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Last Updated: Wednesday, 21 June 2006, 05:50 GMT 06:50 UK
Brazilian airline cancels flights
Varig plane
Rival airlines are already discussing how to share out Varig's routes
The embattled Brazilian airline Varig has been forced to cancel 67 of its 180 daily flights amid mounting fears of financial collapse.

The move came just a day after a bankruptcy judge agreed to sell the airline to a consortium of Varig workers and two foreign investors.

This saved Varig from immediate liquidation, but the consortium must now find $75m (�40m) by Friday.

The judge has warned that without this first payment the buyout will fail.

The NV Participacoes, which represents Varig workers and two foreign investors, has agreed to pay $449m for the struggling airline.

Reports in the Brazilian media say it is appealing to Brazil's National Development Bank for a loan to cover the first deposit required for the sale.

Brazil's national airport authority has said it will begin demanding that Varig pays its airport fees every day, in cash.

The news came as the country's civil aviation authorities met other airlines to divide up Varig's routes should it cease to fly.

Increased competition

Varig has been under bankruptcy protection for a year.

It was the top airline in Brazil until 2004, but was then overtaken by TAM and later by Gol.

The airline has suffered years of financial problems because of rising costs and growing low-cost competition.

It now has just 16.7% of the domestic market, but remains the leading Brazilian carrier internationally, with a 66.4% share.


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There are doubts whether the money can be raised



SEE ALSO
Brazil court backing Varig deal
20 Jun 06 |  Business
Brazil court delays Varig ruling
15 Jun 06 |  Business
Brazil court agrees to Varig sale
13 Jun 06 |  Business
Varig fate unclear after auction
08 Jun 06 |  Business
Varig route disposal plan blocked
12 Apr 06 |  Business
Revamp planned for Brazil's Varig
13 Sep 05 |  Business

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