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Varig employees ask for loan to pay for airline purchase

An employees' group of Brazilian airline Varig contacted a state bank on Tuesday seeking loans to pay for the bidding for the staggering company. Their move came the same day as bankruptcy judge Robert Ayoub warned that the auction outcome could be invalidated if the group fails to pay deposit by Friday. Marcio Marsillac, who heads the Varig Workers Group (TGV), said that the group made up of workers and investors, as yet unnamed, would pay the sum of 75 million U.S. dollars on Friday, but warned that they lacked money to run the company and would have to continue canceling flights. TGV representatives met officials from the National Economic and Social Development Bank (BNDES) on Tuesday, asking for a 150-million-dollar loan. BNDES asked the company to return with a rewritten request. The company on the day also suspended 33 flights. Varig was the international face of Brazil in the 1970s, but is now struggling with more than 3 billion dollars in debts, mostly to airports and fuel companies. It sought bankruptcy protection in June 2005. The employees' group's 450 million dollar bid was the only one made in this month's auction for the company, and was accepted Monday, even though the money was only about half the original price tag of 860 million dollars. United States leasing companies have filed suits against the company, aiming to take 19 of Varig's planes. U.S. courts have given Varig until Wednesday to show it can pay leasing company debts. Varig's main problem at present comes from fuel suppliers, which have threatened to halt supplies if it does not pay its debt by Wednesday.

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