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Rumour: RG Looking At Merger With TAM?

Sat Jan 11, 2003 3:11 am

I read a rumour today, on one of the yahoo groups that RG was looking at a merger with TAM. Varig, as you may be aware, is going through a very bad time at the moment and there is/was a distinct possibility it could go "belly up". This would, of course, be a tragedy, not least because Varig is a VERY fine airline and is effectively Brazil's flag carrier, being the most widely known Brazilian airline abroad. It has recently cancelled orders for four 777s.

Perhaps some of our Brazilian readers might be able to assist with this?

If this did happen, what name would it take? Would it simply amount to a takeover by TAM of Varig's intercontinental routes, thus the VARIG name would disappear? What kind of fleet would we be looking at? I would have to guess it would be mostly Airbus. The MD11s and 767s would probably be replaced by more A330-200s and the combined carrier would probably introduce A340-300s, possibly even A340-5/600s in time to come.

Whatever the outcome, RG is in very serious trouble and with the Brazilian economy not doing well and the new president, Lula, focusing on poverty and social issues, there's unlikely to be any government aid to get it out of its problems.
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RE: Rumour: RG Looking At Merger With TAM?

Sat Jan 11, 2003 3:16 am

Varig has today categorically denied that any such merger is being considered.
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RE: Rumour: RG Looking At Merger With TAM?

Sat Jan 11, 2003 4:34 am

It is a rumor with no foundation,- TAM taking over or merging with Varig would not be a very smart move on TAM's behalf.
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RE: Rumour: RG Looking At Merger With TAM?

Sat Jan 11, 2003 6:00 am

The whole thing has 'Disaster' written all over it!

RG are in deep trouble,TAM are holding their own considering the terrible market conditions they are operating in.

None of their fleet match.

It would be a disaster for both airlines.

Besides,i'd rather TAM survived.


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RE: Rumour: RG Looking At Merger With TAM?

Sat Jan 11, 2003 10:42 pm


Even though a merger could bring synergies in the long run, it is very unlikely to happen. TAM doens't want to holds and would not manage Varig's debts... RG is in a much worse financial situation and it is impressive it did not go belly-up yet!

Brazil cannot afford two major carriers. I foresee a future where Varig will go bankrupt and TAM will emerge as Brazil's national airline.

Life is tough... But hey! Canada and Australia went through this, so maybe, it is our turn now.

The fastest way to become a millionaire in the airline business is to start as a billionaire.

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