Airlines Will Be Maintained Separately
A new Varig has been born... again. Just eight months after the
Brazilian carrier was rescued from dissolution by former cargo
subsidiary Varilog, this week the airline announced
GOL Linhas Aereas Inteligentes, controlling shareholder of
Brazilian low-cost airline GOL Transportes Aereos S.A., agreed to
acquire the total share capital of the airline.
Under terms of the deal, Varig operator VRG Linhas Aereas S.A.
will be acquired by GTI S.A., a wholly-owned subsidiary of GOL
Linhas Aereas Inteligentes. Despite the seeming incongruity of
having a single owner for the country's two largest carriers,
representatives with VRG say the two companies will maintain
individual of finances, and "will be managed according to best
practices in corporate governance and internal controls."
"GOL intends to provide Varig with the necessary ambition,
management expertise, financial strength and cost base to compete
with South American and world competitors. With this acquisition,
Brazil will maintain an important flag in global aviation, the
industry will benefit from an increase in jobs and demand will be
better served," said GOL's CEO Constantino de Oliveira Junior. "We
are confident that throughout this acquisition GOL will continue
its mission of popularizing air travel and consolidate its position
as one of the leading low-cost carriers in the world. We will work
so that our companies become the Brazilian carriers of choice for
both domestic and international passengers."
The total price offered for shares of VRG is approximately $275
million US, consisting of $98 million cash (representing less than
10% of GOL's total cash), and approximately 6.1 million non-voting
(PN) shares issued by GOL (representing approximately 3.2% of GOL's
total shares outstanding), with various sale restrictions for up to
30 months. GTI will also assume roughly $45 million US in debt.
The deal pends on obtaining all customary regulatory approvals
from the Brazilian Antitrust Agency (CADE) and the National Civil
Aviation Agency (ANAC), according to Varig.
VRG's fleet, currently operating with 17 aircraft, will be
increased to 34 Boeing aircraft composed of a simplified fleet of
20 737 and 14 767 aircraft. This fleet will permit Varig to serve
more than 10 international destinations in Europe (Frankfurt,
London, Madrid, Milan and Paris), North America (Miami, New York
and Mexico City), and South America (Buenos Aires, Santiago, Bogota
and Caracas).
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