VARIG | bankruptcy exit plan
VARIG | bankruptcy exit plan
VARIG – Viação Aérea Rio-Grandense S.A.
Led the commercial team & bankruptcy exit plan
The timing of VARIG’s bankruptcy coincided with new Brazilian restructuring laws. Previously, Brazil forced bankrupt companies to liquidate; whereas companies were now allowed to reorganize (similar to Chapter 11). This entailed the need for intense vetting & review of any proposed post-bankruptcy commercial strategy prior to consideration of new liquidity by investors and before submission to the bankruptcy court.
Project requirements:
- Oversee the VARIG commercial team and assist in finalizing details of the post-bankruptcy commercial strategy.
- Responsible for final evaluation & review of the proposed post-bankruptcy commercial strategy documentation (prior to submission to the courts).
- Identify specific operational initiatives and marketing components from the commercial strategy where further efficiences and/or greater revenues were likely achievable. For those identified, direct & assist remaining airline management to re-work the commercial plan accordingly so as to realize improvements.
Major project undertakings:
- Network plan was completely revised using new leased aircraft (as many former VARIG planes had been repossessed).
- Schedule was revamped to protect slots and maintain bi-lateral agreements (despite pricing & trade-off analysis clearly indicating the changes would result in increased short-term losses).
- So as to take advantage of newly leased aircraft, improvements to the inflight product were initiated (notably to inflight entertainment, the inflight magazine, and food & bar service levels) which clearly demonstrated VARIG’s determination to reclaim the market leadership position.
- Further schedule adjustments were made to ensure connectivity to Star Alliance partners; especially to the codeshare flights identified which had large passenger cross-feeds.
- Additional and more aggressive frequent flyer program (FFP) initiatives – for the VARIG ‘Smiles’ program – were developed in order to bring back customers. Robust promotions were created to entice both VFR & business travellers, and for all tier levels of the Smiles program.
Project outcomes:
- Soon after emerging with a solid and viable restructuring plan, VARIG convincingly demonstrated its ability to achieve & maintain projected revenue generation levels. As a result, six (6) months after completing its restructuring, VARIG was indentified as a prime merger/buy-out candidate, and was subsequently purchased by the #1 Brazillian carrier GOL (Linhas aéreas inteligentes).
- It was clear that investors were convinced by the commercial & operational improvements to VARIG, as evidenced by the jump in investment & funding opportunities made available to the airline in the period immediatly preceeding the GOL buy-out.
Case Studies
Get A Free Quote
Ready to tackle your next challenge?
Aviation Strategy Group (ASG) is an aviation advisory group providing support around the world.
Quick Links
Official info
Phone :
Email :
Find Us :
Subscribe
Don’t Miss Out!
Copyright 2025 Aviation Strategy Group – All Rights Reserved. Design & Developed By Ogrelogic