Lets puts some order in the numbers here:
debt: R$7 billion = USD2.6 billion
court victory: R$2 billion = USD 700 million
current debt: R$5 billion = USD1.9 billion
The Court was considering this RG
's case against the Government for at least 8 years. It was a very difficult decision, which took a lot of time. Finally, the Supreme Tribunal came with a decision and gave victory to RG
Transbrasil also won the same case against the Government before it went bankrup. TAM and VASP also are expected to win their case in the Court. However, RG
is by and large the biggest beneficiary.
It was a "clean" victory for RG
. The problem is that they simply wont get any cash, because the Government is the main creditor of RG
(PETROBRAS, Bank of Brazil, and the National Airport Authority). RG
still has a huge debt with theGovernment.
The Government said it will appeal from the decision.
Here is the information, published BEFORE THE FINAL DECISION OF THE SUPREME COURT, WHICH HAPPENED JUST HOURS AGO
Brazil's second highest appeals court has postponed a ruling on a multimillion dollar compensation claim by Varig after a judge asked for more time to consider the case on Tuesday.
Heavily indebted Viacao Aerea Rio-Grandense (Varig) claims the government owes it about 2 billion reais to cover losses resulting from a freeze on the price of its fares from 1985 to 1992. It launched the claim in 1993.
The ruling, which could ease Varig's severe cash crunch, was postponed by the supreme justice tribunal after judge Teori Albino Zavascki requested more time to make a decision.
But before Zavascki requested the suspension, Luiz Fux, the head of the court, voted in favor of Varig's claim. Fux had stalled proceedings in May with a request for more time.
Fux's vote means two out of the tribunal's five judges have backed Varig's claim. Three votes remain to be cast.
The court set no new date to resume its deliberations.
The government faces similar claims from other airlines, including leading domestic carrier TAM;, Vasp, Nordeste, and Cruzeiro do Sul, totaling some 7 billion reais, according to the tribunal's calculations.
Some observers had hoped a ruling in favor of Varig would give new impetus to its talks with rival TAM to widen a flight sharing agreement into a full blown merger, a move that has been long encouraged by some in the government.
The net debt of Varig, a Star Alliance member, totals about 6 billion reais. The government and state companies, including airport operator Infraero and oil company Petrobras, hold more than two-thirds of the debt.
Varig has been driven to the brink of collapse in recent years as competition intensified and successive depreciations of Brazil's currency magnified its dollar-denominated fuel, aircraft leasing, and debt costs.
Last week, Carlos Wilson, the head of Infraero, said Varig was "practically state-owned" because the government was not executing its debts.
On Friday Brazilian Finance Minister Antonio Palocci scotched hopes of a state rescue package when he said the government would not inject funds into the airline.