Brazil's Varig airline in danger of collapsing
Thursday, 15 June 2006Brazil's football team may be the favourite to win the World Cup but they have a problem in that their country's national airline and the team's official sponsor, Varig, may not exist by the time they want to fly home.
That may mean that Brazil's team and thousands of its fans are stranded until other airlines can carry them back to South America.
Founded in 1927, Varig was forced into bankruptcy protection last year, owing creditors about $3 billion. Most of its debt is owed to public services like airports authorities and fuel companies. The company also owes more than $1 billion in unpaid taxes.
As recently as December it was still Latin America's biggest airline, but since then its cash pile has dried up and the company has had to cancel flights and close routes on a daily basis.
US creditors have tried to seize planes when they have landed in the US.
Varig is owned by a not-for-profit foundation intended to benefit the company's employees. If the airline is closed as many as 12,000 people could lose their jobs and many more could be left stranded.
