More than 5,000 Varig ticket holders are thought to be at the World Cup

Variglog must finalise its offer by Wednesday, a bankruptcy court said.

Varig has been paralysed by financial troubles that have forced it to cancel 70% of its flights.

News of a possible Variglog bid came days after courts cancelled the sale of Varig to an employee group because it missed a payment deadline.

The employee consortium, which had offered $449m for the ailing airline, said it had failed "to reach an agreement with investors".

New buyer

Variglog has now come forward to make a play for its former parent after the courts annulled the bid from the TGV workers group.

Varig shares surged on the news to close 56% higher at 2.35 reais.

According to reports Variglog - which was bought by the consortium Volo Do Brasil in 2005 - is set to table a bid of $500m for the airline.

It is negotiating a deal on Varig's debts with creditors as it awaits a decision from the courts on its buyout offer.

Varig, once Latin America's largest flag carrier, has been forced to cancel hundreds of flights and suspend services to 10 cities including New York and Paris as its fate hangs in the balance.

It is thought that 28,000 Varig customers are currently abroad, including more than 5,000 at the World Cup in Germany.

The 79-year-old airline has been subject to bankruptcy protection for more than a year as it struggles to deal with more than 7bn reais ($3.1bn) of debt.