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Jun11
Varig Airlines Ordered to Return Planes to Boeing
A New York State Supreme Court on Friday ordered troubled Brazilian airline Varig  to turn over a number of aircraft to various plaintiffs including Boeing Co. 

PlanespottersNet_016626.jpg injunction called for Varig, which declared bankruptcy a year ago, to stop operating the aircraft on Monday and to return them to the plaintiffs by June 16. The injunction also called for Varig's nonoperating aircraft to be returned to owners by July 1.

A Boeing spokesman said late Friday that it had 10 airplanes at the airline but the court order listed seven planes. Earlier Brazilian news reports put the airplane total at seven.

Founded in 1927, Varig -- short for Viacao Aerea Rio-Grandense - has long been one of Brazil's best-known companies globally. But it has been struggling for years, racking up debt and losing market share to more cost-efficient rivals like TAM and Gol.

On Thursday an employee group, known by its Portuguese acronym TGV, was the lone bidder at a public auction, offering $449 million for Varig. But the bid was well below the minimum price of $860 million stipulated by the court overseeing the auction, raising doubts about whether it would be approved.

 


Brazilian Judge Luiz Roberto Ayoub had said he would decide on Friday whether to authorize the sale of Varig, which has been operating under bankruptcy protection for the last year.

But he decided to postpone the ruling until Monday after receiving a new bid from a little known investment fund called the Multilong Corporation, which offered $800 million for the troubled carrier. A company official could not immediately be reached for comment.

An earlier round of bidding failed to produce an offer that met the court's minimum price of $860 million, triggering the second auction process without a minimum bid requirement.

A decade ago, Varig controlled nearly 50 percent of Brazil's aviation market. Today its market share has dwindled to 16.5 percent.

In addition to Boeing, Varig's creditors include General Electric Co. and several state-owned entities, such as giant oil firm Petrobras and the government's airport authority Infraero.

Yahoo! News

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