Sky Team, because of their ties
33 SAOAP : Not all Brazilians think this is a bad move... I for one think this is the best thing that could happen and could lead the way for the consolidation
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