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Airlines

Name: VARIG LOG
7JetSet7 Code: VLO
Status: Currently Not Operational
Region: LATIN AMERICA
City: SAO PAULO
Country: BRAZIL
Employees 1952
Web: variglog.com.br
Email: vendas.geral@variglog.com
Telephone: +55 1135295335
Fax: +55 2124682455
Sita:
Background
(definitions)

Click below for data links:
VLO-OCT05-A
VLO-SEP05-A

Formed and started operations in 2000. Domestic and international, scheduled & charter, cargo, jet airplane services.

Address:
Ponta Do Galeao
Nr 330 Ilha Do Governador
Terminal de Cargas,
Rio de Janeiro 21949, Brazil

Address:
Rua Fidencio Ramos 223
14.andar, Vila Olimpia
CEP-04551-010 Sao Paulo (SP), Brazil

BRAZIL (FEDERATIVE REPUBLIC OF BRAZIL) WAS ESTABLISHED IN 1822, IT COVERS AN AREA OF 8,511,965 SQ KM, ITS POPULATION IS 165 MILLION, ITS CAPITAL CITY IS BRASILIA, AND ITS OFFICIAL LANGUAGE IS PORTUGESE.

JANUARY 1998: VARIG (VAR) CARGO DIVISION PLANNED TO INCREASE ITS REVENUE FROM $600 MILLION IN 1997, TO $1 BILLION BY 2000 BY ACQUIRING SEVERAL 727-200F'S, & EITHER A 747-200F, OR A DC-10-30F THIS YEAR.

JANUARY 2000: VARIG (VAR) CARGO TO TAKE OVER AIR FREIGHT BUSINESS, FROM SUBSIDIARIES, NORDESTE (NOD) & RIO-SUL (ROS).

JUNE 2000: IN SEPTEMBER 2000, WILL IMPLEMENT A CARGO MARKETING & OPERATIONS AGREEMENT WITH LUFTHANSA (DLH) TO INCREASE CARGO FLIGHTS +40%, WITHOUT PURCHASING EXTRA AIRPLANES TO EUROPE, USING LUFTHANSA GERMAN CARGO (LUB) AIRPLANES.

AUGUST 2000: VARIG (VAR) CLOSES VARIG CARGO OPERATIONS, AND INVESTS $100 MILLION OVER 5 YEARS IN NEW AIR FREIGHT SUBSIDIARY, VARIG LOGISTICA, WHICH WILL COMPETE WITH BRAZIL'S POST OFFICE. TO START OPERATIONS IN OCTOBER 2000 WITH 12 CARGO AIRPLANES & 2,000 DELIVERY TRUCKS, WITH WAREHOUSES, & DISTRIBUTION CENTERS, IN STRATEGIC LOCATIONS THROUGHOUT BRAZIL. WILL DELIVER CARGO AND PARCELS, TO ALL OF BRAZIL'S 5,500 MUNICIPALITIES, WITHIN 6 MONTHS.

JOSE ROCHA LIMA, CEO, VARIG LOGISTICA (VLO), SAYS BUSINESS WILL GROW 600% IN 5 YEARS.

SEPTEMBER 2000: VARIG (VAR) FORMS NEW AIR CARGO SUBSIDIARY, NAMED VARILOG (VLO) (FOR LOGISTICS), TO START IN OCTOBER 2000.

JANUARY 2001: VARIG (VAR) RESTRUCTURES ORGANIZATION, INCLUDING FRB-PAR INVESTMENTS, A NEW CREATION OF THE RUBEN BERTA FOUNDATION, WHICH HAS ALWAYS BEEN THE CONTROLLING ORGANIZATION. (VAR) IS THE LARGEST HOLDING, BUT 2 ADDITIONAL HOLDINGS, INCLUDING VARIG PARTICIPATION EM TRANSPORTS AEREAS (VPTA), & VARIG PARTICIPACOES EM SERVICOS COMPLEMENTARES (VPSC). (VPTA) NOW CONTROLS RIO-SUL (ROS), NORDESTE (NOD), & ROTATUR (TRAVEL AGENCY), WHILE (VPSC) INCLUDES HOTELS, SATA (AIRPLANE GROUND SERVICE GROUP) & AMADEUS BRASIL (RESERVATIONS SYSTEM).

VARIG LOGISTICA (VARIG LOG) (VLO), WILL BE (VAR)'S CARGO OPERATIONS, & ALSO PART OF (VPTA). WILL HAVE 5 727-100F'S, 2 727-200F0F'S, & 2 DC-10-30F'S.

FEBRUARY 2001: VARIGLOG (VLO) EXPANDS IN ARGENTINA, CHILE, COLOMBIA, MEXICO, PERU, URUGUAY, AND VENEZUELA. HAS 15% MARKET SHARE IN BRAZIL. TO USE DC-10'S TO SAO PAULO, LIMA, MEXICO CITY, (LAX), BOGOTA, (MIA), AND NY.

1 DC-10-30F (179), CURTIS & CO LEASED. PLANS TO ACQUIRE 5 747-200F'S.

July 2002: DC-10-30F (PP-VQY) painted with "VARIGLOG" (VLO) on the side of the airplane, with "VARIG" in blue, and "LOG" in gold on upper white fuselage, with lower, dark blue.

February 2004: Varig Log (VLO), the cargo entity of (VAR) joined the Global Freight Exchange, a neutral reservations system for the airfreight industry.

November 2004: 1,345 employees.

July 2005: Varig Log (VLO) is a cargo jet airplane subsidiary of Varig (VAR).

1,345 employees.

(IATA) Code: LC -183. (ICAO) Code: VLO (Callsign - VELOG).

Parent organization/shareholders: Varig (VAR) (100%).

Main Base: Sao Paulo Guarulhos airport.

Domestic, Scheduled Destinations: Belem; Brasilia; Cruzeiro do Sul; Cuiaba; Fortaleza; Manaus; Porto Alegre; Porto Velho; Recife; Rio Branco; Salvador; & Sao Paulo.

International, Scheduled Destinations: Frankfurt; Guayaquil; Lima; Los Angeles; Mexico City; Miami; New York; Sal, & Santiago.

November 2005: Varig (VAR) and its controlling shareholder, the Rubem Berta Foundation have chosen (TAP) Portugal as its partner in a debt-restructuring process aimed at saving it from liquidation, the Brazilian airline said yesterday. (TAP)'s proposal was chosen over six other offers. The plan includes an initial $62 million in financing to pay off debts owed to overseas leasing companies, avoiding the repossession of 20 - 40 airplaners In a second phase, (TAP) would help Varig (VAR) with a $500 million recapitalization effort. The (TAP) plan still needs to be approved by Brazil's federally owned development bank BNDES, according to reports. Last week, (TAP) chairman Fernando Pinto told Diario Economico that the carrier is ready to inject about $500 million into Varig (VAR) in return for a 20% stake. Varig (VAR) filed for bankruptcy in July with debts of approximately R$7.7 billion/$3.4 billion. A New York bankruptcy court has given it until Nov 9 to conclude negotiations.

(TAP) Portugal will assume a controlling interest in Varig Engineering and Maintenance (VEM) and VarigLog (VLO) (Logistics and Cargo) as part of its participation in the carrier's restructuring. Total consideration for the controlling stakes is $62 million. A (TAP) spokesperson said that the airline will not be drawing on its own cash for the transaction. Two-thirds of the amount will be financed by Brazil's National Economic and Social Development Bank and the balance by external investors, whom the spokesperson declined to identify. (TAP) said in a statement that the deal would allow Varig (VAR) "to obtain the necessary capital funds to respond to its immediate cash needs that will allow the company to pursue its regular operations." It added that (VEM) represents a strategic objective to (TAP) as the company is focusing on expanding its jet airplane Mainternance Repair & Overhaul (MRO) unit in South America. VarigLog (VLO) also offers potential for the development of (TAP)'s cargo business. The company operates an 11-freighter fleet worldwide.

December 2005: Varig (VAR)'s bankruptcy reorganization took a new twist after a Brazilian buyout fund reportedly took controlling interest in the airline's parent, Varig SA. According to "Reuters," the fund, Docas Invertimentos, owned by Nelson Tanure, paid $112 million to the Rubem Berta Foundation for 25% of the voting shares owned by the Foundation. It agreed to "rent" a further 42% of the shares, giving it control of the airline. (TAP) Portugal previously agreed to participate in a restructuring of Varig (VAR) that would see the Foundation lose control of the carrier.

Later, Varig (VAR) creditors rejected the carrier's sale to Docas Investimentos, a fund owned by newspaper owner Nelson Tanure, who paid $112 million for a 25% stake in (Varig) SA (VAR) and a 10-year "lease" on an additional 42%. The decision drew cheers from (VAR) employees, according to the Associated Press. A (VAR) spokesperson said creditors have approved an alternative recovery plan involving investment funds and that the airline intends to put into service next year the 18 airplanes currently grounded. It has until January 8 to present its restructuring plan.

January 2006: Varig (VAR), which has been operating under Brazilian bankruptcy protection since last June, announced that it completed the sale, announced in December, of two subsidiaries for $72 million. A portion of the proceeds from the sales was used to pay off the lessors.

VEM-Varig Engineering & Maintenance went to Aero-LB, a consortium led by (TAP) Portugal. VarigLog (VLO), its cargo and logistics subsidiary, also went to (TAP), which then sold it to Volo Brasil, a consortium headed by USA-based Matlin Patterson, a private equity fund.

Both consortia, according to Varig (VAR), also committed to play important roles in the recovery of the carrier, whose restructuring plan was approved by its creditors' committee on December 19.

April 2006: VarigLog (VLO), the former cargo and logistics subsidiary of Varig (VAR) that was sold in January to a Brazilian holding company financed in part by USA fund MatlinPatterson, offered to buy the restructuring airline for $350 million, according to press reports. The bid was scheduled to be presented to Varig (VAR)'s creditors.

VarigLog (VLO), raised its offer to buy the struggling Brazilian airline to $400 million, according to a (VLO) statement cited in press reports. It had offered $350 million two weeks ago. Reports from Brazil indicated the carrier is canceling flights, running out of cash and at risk of shutting down. (VAR) said in a statement that the buyout proposal requires approval of its board.

May 2006: Varig (VAR) will auction off a portion of its assets to raise the money it needs to maintain operations under a plan approved yesterday during a meeting in Rio de Janeiro of employees, government officials and the carrier's creditors, according to media reports. The government confirmed it will not bail out the bankrupt carrier, which reportedly will be split into two companies and sold in approximately two months. Two options are on the table, depending on investor intentions. One would split (VAR) into a flight operations company and a service unit handling distribution, reservations, etc. The operations unit would be auctioned off at a minimum $860 million, with the proceeds used to pay off the debt of the service unit. The other option would split (VAR) into domestic and international carriers, with the proceeds from the sale of the domestic carrier bailing out the new international airline, according to Bloomberg.

(VAR) has received bids from 17 companies interested in buying its flight operations, including rivals TAM (TPR), Gol (GOT), OceanAir and WebJet, according to Merrill Lynch. Under a plan put forward earlier this month, (VAR)'s Flight Operations will be separated from its commercial and non-airline activities and sold separately. The minimum bid for the entire flight operation is $860 million, which includes 46 airplanes. However, the international and domestic arms could be sold separately, with a minimum bid of $700 million for the domestic arm, including 30 airplanes.

Brazil's National Development Bank, which is charged with evaluating the feasibility of the plan, has said it will provide up to $250 million in financing to the winning bidder.

Also, according to Merrill Lynch, Brazil's Supreme Court recently upheld a ruling ordering the government to pay (VAR) R$3 billion /$1.4 billion in compensation for losses suffered by the airline "due to a government policy to control airfares from 1985 - 1992 as part of its plan to control inflation."

Merrill said further that Petrobras, the state-owned fuel supplier, is seeking to reverse a separate lower court ruling requiring it to provide (VAR) with fuel without guarantee of payment.

June 2006: Varig (VAR)'s future is up in the air again as NV Participacoes, the employee-led investor group that was the only bidder at the June 8 auction of the bankrupt carrier, failed to make an initial $75 million down payment at the end of the month, forcing a Rio de Janeiro bankruptcy court to cancel the deal. Judge Luiz Roberto Ayoub told reporters he will meet with government officials, creditors and accountants to determine (VAR)'s fate, which could include another auction or liquidation.

The airline's former freight unit, VarigLog (VLO) made another offer for its former parent, this time for $485 million, according to press reports. (VLO) was purchased in January by a consortium headed by investment firm Matlin Patterson. That offer is under review by the court and the Brazilian government. Approximately two-thirds of (VAR)'s flights were cancelled on Friday.

(VLO), has until Wednesday to finalize its offer for the beleaguered (VAR), according to a Rio de Janeiro bankruptcy court. After canceling the bid made by an employee-led consortium that could not make a required $75 million payment recently, the court accepted a $3 million payment from (VLO) to keep (VAR) afloat while the new bid is prepared. (VLO)'s offer reportedly has risen to around $500 million, higher than the approximately $450 million offered by NV Participacoes, but still far below the original minimum set by the court. "The request to extend the time frame came from (VAR) itself, so that its creditors and the judicial administrator can study the bid better," the court said in a statement cited by "Reuters." (VLO)'s purchase by Volo do Brasil was approved by the Brazilian government over the weekend.

(VLO) deposited an additional $1.8 million to keep (VAR) afloat, according to press reports, while a Rio de Janeiro bankruptcy court, prosecutors and creditors analyzed the freight and logistics company's $500 million bid for the airline. No ruling had been announced by yesterday afternoon.

Meanwhile, a New York bankruptcy court judge extended an injunction against ILFC (ILF), Boeing (TBC) and other creditors, preventing them from seizing 25 airplanes before July 21, "Reuters" reported.

July 2006: VarigLog (VLO)'s $485 - $500 million bid for Varig (VAR) was declared fit to be considered by the airline's creditors, but a Rio de Janeiro bankruptcy court said there likely will be another auction July 11, just in case anyone wants to offer more, "Reuters" reported. (VLO) stepped forward last week after a bid by an employee-led consortium failed. (VLO)'s offer reportedly includes guarantees for the airline's loyalty program and pension fund.

Later, the Brazilian bankruptcy court postponed both a new auction for (VAR) scheduled for July 12 and a meeting of creditors that was to consider a $500 million bid from (VLO), the "Associated Press" reported. Judge Luiz Robert Ayoub apparently reversed his own decision of July 3, when he said (VLO)'s bid was ready for review and that higher bids would be accepted at the new auction.

Brazilian freight and logistics company (VLO) boosted its bid for the bankrupt carrier (VAR) after a Rio de Janeiro bankruptcy court judge reversed his decision to present the approximately $500 million bid to creditors, who may be better off if (VAR) is liquidated, "Bloomberg News" reported. The judge will ask creditors to review the higher offer at a July 17 meeting. If it is approved, (VLO) could win (VAR)'s operating assets at an auction.

The new bid includes the option of a payment to creditors who prefer cash over 10-year bonds, among other provisions involving debt assumption, leasing and real estate. (VLO) already has spent $11 million keeping (VAR) afloat.

A (VAR) creditors meeting, scheduled to evaluate (VLO)'s bid for the bankrupt airline, was postponed after the freight and logistics company altered its offer, "Bloomberg News" reported.

After initially postponing a meeting at which they planned to review a $500 million bid from freight and logistics company (VLO) due to reported changes in the offer, (VAR) creditors decided to reject the bid, forcing the Sao Paulo stock exchange to suspend trading in (VAR) stock briefly after a rush to sell, according to press reports, and leaving Brazil's flag carrier on the cusp of liquidation.

The "Associated Press" (AP) reported that airplane leasing companies were united in opposition to the bid, which was arranged by (VLO) parent Volo do Brasil.

(VAR) management said it will continue to attempt to auction off the airline's assets while the Rio de Janeiro bankruptcy court handling the case decides whether or not to seek a third bidder - - an initial offer from a consortium of employees and investors failed last month - - or put the floundering airline out of its misery. (VLO) will challenge the decision in court, according to press reports, claiming the majority of creditors had given their consent to the bid.

At present, (VAR) is operating only 13 airplanes and has seen a -80% plunge in monthly revenues to $32 million, according to a statement from a (VAR) attorney cited by the (AP). "Reuters" reported that the carrier canceled 86 of 139 flights scheduled, the last day of an emergency plan implemented by Brazil's civil aviation administration calling for other airlines to honor (VAR) tickets. That plan may be extended.

Volo do Brasil has spent $13 - $14 million to keep the carrier afloat. (VAR) was given until Friday to return 25 airplanes to leasing companies.

(VAR) may not be well, but it is alive; three days after its bid was rejected by the airline's creditors, freight and logistics company (VLO), the former (VAR) subsidiary purchased this year by a consortium led by Volo do Brasil, was the sole and winning bidder at a public auction. It paid BRL52.4 million/$23.9 million, according to press reports, and will split (VAR) into two companies, one operational and one that will handle facilities and the carrier's $3 billion debt. Volo will not be responsible for the debt. (VAR) currently is flying just 13 airplanes and will have to negotiate the fate of much of its fleet with leasing companies.

"(VAR) will be back on its feet in no time," (VLO) President, Joao Luis Bernes de Souza told employees in Rio de Janeiro, according to Bloomberg News. To get it there, (VLO) agreed to invest more than $600 million - - $128 million for assets like routes, slots and brand and $485 million for operations, "Bloomberg" said. Its initial bid of $500 million was turned down by creditors.

The BBC reported that documents filed with auction officials indicated the new owners might eliminate up to -80% of (VAR)'s workforce of about 10,000 employees.

(VAR) said it reestablished domestic service Wednesday from Rio de Janeiro and Sao Paulo to Porto Alegre, Salvador, Recife, Fortaleza and Manaus, and is continuing international flights to Buenos Aires and Frankfurt. (VAR) said on its website that it already has "solved a series of problems in this period of transition" following last week's purchase at auction by former subsidiary (VLO). "We recognize the discomfort that the passengers of (VAR) have experienced, but all can be certain that we are working hard and quickly to solve the problems, re-institute the network and normalize services," (VAR) President, Marcelo Bottini said. The (VLO) board member, Marco Antonio Audi said (VAR) is reestablishing credit with lessors and airlines who honored (VAR) tickets and is looking to bring airplanes back into the fleet and reestablish service on discontinued routes.

August 2006: VarigLog (VLO) parent Volo do Brasil's acquisition of the troubled (VAR) hit another snag when a Brazilian court ruled that a $75 million cash payment originally intended to pay debts and keep (VAR) running during the transition, instead must be used to pay employees, the "Associated Press" reported. In addition, TAM (TPR) notified Brazilian authorities it would no longer honor (VAR) tickets on international flights. (VAR) reportedly owes (TPR) $1.5 million.

(VAR) confirmed it intends to lay off approximately -5,500 of 9,500 Brazilian employees. "Today, we begin one of the most important phases of the project of restructuring (VAR), promoting the balancing of the company's staff with current operational necessities," CEO, Marcelo Bottini said in a statement to employees cited by Reuters.

(TAP) Portugal suspended acceptance of (VAR) tickets. "Responsibility of the new company [Volo do Brasil] for tickets issued in advance, has not yet been clearly defined or declared," (TAP) noted in a statement. "This is reflected in increased financial risk to (TAP) that is worsening by the day." (TAP) added it will continue to pursue negotiations with (VAR) on the potential resumption of commercial agreements between the carriers.

(VAR) intends to add five airplanes this week and operate a fleet of 45 by year end, up from the current 12, according to an official of parent Volo do Brasil cited by "Reuters." (VAR) employs 3,985 people following the latest layoffs and intends to raise that to 5,400 by year end. Marco Antonio Audi told "Reuters" (VAR) is looking at leasing Airbus (EDS) and Embraer jets - - it has operated an all-Boeing (TBC) fleet - - and that it now will begin purchasing airplanes at the end of their leases.

(VLO) completed arrangements to request a 15-year, $1.7 billion financing deal in funding from Brazil's state bank (BNDES) for the acquisition of 50 airplanes to help re-build (VAR). This represents 85% of what (VLO) requires to secure the airplane deal. The remaining 15% ($250 million to $300 million) will be footed by (VLO). Parent Volo do Brasil aims to rebuild its domestic routes with a single-type fleet in the 115- to 135-seat category.

(VAR)'s President, Bottini, stepped down.

October 2006: The new owners of Brazil's Viacao Aerea Rio-Grandense, or Varig (VAR), plan to invest $173 million to expand the fleet of the embattled airline, the Estado newswire said. Of the sum, $140 would be spent on the lease of seven new planes of the 757-200 type of Boeing Co (TBC), while $33 million would go into the purchase of 22 medium-size Cessna planes, the newswire said.

Yet, (VAR) is still awaiting a final regulatory approval of the recent sale of its operating assets before being able to make any purchases.

December 2006: VarigLog (VLO) CEO, Joao Luiz Bernes de Souza said at (ALTA)'s Latin American Airline Leaders Forum in Cancun, that Varig (VAR), which the logistics company purchased over the summer, will add 16 airplanes to its fleet, once it gets its new Air Operating Certificate (AOC), "Reuters" reported. It currently operates 15 airplanes.

(VAR) was conspicuously absent from this month's Star Alliance (SAL) meeting and ceremony in Istanbul, prompting speculation about whether or not the struggling Brazilian carrier remains a viable component of (SAL). (SAL) CEO, Jaan Albrecht told reporters that "(VAR) is a full member of the (SAL) . . . of good standing," and that "we have made every effort into supplying our required support, what the members can do, for one of the members who is under this restructuring process."

(VAR), rescued by former logistics subsidiary (VLO) over the summer, "is flying its schedule, a smaller schedule, with the possibilities of restructuring on the airplanes, on the composition of the routes, and a more limited schedule compared to what they were flying before," according to Albrecht. He said (VAR) is realigning its operation around its hubs in Rio de Janeiro and Sao Paulo and will add airplanes "very carefully."

Later, (VAR) received its new air operating certificate (AOC), Merrill Lynch (ML) said. The restructuring carrier is operating 15 737-300s and up to three MD-11s to nine Brazilian destinations plus Bogota, Buenos Aires, Caracas and Frankfurt. (ML) said that (VAR) must relaunch service on abandoned domestic routes by January 13 or risk losing them to other Brazilian airlines. It has 180 days to restart its international operations or face the same consequence. The investment bank said, "We expect both Gol (GOT) and TAM (TPR) to benefit from this process and expand their respective market shares in slot-constrained domestic airports as well as international markets."

Precision Conversions will provide seven full 757-200PCF conversions that will be leased by (VLO). SkyWorks Capital of Connecticut is managing the deal. The first airplane will be delivered in January.

January 2007: In 2006, Varig (VAR) had 13.08 billion (RPK)s (-54.2%); 869, 87 million (FTK)s (-29.7%), and 5.78 million passengers (-55.5%).

Varig (VAR) Engineering & Maintenance (VEM) aims to become a major player in the repair and maintenance of Airbus (EDS) airplanes in South America, according to Filipe Morais de Almeida, who joined the company as CEO last October from Bombardier Portugal, where he served as Chairman & CEO. (VEM), the former Varig Engineering & Maintenance, was acquired by (TAP) Portugal in early 2006. It has bases in Rio de Janeiro, Porto Alegre and Sao Paulo.

Almeida noted that (VEM) already offers airframe maintenance for all Boeing and former McDonnell Douglas airplanes, as well as the Embraer EMB-120, EMB-145 and F 50. It is in the final phase of achieving certification to perform heavy maintenance on the A300/A310 family while A320 approvals are expected in the second half of 2007. It already is providing line maintenance to (TAP) supporting A310 flights into Brazil. It also operates the only 767 passenger-to-freighter line in South America, and is considering entering into the 757 conversion business as well, Almeida said, although he noted that conversions are a supplemental activity, not a core function. In addition to airframe Maintenance Repair & Overhaul (MRO), (VEM) is active in component support and aims to grow this business.

Biggest challenge, according to Almeida, who spent several years with (TAP) Maintenance & Engineering, is changing the internal mindset at (VEM) to make it a more customer-focused organization. "Basically, the cultural change we need to make here is to part from a culture that was very linked with the operator [Varig (VAR)] to the culture of an (MRO) dedicated to the third-party activity where the customer is the first reason of our existence," he explained. He added, "We are forced to succeed. We don't have too much choice."

February 2007: (LAN) Airlines is providing $17.1 million in financing to VRG Linhas Aereas (VAR), the "new" Varig (VAR). The loans may be converted into shares of the new airline, (LAN) said, which would make it a minority owner.

Varig (VAR) will apparently change its name to Nordeste (NOD) in the months ahead.

It was told by the Brazilian regulatory authorities to relaunch services on abandoned domestic routes or risk losing them to other Brazilian airlines. At the same time it was given 180 days to restart its international operations or face the same consequence. It is currently looking to add 16 airplanes.

Has been operating 15 737-300s and up to 3 MD-11s to nine Brazilian destinations, plus Bogota, Buenos Aires, Cracas, and Frankfurt.

Precision Conversions will provide 7 full 757-200PCF conversions, that will be leased by VarigLOG (VLO). Skyworks Capital of Connecticut is managing the deal. The first airplane was due to be handed over last month.

March 2007: Latin American Air Transport Assn's 33 member airlines flew 11.15 billion (RPK)s passenger traffic in January, down -7.6% from the year-ago month, a decline the organization attributed to cutbacks at Varig (VAR). Capacity fell -4.9% to 15.89 billion (ASK)s and load factor dropped -2.1 points to 70.2% LF.

Varig (VAR) Engineering & Maintenance (VEM) completed its sixth 767 freighter conversion, its first for (ABX) Air, in Rio de Janeiro. (ABX)'s second of five airplanes already is undergoing conversion. (VEM) is working in conjunction with Israel Aerospace Industries (IAI).

April 2007: Gol (GOT) detailed its fleet plan for Varig (VAR) in conjunction with its first-quarter earnings release. It said the Varig (VAR) fleet, which will continue to operate independently of the new parent company, will comprise 14 737-300s and two 767-300ERs at the end of the current quarter. By year end, Varig (VAR) will operate nine 737-300s, five 737-800s and eight 767-300ERs. The 737-300s will be phased out by 2009, when Varig (VAR) is scheduled to fly eight 737-700s, nine 737-800s and 16 767-300ERs. By 2012, it will operate 14, 15 and 22 of the respective types. Gol (GOT) said Varig (VAR) "will provide an attractive service offering to business travelers in the domestic market and offer new services to high-traffic destinations in South America, Europe and North America."

June 2007: Gol (GOT), which operates the Low Cost Carrier (LCC) of the same name, as well as the recently acquired Varig (VAR), issued updated second-quarter and full-year guidance, that reflects the difficulty of integrating the floundering flag carrier. For the full year, Gol (GOT) reduced its earnings per share projection to BRL3.70 to BRL4.20/$1.94 to $2.20 from the original forecast of BRL4.20 to BRL4.70, and its operating margin guidance to approximately 18% from 20%. Revenues should be BRL6 billion, rather than BRL6.1 billion, but capacity still is expected to rise +80% year-over-year, and load factor remains pegged at 72% LF. The company expects a full-year nonfuel (CASK) of BRL0.081. Gol (GOT) officially assumed control of Varig (VAR) on April 9. Year-over-year traffic and capacity comparisons, also are affected by the addition of Varig (VAR), which is expected to end the current quarter, operating 16 737s and three 767s. Both will increase substantially. The two airlines expect a combined second-quarter load factor of approximately 68% LF, yield of BRL0.18, and unit revenue of BRL0.14. Nonfuel unit cost is expected to drop -5% from the year-ago quarter to BRL0.088. Each figure is slightly worse than the company's forecast for the (LCC) as a standalone entity.

July 2007: Precision Conversions (PC) announced the delivery of a fifth 757-200PCF to VarigLog (VLO). Modifications were performed at Flightstar Aircraft Services in Jacksonville. VarigLog (VLO)'s deal with (PC) is for seven full-15-pallet airplanes.

December 2007: Gol (GOT) and Varig (VAR) flew 2.02 billion combined (RPK)s passenger traffic in November, up +59.9% from the year-ago month. Capacity climbed +61.6% to 3.07 billion (ASK)s, and load factor fell -0.7 point to 65.8% LF.

January 2008: Airbus (EDS) said MatlinPatterson Global Advisers placed an order for six A330-200F freighters for placement with companies in its portfolio such as Varig Logistica (VLO) and Global Aero Logistics (holding company of ATA Airlines (AAT), World Airways (WLD), and North American Airlines (NNA)). Airbus (EDS) now has sold 72 A330-200Fs to eight customers.

June 2008: The USA and Brazil announced an enhanced air services agreement that will provide for a nearly +50% increase in passenger flights between the countries, while eliminating restrictions on the number of airlines that can fly the routes. "This agreement will help air carriers meet the growing demand for passenger and cargo services between the USA and Brazil," USA Secretary of Transportation, Mary Peters said. "Now more than ever, it is crucial that we give USA carriers every possible opportunity to compete and succeed wherever passengers want to fly." The previous agreement allowed only four airlines from each country to fly to the other, while the new deal removes those limits. In addition, the number of permissible weekly flights between the nations will increase in four stages to 154 from the current 105 between next month and October 2010.

USA carriers will gain access to Fortaleza, Curitiba, and three additional new cities to be selected by USA authorities. At present, American Airlines (AAL), Continental Airlines (CAL), Delta Air Lines (DAL), and United Airlines (UAL) fly to Sao Paolo and Rio de Janeiro Galeao. USA and Brazilian carriers also now will be permitted to provide certain codeshare services with partners from third countries.

Weekly cargo flights will increase to 35 from 24 immediately, and to 42 in 2010, while the number of cargo charters allowed, also will rise. USA cargo companies now will be permitted to transfer freight from airplanes to ground vehicles for home and office delivery in Brazil. The terms of the agreement will be applied on a reciprocal basis until it enters into force.

September 2008: (VEM) Maintenance & Engineering (VLO), a (TAP) Portugal subsidiary, reached a deal with Air Transat (AIJ) for heavy maintenance on four A310s. "C" checks are scheduled from September to November at (VEM)'s (VLO) hangar in Rio de Janeiro.

December 2009: SkyWorks Leasing announced a mandate to re-market three 757-200SFs for sale or lease. Two are currently on lease with Varig Logistica (VLO) and will be available in January and May, respectively. The airplanes were converted in 2006 at Flightstar Aircraft Services.

May 2010: 757-236F (25597, PR-LGN), (CGP) leased, ex-British Airways (BAB), ex-(N597AG).

Fleet:
(definitions)

Click below for photos:
VLO-727-2J7F-MAR09
VLO-DC-10-30F
VLO-DC-10-30F-1
VLO-MD-11F

March 2012:

1 727-41F (JT8D-9A) (810-20423, /70 PP-VLG; 824-20425, /70 PP-VLD), 20423 PARTED OUT 2005-01. FREIGHTER.

0 727-172C (JT8D-9A) (480-19666, /67 PP-VLE), PARTED OUT 2005-01. FREIGHTER.

1 727-173C (JT8D-9A) (457-19508, /67 PP-VLS), 2000-10. FREIGHTER.

2 727-2A1F (JT8D-17 HK) (1253-21341, /77 PR-LGB; 1256-21342, /77 PR-LGC "LEANDRA"), PLATINUM AIRCRAFT LSD 2003-05, FREIGHTER.

1 727-2J7F (JT8D-15) (1037-20880, /74 PP-VQU - - SEE ATTACHED PHOTO - - "VLO-727-2J7F-2009-03"), (PSS) LSD 2000-10. FREIGHTER.

0 727-243 (JT8D-9A) (1725-22166, /81 PP-VQV), (PSS) LSD 2000-12. RTND. FREIGHTER.

2 +4 ORDERS 757-208PCF (RB211-535E4) (42-22210, /84 PR-LGJ; 74-22211, /85 PR-LGH), CONV TO F BY PRECISION CONVERSIONS 2006-12. FREIGHTER.

1 757-236F (25597, PR-LGN), EX-(BAB), (CGP) LSD, EX-(N597AG). FREIGHTER.

0 DC-10-30F (CF6-50C2) (329-47841, /80 00-VMT; 332-47842, /80 PP-VMU), (PSS) LSD 2000-10. RTND. FREIGHTER.

0 DC-10-30F (CF6-50C2) (179-46949, /76 PP-VQY), XS AVIATION LSD 2001-04. RTND. FREIGHTER.

1 MD-11F (PR-LGE).

Management:
(definitions)

MARCO ANTONIO AUDI, CHAIRMAN.

JOAO LUIS BERNES DE SOUZA, PRESIDENT & CHIEF EXECUTIVE OFFICER (CEO).

FILIPE MORAIS DE ALMEIDA, CEO VARIG ENGINEERING & MAINTENANCE (VEM), EX-BOMBARDIER PORTUGAL & (TAP) (2006-10).

CHAN LUP WAI OHIRA, MANAGING DIRECTOR.

 
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