PPVRA
Topic Author
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Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 8:10 am

Considering RG's restructuring plan go through well, a new member of RG's main shareholder council (the FRB, also responsible for putting RG into this mess) stated a few cost-cutting measures:

1. Lay-offs are likely if the labor contracts revision proves not to be enough. RG currently employ a labor force the same size when they had 118 a/c (11.500 people), now down to 78.

2. Fleet simplification (4-5 years): Now at 12 different types of planes and engines, RG plans to reduce that number to two: B777s and B737s. He also mentioned that RG would like to work with Embraer.

3. RG needs to reduce costs by 40%, largely due to aviation fuel which currently makes up 35% of their operational costs.

4. Even possible new routes were announced (they seem to be getting a little too enthusiastic if you ask me), including ORD, IAH, YYZ and -- not again -- JNB. For the routes they may come to stop operations, expansion in the codeshare agreements will be utilized. This is all due in 2007, two years away.

5. VarigLog, RG's cargo subsidiary, has been sold to a U.S. investment fund. More information here:

http://www.airliners.net/discussions...eneral_aviation/read.main/2286584/

So it seems that the MD-11s time with RG are on count down, as well as the B767s. Interesting to see an interest in Embraer, hope they go forward with that plan.

Now the most interesting of all must be the B777 and B737 deal, sounds good to me, later on the B739 (speculation here) could substitute the B757s.

RG's labor union asked for pay cuts instead of lay-offs if it comes to that, but I think we will see both.

This all, of course, could change if an investor (such as TAP) decide to invest in RG.

Cheers,
PPVRA

Edit: a more appropiate title

[Edited 2005-08-24 01:25:28]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
RCS763AV
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 8:41 am

Those are huge fleet cutbacks! Form 118 to 78! Wow RG had been doing bad, hope the plan turns them around. It can be done! (see other examples: TA and AV)
 
commavia
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 9:08 am

Quoting PPVRA (Thread starter):
Even possible new routes were announced (they seem to be getting a little too enthusiastic if you ask me), including ORD, IAH, YYZ and -- not again -- JNB.

I agree -- a bit too overzealous. I think I can confidently say that ORD and IAH will never get off the ground, or if they do, neither will last long. Both are markets that are already domainted by a U.S. carrier -- UA in the case of ORD and CO to IAH -- and neither is a particularly huge market, especially Brazil-ORD, which apparently exists solely because of some connections, as the O&D is not that huge.

JNB and YYZ could definitely work, but probably only 3-4x weekly, IMO, and both from GRU only, not GIG.
 
EddieDude
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 9:52 am

Quoting PPVRA (Thread starter):
RG plans to reduce that number to two: B777s and B737s. He also mentioned that RG would like to work with Embraer.

It is interesting that in the medium term the MD-11 will no longer have a place within RG's fleet. The MD-11's are highly emblematic of RG, so it will be a sad loss for many. Nevertheless, this means too that RG will have to expand somehow the 772 fleet. Let's see what happens.

Quoting PPVRA (Thread starter):
ORD, IAH, YYZ and -- not again -- JNB.

I agree these are strange choices for new routes. ORD is partner SA)">UA's main hub so maybe RG is negotiating with SA)">UA in order for the two carriers to work together on this; otherwise, I also believe that this route would not last long. As for IAH, I also see this as a strange choice. SA)">CO will probably act very aggressively to protect its turf if RG goes ahead and launches this route. I don't know if cargo plays an important part of this plan, or perhaps it is the fact that Brazil's energy industry is very strong and Houston is the hemispheric capital of oil and gas. With respect to JNB, RG is probably wondering if a new attempt at JNB would be profitable since SA seems to have very profitable operations to Brazil. In any case, I tend to believe that one Star Alliance carrier flying the route for itself and on behalf of its partner is more than enough (of course I may be wrong). Finally, YYZ may work. AC is upgrading GRU from 763ER to A343 and yields seem to be very good. Maybe RG can now codeshare with AC to NRT from YYZ... this could improve the chance of success for the GRU-YYZ route.

Quoting PPVRA (Thread starter):
B739 (speculation here) could substitute the B757s.

That would be nice (I am sure you are talking about the 737-900ER's). I guess that adding such type to the fleet depends on whether the destinations served by the 752's at the moment can be reached by the 738/739ER without payload restrictions. A wingletted RG 739ER would look very nice!
Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738
 
Southamerica
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 10:18 am

Interesting.

Expecting to see what happens when these measures take place with destinations that are currently served by 763, namely BOG and CCS.

I would expect 73G service to BOG again, just right for RG's overall performance in the route, and instead, they could push for a new bilateral between Colombia and Brazil to allow daily service.



SOUTHAMERICA
 
JoFMO
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 10:20 am

One problem for RG in North America is that they doesn't serve any Star Alliance hub in the east. So it is impossible for RG offer onward their long haul flights to MIA and JFK.
They can for sure offer service to nearly any North American city through their codeshare partner AC and UA, but you can't fly RG to North America and have an US onward connection.
In Europe they can bring their passengers to the Star hubs of LIS, MAD. LHR and FRA by their own and offer onward flights by their partners.

The second options sounds more profitable for RG than the first.


I wonder what word the future owner of RG will have regarding their future fleet. If TP takes them over I could see a harmoniced long haul fleet order for them both.
 
cslusarc
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 12:05 pm

RG should consider launching flights to the "NEW" US Airways primary hubs of CLT, PHX and PHL.
--cslusarc from YWG
 
LipeGIG
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 3:31 pm

Today Varig sold their cargo business (Velog) to north american funds (for US$ 100 mm).

They announce that the money will be used to pay some past due leasing, and to put 9 aircrafts back to service (which could improve their revenues). Two of those aircrafts are in fact Boeing 777-200 (PP-VRA and PP-VRD). With more aircraft, RG will probably increase offer of service (they already announce new GRU-JFK and GRU-MIA daily light, the GIG leg is back for SCL daily light and the POA-GRU-CDG has been realocated in favor of GIG).

Quoting Cslusarc (Reply 6):
RG should consider launching flights to the "NEW" US Airways primary hubs of CLT, PHX and PHL.

Good idea and better than ORD and IAH in my opinion.

Regards,
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
hardiwv
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 4:33 pm

Quoting PPVRA (Thread starter):
Even possible new routes were announced (they seem to be getting a little too enthusiastic if you ask me), including ORD, IAH, YYZ and -- not again -- JNB

What RG management said was IAD and not IAH! I think IAD could work well, but it would have tough competition since UA will start its second daily IAD-GRU in Oct/05.

I also agree with the option above of exploring US Airways new primary hubs such as CLT, PHX and PHL, but I still see IAD as a better hub for RG connections.

Quoting PPVRA (Thread starter):
So it seems that the MD-11s time with RG are on count down

Good!

Quoting PPVRA (Thread starter):
. Interesting to see an interest in Embraer, hope they go forward with that plan.

I think this is a political statement...

Quoting LipeGIG (Reply 7):
and the POA-GRU-CDG has been realocated in favor of GIG).

Lipe: the correct itinerary of the flight is POA-GRU-CDG-AMS! Indeed, it will be relocated to GIG-GRU-CDG-AMS as of 4 Sep/05.

Rgs,
 
CV990
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 4:42 pm

Hi!

Although I like MD11 I agree that RG need to shape down a bit its fleet. I don't know if having just 2 models will be wise. Only 777 and 737 I think it's just very few. What will happens to routes that the 777 is too big?
In my opinion RG should have 3 models, the 777 yes, the 787 and the 737NG. At this moment RG have 737-300's, 400's and 500's, they then should migrate to the 600, 700, 800 and 900?
The 787 could not only make some long-haul flights replacing the 767 but also work around Brazil and even around South America. The 777 would be used on those real "heavy" routes like London, Paris and Amsterdam.
This is just my humble opinion of course. The MD11 because is a tri-jet and seeing the wai prices are going it will be a very expensive airplane to operate from now on!!! Sad but true!
Regards
CV990, the Maserati of the skies!
 
hardiwv
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 8:44 pm

Quoting CV990 (Reply 9):
The 777 would be used on those real "heavy" routes like London, Paris and Amsterdam.

Also FRA (already B777 rwo daily), MXP, MAD, LIS, CPH, LAX, MIA, JFK (already B777), in other words, all intercontinental routes should be operated with the B777.

Quoting CV990 (Reply 9):
In my opinion RG should have 3 models

Agree. Some intra-South American routes need an intermediary a/c. Of course, selective South American destinations such as MEX, EZE and SCL already receive the B777.

Rgs,
 
PPVRA
Topic Author
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RE: Bits Of Varig's Restructuring And Long Term Pl

Wed Aug 24, 2005 11:00 pm

Quoting SOUTHAMERICA (Reply 4):
Expecting to see what happens when these measures take place with destinations that are currently served by 763, namely BOG and CCS.

I agree, a little strange not to have an intermediate a/c. Although maybe increasing frequencies (BOG is 1X daily by RG, no?) could prove more succesfull.

Quoting JoFMO (Reply 5):
In Europe they can bring their passengers to the Star hubs of LIS, MAD. LHR and FRA by their own and offer onward flights by their partners.

The second options sounds more profitable for RG than the first.

MAD, LIS, MUC is what I have thought about... but I agre also, Europe would be a better way.

Quoting JoFMO (Reply 5):


I wonder what word the future owner of RG will have regarding their future fleet. If TP takes them over I could see a harmoniced long haul fleet order for them both.

And TAP is to announce a fleet renovation plan in September, the same month they will announce a new take-over plan to RG.

Quoting Hardiwv (Reply 8):
What RG management said was IAD and not IAH!

Yes indeed!! My fault guys, sorry!!

Quoting Hardiwv (Reply 8):
Quoting PPVRA (Thread starter):
. Interesting to see an interest in Embraer, hope they go forward with that plan.

I think this is a political statement...

I kinda took it in the same way, but who knows...

Cheers,
PPVRA
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
PPVRA
Topic Author
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RE: Bits Of Varig's Restructuring And Long Term Pl

Wed Aug 24, 2005 11:03 pm

Quoting CV990 (Reply 9):
The MD11 because is a tri-jet and seeing the wai prices are going it will be a very expensive airplane to operate from now on!!! Sad but true!

And now RG doesn't even have Velog anymore. It was one of my hopes to still see RG M11s around for a while...
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
MAH4546
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 11:14 pm

Quoting Cslusarc (Reply 6):
RG should consider launching flights to the "NEW" US Airways primary hubs of CLT, PHX and PHL.

Varig is trying to make money, not lose more.
a.
 
hardiwv
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RE: Bits Of Varig's Restructuring And Long Term Plan

Wed Aug 24, 2005 11:56 pm

Quoting PPVRA (Reply 11):
BOG is 1X daily by RG

BOG is 4 x week with the B763ER.

Quoting MAH4546 (Reply 13):
Varig is trying to make money, not lose more.

Good one!  Smile

Quoting PPVRA (Reply 12):
And now RG doesn't even have Velog anymore. It was one of my hopes to still see RG M11s around for a while...

I'm sure VarigLog's new owners will keep the MD-11 on the fleet. Maybe they even keep the name VarigLog since 5% will remain with 5% stake in the company.

Rgs,
 
JoFMO
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 2:56 am

If RG starts IAD (what makes sense in terms of having a star hub in USA), star would have 3daily flights to there. A little bit of an overkill.

But UA couldn't just end it's 2nd daily IAD-GRU without loosing the traffic rights to one of it's competitors.
So will UA has three options: remain it's 2nd daily, move it to anywhere else or just let their authorities be dormant and risk to loose them.

Maybe UA could use one of their authorities to fly an daily IAD-GIG. So far star has no nonstop flight from GIG to anywhere in the USA. With their hub in IAD UA could capitalize on that.
 
bsbisland
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 4:41 am

Quoting JoFMO (Reply 15):
Maybe UA could use one of their authorities to fly an daily IAD-GIG. So far star has no nonstop flight from GIG to anywhere in the USA. With their hub in IAD UA could capitalize on that.

AA flies daily MIA-GIG nonstop with 763 and at some point this year they will increase to 12x week.
 
hardiwv
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 4:49 am

Quoting BSBIsland (Reply 16):
AA flies daily MIA-GIG

I think JoFMO meant Star Alliance flights and indeed, apart from RG seasonal MIA-GIG, there is no nonstop Star flight from GIG to the US...IAD-GIG could be an option in the future.

Rgs,
 
bsbisland
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 5:09 am

Quoting Hardiwv (Reply 17):

Sorry, I didn´t notice the "star" word there
 
123
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 5:25 am

737's are sometimes too small, for instance this 27.08. RG is flying GRU-VVI-GRU with a 767 due to the high demand. With the new fleet proposal, a replacement of a 737 with a 777 would probably not take place, and thus, pax would fly with the competition = loss for RG. Surely, a mid-size plane between the 737 and 777 would be needed.
 
Avianca
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 6:13 am

Quoting Hardiwv (Reply 14):
Maybe they even keep the name VarigLog since 5% will remain with 5% stake in the company.

I am sure they will keep the Name VarigLog, well the name is well known in the market (not always as a good one) but its known.


regards
Colombia es el Mundo Y el Mundo es Colombia
 
PPVRA
Topic Author
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RE: Bits Of Varig's Restructuring And Long Term Pl

Thu Aug 25, 2005 6:17 am

Quoting JoFMO (Reply 15):
But UA couldn't just end it's 2nd daily IAD-GRU without loosing the traffic rights to one of it's competitors.
So will UA has three options: remain it's 2nd daily, move it to anywhere else or just let their authorities be dormant and risk to loose them.

By the time RG actually begins said service ther should, I hope, be a new U.S.-Brazil bilateral agreement.

Quoting 123 (Reply 19):

They can always increase frequency. Or even divide VVI and LPB into different flights.

JJ seem to be doing fine with only 2 a/c types (not counting the F100s).

Quoting Hardiwv (Reply 14):
I'm sure VarigLog's new owners will keep the MD-11 on the fleet. Maybe they even keep the name VarigLog since 5% will remain with 5% stake in the company.

Hope you're right, they are good looking birds.

Cheers
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
LipeGIG
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 4:00 pm

Quoting Hardiwv (Reply 8):
Lipe: the correct itinerary of the flight is POA-GRU-CDG-AMS! Indeed, it will be relocated to GIG-GRU-CDG-AMS as of 4 Sep/05.

Hardi, thanks for the correction. I forget about AMS.

Quoting PPVRA (Reply 21):
Quoting Hardiwv (Reply 14):
I'm sure VarigLog's new owners will keep the MD-11 on the fleet. Maybe they even keep the name VarigLog since 5% will remain with 5% stake in the company.

Hope you're right, they are good looking birds.

I do expect it too. The M11 seems to be one of the best choices in terms of second hand plane for cargo.

Rgds
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
persotvik
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RE: Bits Of Varig's Restructuring And Long Term Plan

Thu Aug 25, 2005 8:04 pm

Quoting Hardiwv (Reply 10):
Also FRA (already B777 rwo daily), MXP, MAD, LIS, CPH, LAX, MIA, JFK (already B777), in other words, all intercontinental routes should be operated with the B777

CPH is still served by M11, I saw it there yesterday evening, departed for LHR Smile
Just love flying
 
LipeGIG
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RE: Bits Of Varig's Restructuring And Long Term Plan

Fri Aug 26, 2005 6:33 pm

Quoting Persotvik (Reply 23):
Quoting Hardiwv (Reply 10):
Also FRA (already B777 rwo daily), MXP, MAD, LIS, CPH, LAX, MIA, JFK (already B777), in other words, all intercontinental routes should be operated with the B777

CPH is still served by M11, I saw it there yesterday evening, departed for LHR

The only routes served by RG 777 nowadays are GIG-FRA, GRU-FRA, GRU-MEX and GRU-JFK. All the others keep M11 and 763ER service. I believe Hardi tried to explain only the future of the routes, not the present.

Rgds,
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
TP727
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 1:18 am

Are there any plans for new acft? Are they planning on getting those planes on the second hand market or there are planes to place new orders? It´s difficult to see RG having any credit to order any new acft, but with the new investors coming, and putting money in the company it could happen.
They really need to get new metal, also some product (F/C/Y) improvement is needed.

TP727
 
EddieDude
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 1:51 am

The resolution of a U.S. court due very soon regarding the repossession of some leased aircraft will be crucial to the continuation of the operations of RG in the short-term and will also affect the future strategy in terms of route planning. Anybody has any details or forecasts?
Next flights: MEX-LAX AM 738, LAX-PVG DL 77L, SHA-PEK CA 789, PEK-PVG CA A332, PVG-ORD MU 77W, ORD-MEX AM 738
 
LipeGIG
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 2:30 am

See guys:
RG has plans to lease some 763's on the short run. With the money received on VELOG's sell, they probably will put at least 75% of leasing past due installments in order, also they will put back into their network 2 777-200 which nowadays is parked @ GIG waiting for new engines (PP-VRA owner by ILFC and PP-VRD probably owned by UA).
The info i have states that in 2 or 3 years all M11 will be out of service and replaced by 777 state-of-art aircrafts. We all know that there is no availability of such aircraft in the market, and some drops are only expect when 787 become operational.
So:
1- Varig will probably order some aircrafts as soon as they solve the past-due leasings.
> What about their credit --> Boeing probably will think that a good Varig is better with Boeing aircrafts then see Varig flying Airbus and recovering their financials.
2- Varig need at least 12 Boeing 777 in order to run all the routes they have nowadays and are operated with M11 (two for MIA, two for MAD, two for MXP, two for LHR-CPH, two for CDG-AMS, one for LAX and one for improve service or new route)
3- The final agreement RG and Brazilian Government probably will take place as sonn as FRB sells RG control. It will reduce RG debt in BRL 6 billion (updated numbers)
4- Aerus (Pension Fund) can convert their credits with RG into a lower stake position (5 to 7,5%). Better for them that RG flies otherwise they will loose BRL 1 billion.
5- VEM could be partially sold to GE in order to solve 100% of past-due leases, its a way to allows RG to access financial markets overseas (as well as US Eximbank)

With the cash flow received they are able to keep operations during the next 8 to 12 months. Intl demand keeps very high but prices for domestic tickets seems to be very low while demand still grows.

Rgds,
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
Brasuca
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 2:40 am

Quoting PPVRA (Thread starter):
Now at 12 different types of planes and engines

I cannot count up to 12. Can you clarify?

Quoting EddieDude (Reply 26):
The resolution of a U.S. court due very soon regarding the repossession of some leased aircraft will be crucial to the continuation of the operations of RG in the short-term and will also affect the future strategy in terms of route planning.

I don't think tihs will happen, as LipeGIG has just mentioned: "the money will be used to pay some past due leasing, and to put 9 aircrafts back to service".

Quoting JoFMO (Reply 15):
But UA couldn't just end it's 2nd daily IAD-GRU without loosing the traffic rights to one of it's competitors.
So will UA has three options: remain it's 2nd daily, move it to anywhere else or just let their authorities be dormant and risk to loose them.

It's more likely to see UA resuming their LAX operations, if RG pulls out as RG would launch their own IAD flights.

Quoting Hardiwv (Reply 8):
Interesting to see an interest in Embraer, hope they go forward with that plan.

I think this is a political statement...

Ei! Hoe gaat het? Big grin
It looks more than a political statement to me, as they've been one major player of EMB Jets in Brazil.
Varig, Varig, Varig
 
Southamerica
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 3:01 am

Quoting PPVRA (Reply 11):
Although maybe increasing frequencies (BOG is 1X daily by RG, no?) could prove more succesfull.

Going from the current 4 weekly flights to daily and downgrading BOG to 73G would probably be viable, but the bilateral between Brazil and Colombia only allows one airline from each country to fly 4 times per week, so all the positions are being fully-used [Remember AV flies 4x week as well].

That's why I mentioned that maybe in the future both airlines could push for a revision of the agreement. Not only RG, but there's a strong rumor floating around that AV has plans to re-structure its whole South American operations, and this would include dropping GIG. GIG and SCL are AV's weakest South American markets. Though, for the whole project to take place, more aircraft would be needed, especially 757. For the time being, GIG still appears in AV's schedules indefinitely.



SOUTHAMERICA
 
LipeGIG
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 3:23 am

Quoting Brasuca (Reply 28):
Quoting JoFMO (Reply 15):
But UA couldn't just end it's 2nd daily IAD-GRU without loosing the traffic rights to one of it's competitors.
So will UA has three options: remain it's 2nd daily, move it to anywhere else or just let their authorities be dormant and risk to loose them.

It's more likely to see UA resuming their LAX operations, if RG pulls out as RG would launch their own IAD flights.

I don't think RG will drop LAX route. What probably will happen is drop LAX-NRT leg. LAX could be even more profitable as this is the only South America flight to California. RG can easily fly 3 or 4 times per week GIG-GRU-LAX with a single aircraft (and not two as nowadays).

Rgds,
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
LipeGIG
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 3:32 am

Quoting SOUTHAMERICA (Reply 29):
AV has plans to re-structure its whole South American operations, and this would include dropping GIG. GIG and SCL are AV's weakest South American markets. Though, for the whole project to take place, more aircraft would be needed, especially 757. For the time being, GIG still appears in AV's schedules indefinitely.

SouthAmerica, i think that this re-structure will wait for the new F100 fleet. OceanAir and AV could take advantage of this and start a code-share with OceanAir on GIG-GRU.
How are the loads for GIG-GRU-BOG nowadays ?

Rgds.
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
Southamerica
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 3:45 am

Quoting LipeGIG (Reply 31):
SouthAmerica, i think that this re-structure will wait for the new F100 fleet.

Could be. Though AV's plans are to basically put the F-100s on regional and domestic routes which currently see F-50 service and have exceeded the prop's capacity. Medellin-Barranquilla and Bogota-Pasto could be a couple of examples.

Quoting LipeGIG (Reply 31):
How are the loads for GIG-GRU-BOG nowadays ?

Acceptable, though nothing special, not even in heavy travelling periods. AV [76% load] fills better than RG [57% load], though yields are decent for both carriers. The bulk of AV's passengers stay in GRU, with a smaller proportion continuing to GIG.




SOUTHAMERICA
 
hardiwv
Posts: 4341
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 5:01 am

Quoting SOUTHAMERICA (Reply 32):
AV [76% load] fills better than RG [57% load], though yields are decent for both carriers.

RG offers more seats in the market. RG operates to BOG B763 for the 4 weekly flights while AV operates 2 x week B767 and 2 x week B757.

Loads may not be high, but if you have high loads on business class it drives yields upwards and turns the flights profitable. This is the case of the GRU-BOG market.

Quoting SOUTHAMERICA (Reply 32):
The bulk of AV's passengers stay in GRU, with a smaller proportion continuing to GIG.

I dont think AV will axe GIG, as it provides AV with the healthy balance of the leisure pax on its flight to Brazil. It could be only 10-20% of the total load, but it makes a difference. [also, GIG is home of AV's new boss. His house is in Rio, so you have the sentimental attachment].

Quoting SOUTHAMERICA (Reply 29):
the bilateral between Brazil and Colombia only allows one airline from each country to fly 4 times per week,

This is nonsense. They should revise this agreement. Liberalising the agreement could also lead airlines (maybe GOL?) to open routes such as MAO-BOG as RG already operated in the past with the B737.

Rgs,
 
hardiwv
Posts: 4341
Joined: Sat Oct 09, 2004 11:30 pm

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 5:15 am

Quoting Brasuca (Reply 28):
Ei! Hoe gaat het?

Your Dutch improved really quickly? You have to tell me what happened in AMS after we last saw each other!  Wink I will send you an email this weekend. Check it out! (I think I will be in BSB next month but very briefly like 2 days only).

Quoting Brasuca (Reply 28):
It looks more than a political statement to me, as they've been one major player of EMB Jets in Brazil.

Not under the current conditions. It is very expensive to lease Embraers in Brazil...I know, complete non-sense!!! [this explains why no airline in Brazil operates Embraer Jets].

Rgs,
 
Southamerica
Posts: 2298
Joined: Tue Dec 02, 2003 2:56 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 5:44 am

Quoting Hardiwv (Reply 33):
RG offers more seats in the market.

Not enough to justify the huge difference in loads between AV and RG. Take this past June for example, 12.457 seats were offered in the BOG-GRU-BOG market; 6.480 of them were offered by RG and 5.977 by AV.

Still, of the 8.327 passengers actually trasported, RG carried 3.713, while AV had 4.614 onboard.

Quoting Hardiwv (Reply 33):
RG operates to BOG B763 for the 4 weekly flights while AV operates 2 x week B767 and 2 x week B757.

Don't take that for granted; AV has no definite pattern when it comes to their deep South American destinations. It's common to find weeks when AV operates its GRU flights exclusively on 762ER, and it's logical baring in mind that the 757s are being more tightly used than the 762s.

Quoting Hardiwv (Reply 33):
Loads may not be high, but if you have high loads on business class it drives yields upwards and turns the flights profitable. This is the case of the GRU-BOG market.

I agree. The yields, not only in Biz, but in general are not bad anyways, but it's said that even though Business Class registers fine occupation, most of the high-yielding passengers get off the plane in GRU.

Quoting Hardiwv (Reply 33):
I dont think AV will axe GIG, as it provides AV with the healthy balance of the leisure pax on its flight to Brazil. It could be only 10-20% of the total load, but it makes a difference.

For now, it's a rumor that I've been hearing since the first semester of this year, and later a.net user AV757, who works as a 757/767 captain for AV also stated that AV wanted to drop GIG later this year.

AV, unlike most American/European carriers flying to Brazil, doesn't leave its aircraft parked in the apron waiting the whole day, no. AV needs its aircraft to return to BOG as fast as they can, and the GRU-GIG-GRU does not help much. As I said, AV's 757 are scarce, not only are they used in several of the daily Colombia-Miami area flights, but also to Mexico City, Quito, New York, Buenos Aires and Santiago.

CCS recently lost 757-service from AV [although gaining daily definite 763ER service], I wouldn't be surprised if GIG followed.

Quoting Hardiwv (Reply 33):
This is nonsense. They should revise this agreement.

Definitely, and many of the bilaterals seem ridiculous. Despite this, I think that the agreement with Brazil is one of the most flexible ones, and could be renegotiated if airlines wish to fly more frequently.



SOUTHAMERICA
 
hardiwv
Posts: 4341
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 6:04 am

Quoting SOUTHAMERICA (Reply 35):
Still, of the 8.327 passengers actually trasported, RG carried 3.713, while AV had 4.614 onboard.

Tks for the data. However, my statement still holds: RG offers more seat in the market. RG dominates the market from Brazil, while AV captures market in other Andean countries, in the Caribbean, and Colombia of course.

Quoting SOUTHAMERICA (Reply 35):
even though Business Class registers fine occupation, most of the high-yielding passengers get off the plane in GRU.

As is the case with all other airlines, if not they fly nonstop to GIG, i.e. AR, LA, AF, TP, IB, AA, etc...

Quoting SOUTHAMERICA (Reply 35):
CCS recently lost 757-service from AV [although gaining daily definite 763ER service], I wouldn't be surprised if GIG followed.

I would not be surprised of such as decision. GRU-GIG is such as short leg and there is no shortage of flights GRU-GIG. Even because AV could easily fly their pax GRU-GIG with OceanAir. I remember last year OceanAir operated GRU-SDU. This would be even a better flight arrangenment meaning that AV pax would then arrive in downtown Rio!

My guess is that only about 10-20% of AV pax continue onwards to GIG, if that much! Would you manage to get figures for this? [I took RG LIM-GRU-GIG B757 last month and only about 10 pax (!!!) continued to GIG, although the flight got full in GRU with pax fron other RG connecting flights].

Quoting SOUTHAMERICA (Reply 35):
I think that the agreement with Brazil is one of the most flexible ones, and could be renegotiated if airlines wish to fly more frequently.

Most certainly RG and AV dont want to touch the agreement as it could "open the gate" to competition, i.e. GOL. But I'm sure they will have to revise the agreement at some stage. (Chile-Brazil was just revised last month).

Rgs,
 
Southamerica
Posts: 2298
Joined: Tue Dec 02, 2003 2:56 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 6:20 am

Quoting Hardiwv (Reply 36):
Tks for the data. However, my statement still holds: RG offers more seat in the market.

Yes, true, I never said you were wrong. RG offers more seats, AV carriers more passengers.

Quoting Hardiwv (Reply 36):
I would not be surprised of such as decision.

I don't get it. First you said that you didn't believe AV would drop GIG, and now the decision would not surprise you?  Confused

Quoting Hardiwv (Reply 36):
Would you manage to get figures for this?

Unfortunatley I can't. But if AV's case is similar to what you experienced in your past flight from LIM, then no wonder they are seeking to drop GIG. As I said, the plane would return earlier to BOG and would be available for more flights.


SOUTHAMERICA
 
hardiwv
Posts: 4341
Joined: Sat Oct 09, 2004 11:30 pm

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 6:32 am

Quoting SOUTHAMERICA (Reply 37):
Yes, true,

Tks for recomnirming my statement.

Quoting SOUTHAMERICA (Reply 37):
RG offers more seats, AV carriers more passengers.

It would be interesting to look at the yields. RG performs quite well on Business Class in its Latin American network.

Quoting SOUTHAMERICA (Reply 37):
First you said that you didn't believe AV would drop GIG, and now the decision would not surprise you?

If OceanAir provides AV with onward connection to Rio, which is plausible. Maybe it could even enhance AV presence in Rio, provided OceanAir flies GRU-SDU!

Quoting SOUTHAMERICA (Reply 37):
if AV's case is similar to what you experienced in your past flight from LIM, then no wonder they are seeking to drop GIG. As I said, the plane would return earlier to BOG and would be available for more flights.

If AV experiences the same of my last RG flight they would not be flying to GIG. But I dont know so cannot affirm anything. I assume loads are at least 10-20%. Still, if they are low-yielding it would be cheaper to simply axe GIG. So AV must be performing in GIG...business is business and not charity.

Rgs,
 
Brasuca
Posts: 684
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 6:33 am

Quoting Hardiwv (Reply 34):
I will send you an email this weekend.

Can't wait to read from you  Smile Dank u wel

Quoting Hardiwv (Reply 34):
It looks more than a political statement to me, as they've been one major player of EMB Jets in Brazil.

Not under the current conditions. It is very expensive to lease Embraers in Brazil...I know, complete non-sense!!! [this explains why no airline in Brazil operates Embraer Jets].

Leasing EMBs might not be the toughest part.. Yes, it's actually cheaper to lease them abroad, but it sounds less logical ordering 739ER than leasing EMBs.
I know they are far from being competitors, but the list price of the new 739ER is $66.5 million to $77 million - No chance for RG in the short-term plans.
Moreover, operating EMBs Jets won't be something new for RG. They did it once, and could easily resume it, encouraged by the Gov (which is in favor of both: RG and Embraer).
If they shall not operate Embraer Jets because of high price, then we can forget about 739ER and see them with either 757 or 767 as the medium capacity a/c.
Varig, Varig, Varig
 
RCS763AV
Posts: 3645
Joined: Mon Jun 14, 2004 1:22 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 6:59 am

Quoting Hardiwv (Reply 36):
Tks for the data. However, my statement still holds: RG offers more seat in the market. RG dominates the market from Brazil

You mean BOG-Brazil? Dont think so. Its a tie.

Quoting SOUTHAMERICA (Reply 37):
As I said, the plane would return earlier to BOG and would be available for more flights.

To do what? BOG-CTG-BOG? The segment is so short i dont think it is reasonable to drop it...of course i leave that to management. But also remeber the other rumor which is that AV wanted to keep GRU 4x a week and GIG 3x a week both nonstop. Anyway, its just rumors. Were gonna have for the 6th 757 to arrive and see how they work it.
 
flyyul
Posts: 4394
Joined: Sun Jun 25, 2000 11:25 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 7:12 am

So Varig wants to compete with Air Canada 343's daily on the route.

If Im Varig... re-thinking is needed
 
hardiwv
Posts: 4341
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 7:16 am

Quoting RCS763AV (Reply 40):
But also remeber the other rumor which is that AV wanted to keep GRU 4x a week and GIG 3x a week both nonstop.

Interesting, so in fact AV wants to operate GIG nonstop.

Quoting FLYYUL (Reply 41):
So Varig wants to compete with Air Canada 343's daily on the route.

If Im Varig... re-thinking is needed

Why?

Quoting Brasuca (Reply 39):
Leasing EMBs might not be the toughest part..

Nadson: Tks for the insights!

Rgs,
 
PPVRA
Topic Author
Posts: 7865
Joined: Fri Nov 12, 2004 7:48 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 11:13 am

Quoting Brasuca (Reply 28):
Quoting PPVRA (Thread starter):
Now at 12 different types of planes and engines

I cannot count up to 12. Can you clarify?

There was an article that counted up to 13, but they also included different interiors.

This is what I have:
B777 - Two different engines (2)
MD11 - Two different engine makers, IIRC + two different engine on each a/c (engine #2 is not the same as #1 and #3, so 4 engines for the MDs)
B767 - (1 AFAIK)
B757- (1)
B737- Classic and NG. Not sure as far as the engines go. (2)
B727- VELOG. Don't know about the engine either (1)
DC-10- VELOG. Don't think the engines interline with the MD11s (2)

So I got 13! Expressively shows their fleet inneficiency there... I like the M11s, but...

Quoting Hardiwv (Reply 42):
Quoting Brasuca (Reply 39):
Leasing EMBs might not be the toughest part..

Nadson: Tks for the insights!

Also, I believe the govt. is looking into the issue.

Cheers,
PPVRA

[Edited 2005-08-27 04:21:01]
"If goods do not cross borders, soldiers will" - Frederic Bastiat
 
flyyul
Posts: 4394
Joined: Sun Jun 25, 2000 11:25 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 11:21 am

Because there is simply not enough demand for two carriers to fly side by side on YYZ-Brazil.
 
Avianca
Posts: 5270
Joined: Tue Jan 25, 2005 5:33 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 11:24 am

Quoting Hardiwv (Reply 36):
while AV captures market in other Andean countries, in the Caribbean, and Colombia of course.

totally agree! AV is in specially very strong from Venezuela (CCS) to many destinations on the AV network (AV is always the cheapest option to travel from ccs to gru/gig) mostly 200usd under the other airlines....

regards
Colombia es el Mundo Y el Mundo es Colombia
 
Southamerica
Posts: 2298
Joined: Tue Dec 02, 2003 2:56 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 1:22 pm

Quoting RCS763AV (Reply 40):
To do what? BOG-CTG-BOG? The segment is so short i dont think it is reasonable to drop it

Man, think, I'm sure it doesn't hurt. If AV drops the GRU-GIG-GRU segments, it would translate in an arrival to BOG nearly 4 hours earlier !. If the aircraft departed back to BOG from GRU instead of having to go to GIG, it would easily make it on-time to be deployed for the flight to FLL, or to be sent to CLO to do the CLO-MDE-JFK flight, for example. Right now that's not impossible.

Quoting RCS763AV (Reply 40):
But also remeber the other rumor which is that AV wanted to keep GRU 4x a week and GIG 3x a week both nonstop.

I had never heard such a thing. The only rumor that I received from AV personnel related to their operations in Brazil was GIG getting dropped, I took it with a grain of salt at the beginning, but later got stronger when AV757 said the exact same thing in a past thread.

Plus, for AV going daily to Brazil, they would have to ask directly the authorities for a revision of the agreement, and that hasn't happened until now.


SOUTHAMERICA
 
LipeGIG
Posts: 5048
Joined: Tue May 03, 2005 7:33 am

RE: Bits Of Varig's Restructuring And Long Term Plan

Sat Aug 27, 2005 6:26 pm

I don't think they want to drop GIG as RG offers this leg. Remember that a 10 to 20% share on its customers means 460 to 920 customers.... which could use RG service. Also the number i have from some friends at GIG nowadays is 25% to 30%.

Quoting Hardiwv (Reply 38):
Maybe it could even enhance AV presence in Rio, provided OceanAir flies GRU-SDU!

As SDU presents some restrictions regarding to interstate flights on jet planes, Ocean Air cannot provide GRU-SDU with a F100, only GRU-GIG.

Regards,
Felipe
New York + Rio de Janeiro = One of the best combinations !
 
123
Posts: 614
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RE: Bits Of Varig's Restructuring And Long Term Plan

Sun Aug 28, 2005 6:20 am

Earlier in this thread I posted, that todays´RG flight to VVI was to be a 767 instead of the normal daily 737.

Turns out, I saw around noon an RG 757, and there was yet another flight to arrive (normally it´s 1xdaily).

Sure, if there is demand, you need an intermediate aircraft from 737 to 777, as I indicated earlier and todays´sight and RG schedule confirm that.

2 aircraft types for a fleet that large as RG, seems to be a mistake...
 
hardiwv
Posts: 4341
Joined: Sat Oct 09, 2004 11:30 pm

RE: Bits Of Varig's Restructuring And Long Term Plan

Mon Aug 29, 2005 1:59 am

Quoting Avianca (Reply 45):
totally agree! AV is in specially very strong from Venezuela (CCS)

Correct, and AV fares CCS-GRU via BOG are much cheaper than what RG offers. It is almost impossible to find a fare cheparer than USD900 (!!) to fly RG CCS-GRU. I'm sure AV, CM and TA capture a lot of the low-yielding segment of this route.

Quoting LipeGIG (Reply 47):
As SDU presents some restrictions regarding to interstate flights on jet planes, Ocean Air cannot provide GRU-SDU with a F100, only GRU-GIG.

Lipe: tks for the info.

Quoting LipeGIG (Reply 47):
I don't think they want to drop GIG as RG offers this leg. Remember that a 10 to 20% share on its customers means 460 to 920 customers.... which could use RG service. Also the number i have from some friends at GIG nowadays is 25% to 30%.

Agree with you, especially considering that AV is now planning to open GIG nonstop, it means that GIG must be performing quite well on their network.

Quoting SOUTHAMERICA (Reply 46):
. If AV drops the GRU-GIG-GRU segments, it would translate in an arrival to BOG nearly 4 hours earlier !.

No really, because it could turn AV flight quite unatractive as it would entail leaving GRU 2 hour earlier (i.e. 8am). 8 a.m. is not a good timing for a flight. Currently AV departs GRU about 10 a.m. I think the extra 4 hours are a good deal for AV considering that they have a foothold in the expanding GIG market!

Rgs,