O Globo newspaper here in Rio reported today that Varig has plans for a LCC carrier. The company would carry the Varig brand but would be run independently from the main company. They said the same might already be chosen, "VarigPop". This report included interviews with two Varig vice-presidents (operations and commercial).
VarigPop is not a done deal yet. Varig is still studying the market and is yet to make a final decision. But the plans exist.