airline	VARIG – Viação Aérea Rio-Grandense S.A.
alt	Logo of Varig until 2007
iata	RG
icao	VRG
callsign	VARIG
founded	Porto Alegre, Rio Grande do Sul, Brazil
ceased	2006
hubs	Rio de Janeiro-Galeão
frequent flyer	Smiles (until )
alliance	former member of Star Alliance
subsidiaries
company slogan	Estrela brasileira no céu azul, iluminando de Norte a Sul (''A Brazilian star on the blue sky, illuminating from North to South'') (1967)
headquarters	Porto AlegreRio de Janeiro
key people
website	}}

VARIG (acronym for Viação Aérea RIo-Grandense) was the first airline founded in Brazil, in 1927. From 1965 until 1990 it was Brazil's leading and almost only international airline. In 2005, Varig went into judicial reorganisation (similar to the American concept of bankruptcy protection) and in 2006 it was split into two companies informally known as "old" Varig - heir to the original airline, and "new" Varig - a new company presently fully integrated into Gol Airlines.

History

Formation and Early Years (1927–1943)

Sociedade Anônima Empresa de Viação Aérea Rio-Grandense – VARIG was the first national airline established in Brazil. It was founded on in Porto Alegre, by Otto Ernst Meyer-Labastille, a German aviator decorated in the World War I, who immigrated to Brazil in 1921 and noticed how necessary air transportation was for a large country like Brazil. Varig was an off-spring of the German trade company and airline Condor Syndikat, thus sharing the same origin as Syndicato Condor, later renamed Serviços Aéreos Cruzeiro do Sul. Condor Syndikat gave the initial operational and financial support and for a short time Varig and the sister-company Syndicato Condor operated in partnership.

The first aircraft of VARIG was a ten-passenger Dornier Do J Wal flying boat, transferred from the assets of Condor Syndikat. This aircraft, named ''Atlântico'', was also the first aircraft registered in Brazil as P-BAAA. Operations started on with a flight from Porto Alegre to Rio Grande via Pelotas. Varig inherited the route rights from Condor Syndikat which since had operated the service.

VARIG slowly but consistently in spite of difficulties added aircraft and destinations to its network initially focusing on the state of Rio Grande do Sul. On Varig began its first international route from Porto Alegre to Montevideo using its de Havilland DH 89 Dragon Rapide.

On 1941, as the United States declared war against the Axis and joined the Allies in the conflict, aviation supplies became scarce, particularly in terms of petrol and replacement parts. Because it used mostly German equipment and had a German Manager-Director (President), Varig faced particular difficulties. For this reason, Varig's first Manager-Director Otto Ernst Meyer resigned on and shareholders decided that the next Manager-Director would be a Brazilian-born. Érico de Assis Brasil was chosen but he died on an aircraft accident shortly after. It was in 1943 that Varig's first employee, Ruben Martin Berta, a descendant of Hungarian and German grandparents, was chosen as Manager-Director and thus would remain until his death in 1966.

Expansion (1943–1966)

One of the first decisions of Ruben Berta was to pursue an expansion plan and to unify the fleet around only one type of aircraft. The chosen one was the Lockheed L-10 Electra. Another ground-breaking suggestion was made on when, based on social ideas found on the Papal Encyclicals Rerum Novarum and Quadragesimo Anno and on Jean-Jacques Rousseau's The Social Contract, Berta proposed and the assembly approved the transfer 50% of Varig's shares to a not-for-profit foundation belonging to the employees. The aim of the foundation was to provide health, financial, social and recreational benefits to its employees. Decades later this foundation would be called Fundação Ruben Berta.

In 1946, with the addition of Douglas DC-3 and later the Curtiss C-46 to its fleet, Varig was able to greatly increase its network by adding cities in the states of Santa Catarina, Paraná, São Paulo, and Rio de Janeiro, facing fierce competition with Real Transportes Aéreos, and SAVAG. On , Varig bought Aero Geral, a small airline with concessions to fly from Natal until Santos. With this purchase Varig greatly enlarged its operations in Brazil, extending services beyond Rio de Janeiro until Natal along the Brazilian coast and was thus better prepared to compete with Panair do Brasil and Cruzeiro do Sul. In 1949, the Brazilian government granted to Varig the concession to fly to the United States, since the original airline which had the concession, Cruzeiro do Sul, was unable to operate the services. The inaugural service between Rio de Janeiro-Galeão and New York-Kennedy (then known as Idlewild) happened on . The services were operated by three brand-new Lockheed L-1049G Super Constellation. On , international flights to Buenos Aires using Curtiss C-46 aircraft were initiated. In January 1956 Varig served 55 cities in Brazil and four abroad, being the second Brazilian airline in terms of passengers transported.

In 1954, sensing the need to operate more modern equipment in its increasing amount of services, new Convair 240s were purchased. The addition of the Lockheed Super Constellation and the Convair 240 provoked a deep change of mentality in the culture of Varig, which was marked by the introduction of a new more cosmopolitan corporate image that would remain being used until 1996.

On , Varig, Cruzeiro do Sul and VASP initiated the air shuttle services between Rio de Janeiro-Santos Dumont and São Paulo-Congonhas airports, the first of its kind in the world. The three companies coordinated their schedules, operations, and shared revenue. The service was a direct response to the competition imposed by Real Transportes Aéreos. The idea, baptized as Air bridge (), inspired on the Berlin Airlift was so successful that it was abandoned only in 1999. Flights operated on an hourly basis initially by Convair 240 (Varig), Convair 340 (Cruzeiro) and Saab 90 Scandia (VASP). In a matter of a few months the shuttle service led by Varig won the battle against Real, which was anyway bought by Varig in 1961. Sadia Transportes Aéreos joined the service in 1968. Between 1975 and 1992 it was operated exclusively by Varig's Lockheed L-188 Electra which for sometime and for the sake of neutrality did not have the name Varig on the fuselage.

On Varig started to fly its brand-new Sud Aviation SE-210 Caravelle I between Brazil and New York-Idlewild, stopping at Belem, Trinidad and Nassau; on , the Caravelles were replaced by the also brand-new Boeing 707-441, which could fly from Rio de Janeiro-Galeão to New York-Idlewild non-stop. The Caravelles were switched to operate trunk routes within Brazil and to Buenos Aires-Ezeiza and Montevideo.

Between May and August 1961, after a lengthy battle for the Brazilian market, Varig gradually took over the Consortium Real-Aerovias-Nacional, which was in serious economic difficulties. This purchase not only made Varig the largest airline in South America but also granted route rights to other cities in Latin America, Miami, the West Coast of the United States and to Japan.

European services started on . Even though Varig had been lobbying for European concessions for more than 10 years, that day and in a matter of hours, following the traumatic and sudden shutdown of Panair do Brasil ordered by the Brazilian military government, Varig was granted rights previously held exclusively by Panair and ordered to immediately operate all scheduled services, including Panair's flight scheduled to depart that very night from Rio de Janeiro-Galeão to Recife, Lisbon, Paris-Orly and Frankfurt.

Varig also inherited Panair's two Douglas DC-8-33 and the agreement with TAP-Transportes Aéreos Portugueses to operate the ''Voo da amizade'' () between São Paulo-Congonhas, Rio de Janeiro-Galeão and Lisbon, with stops in Recife and Sal, now using Varig's Lockheed L-188 Electra. Originally started on November 30, 1960 by Panair and TAP, only Brazilian and Portuguese citizens or foreigners with permanent residence in Brazil or Portugal were entitled to the purchase of tickets for those flights, which were extremely popular due to their low fares. Those flights operated until 1967.

On , Rubem Berta died of a heart attack. The following day, the administrative board elected Erik Oswaldo Kastrup de Carvalho, Berta's right-hand and former Panair employee, as Varig's fourth Director-President.

Consolidation (1966–2000)

The 1973 oil crisis brought to Varig the need to replace its older generation aircraft with newer ones. For international flights the chosen one was the Douglas DC-10, which had its first flight with Varig on . In the domestic arena gradually the Boeing 737-200 became the work-horse.

Still as a consequence of the 1973 oil crisis which caused many difficulties to airlines, on Varig acquired a controlling interest in Cruzeiro do Sul, which was in a particularly delicate economic situation. Cruzeiro do Sul was fully integrated into VARIG on .

On the Brazilian Federal Government created the Brazilian Integrated System of Regional Air Transportation and divided the country in five different regions, for which five newly-created regional airlines received a concession to operate air services. Rio-Sul Serviços Aéreos Regionais S/A was the fourth of those regional airlines to be made operational and it was established by Varig in partnership with Top Táxi Aéreo, Bradesco Bank, and Atlântica-Boavista Insurance. Its services started on and its operational area comprised roughly the Southern and parts of the Southeast regions of Brazil. Soon Rio-Sul was operating as Varig's feeder-airline.

In February 1979 Carvalho left the Presidency of Varig due to serious illness being succeeded by Harry Schuetz for a short time, by Hélio Smidt, Berta's nephew, in 1980 and by Rubel Thomas in 1990.

The 1980s were marked by a modernization of the fleet, growth in the number of destinations and increasing financial problems originated in high inflation and in a foreign currency crisis. Furthermore with the end of the military régime and the return to democracy in 1985, Varig lost its intimate connection with the ruling powers. In 1990, with a gradual deregulation promoted by the Federal Government, VASP and Transbrasil were authorized to fly to international destinations, breaking an almost-monopoly held by Varig since 1965 (Cruzeiro do Sul was the only exception). More international carriers were also authorized to fly to Brazil, greatly increasing competition. Slowly Varig began to loose its financial health, aggravated by the early 1990s world recession and administration problems. In 1988, a few years after the inauguration of São Paulo-Guarulhos International Airport, Varig decided to move its operational hub from Rio de Janeiro to São Paulo.

In June 1995, Varig bought 49% of the shares of Pluna Uruguayan Airlines.

In an attempt to solve its increasing problems, Carlos Willy Engels became president in 1995 and in 1996 he was succeeded by Fernando Abs da Cruz Souza Pinto, who would be the last president of the consolidation phase in the history of the company. He developed an ambitious project to bring financial and operational health back to the company. The two most visible milestones of this project were the new corporate image launched on October 15, 1996 - the first change since 1955 - and the membership of Varig on Star Alliance, as of . Varig was its sixth member airline, and first to join after it was launched only 5 months earlier.

In spite of some success in the re-organization of the company, Pinto did not have full support of Ruben Berta Foundation, the controller of Varig and, as a consequence, he left the Presidency of Varig on . That same year he became the CEO of TAP Portugal and successfully re-organized that airline. Pinto was succeeded by Ozires Silva, former president of the Brazilian aircraft manufacturer Embraer.

Decline and Final Split (2000–2006)

The administration of Ozires Silva, which lasted for only 2.5 years, started with major restructuring in the company, aiming at making Ruben Berta Foundation more powerful and the President-Director weaker. Also, on , all cargo operations were united under a new airline named VarigLog. Even so, the airline presented at the end of the year, for the first time in its history Exposed Net Assets of BRL148.6 million - that is, the amount of debits was greater than the amount of credits and assets. One year later, it would reach BRL523 million.

In 2001 Varig saw the birth of a new competitor in the Brazilian market: Gol Airlines and increasing competition of VASP and Transbrasil fighting for survival by dumping fares. Furthermore, for the first time since 1961, Varig lost the first place in the domestic market share in terms of passengers/km for TAM Airlines. Later in the year, the September 11 attacks further increased operational and economic difficulties of Varig.

In 2002 Ruben Berta Foundation merged the administration of Varig and its subsidiary Rio Sul Serviços Aéreos Regionais (which included the brand Nordeste Linhas Aéreas Regionais). The three brands were used separately with Rio-Sul and Nordeste providing feeder services to Varig.

Year-long discussions to merge Varig with TAM Airlines ended unsuccessfully in 2004 and on the same year Varig fell to third place in the Brazilian domestic market share, behind TAM and Gol.

As of May 2005, VARIG fleet comprised 87 aircraft (76 passenger, 11 cargo), with an average age of 13.2 years; 83 of them had operating leases, while the remaining four had finance leases. As of June 2005, VARIG had a negative net worth of approximately US$ 2.5 billion, with balance sheet debt of US$ 2.8 billion and off-balance-sheet debt of US$ 2.0 billion.

VARIG applied to the Commercial Bankruptcy and Reorganization Court in Rio de Janeiro on , for the commencement of "judicial reorganization" proceedings pursuant to the New Bankruptcy and Restructuring Law of Brazil (Law 11.101). The request was granted on 22 June 2005. VARIG continued to provide services despite its financial troubles.

In order to raise funds, the Bankruptcy and Reorganization Court decided to sell two of Varig's subsidiaries:

in November 2005 the maintenance centre VEM Maintenance & Engineering was sold to a consortium presided by the Portuguese airline TAP Portugal;

in December 2005 the cargo division VarigLog was sold to Volo do Brasil, a consortium started by the private equity fund MatlinPatterson Global Advisors and three Brazilian investors (Marco Antonio Audi, Marco Hapfel and Luiz Gallo). The negotiation was concluded in June 2006.

After two unsuccessful attempts to auction the airline as a whole, the bankruptcy court decided to split the airline in two different judicial entities, informally known as "old" Varig and "new" Varig: The first portion, formally called Nordeste Linhas Aéreas S/A and informally known as "old" Varig, comprised the brand Nordeste, one aircraft, debts, liabilities, legal disputes, various assets, concessions and properties of the original Varig. Since "old" Varig, could not use the name Varig anymore, the company used the brand-name Nordeste for a while and in 2008 it began using the name Flex Linhas Aéreas. The second portion, formally called VRG Linhas Aéreas and informally known as "new" Varig, is a brand new airline which comprises the brands Varig and Rio-Sul, Varig's route rights, all aircraft but one and the Smiles mileage program. "New" Varig was auctioned on to Volo do Brasil (owner of VarigLog) and legal procedures finalized on ;

"Old" Varig

Since , the former Viação Aérea Rio-Grandense S/A was judicially known as Nordeste Linhas Aéreas S/A, and operated under the brand-name Flex Linhas Aéreas. On August 18, 2009, the National Civil Aviation Agency of Brazil renewed the authorization of Flex to operate non-regular passenger, cargo and postal services. Therefore, Flex operated flights on behalf of other airlines, as contracted.

Between 17 June 2005 and 2 September 2009, "old Varig" remained in Recovery Order in the 1st Business Court of Rio de Janeiro, under the leadership of Judges Luiz Roberto Ayoub and Miguel Dau. After the bankruptcy protection was lifted, the administration of the airline could have returned to its original owner, Fundação Ruben Berta, which still owed 87% of the shares of Varig. However, Fundação Ruben Berta preferred to keep a judicial administrator.

In September 2006 "old" Varig sold its participation in PLUNA (49% of the shares) to the Uruguayan Government.

On , Varig Brazilian Airlines ("old" Varig) was suspended from membership in Star Alliance for not fulfilling membership pre-requisites, and on , the IATA code RG and the callsign Varig officially ceased to exist.

As a result of accumulated debts, on , at the request of the airline administrator, the 1st Business Court of Rio de Janeiro declared Flex bankrupt and initiated the process of liquidation. However, on September 10, the bankruptcy process was suspended at the request of Ruben Berta Foundation and the company returned in practical terms to recovery order status until the validity of the bankruptcy is judged.

"New" Varig

VRG Linhas Aéreas S/A is today fully integrated with '''Gol Airlines.

On , the "new" Varig canceled all its flights, except for Rio de Janeiro-São Paulo shuttle service, which remained being operated in an agreement with "old" Varig. On , "new" Varig announced that it would cut 60% of its staff.

Between September and November 2006, "new" Varig announced its intentions to gradually resume some international and domestic flights. On December 14, 2006, the National Civil Aviation Agency of Brazil issued the final certificate to "new" Varig, making it fully operational. Soon after the certificate was granted, orders for 16 aircraft were announced, to bring the fleet to 31 aircraft and the operational agreement with "old" Varig expired.

Before and after relaunch in December 2006, "new Varig" struggled greatly to find a strategic partners, due to lack of credibility, affecting aircraft contracts, network and personnel inherited from "old" Varig. "New" Varig was facing monthly losses as high as US$20 million, and MattlinPatterson was unwilling to invest more money in the company, putting "new" Varig in extreme economic difficulties.

On , Gol Airlines purchased "new Varig" (VRG Linhas Aéreas) for US$ 320 million, and announced that VRG Linhas Aéreas, the operator of the brand VARIG, would continue to operate under its original name. The transaction was completed on .

The new owner radically restructured the fleet, the network, eliminated the First Class cabin from the aircraft, and gradually transformed the brand Varig into the arm of Gol Group specialized in international scheduled and charter medium and long-haul destinations. On Varig's new corporate image was unveiled, stressing the orange colour of Gol.

On Gol was merged into VRG Linhas Aéreas and thus VRG Linhas Aéreas became an airline with two different brands: Varig and Gol. As a consequence, on mid-April 2009, Varig's booking systems were integrated into Gol's and the Smiles frequent flyer program was reformulated to include Gol. In June 2009, "new" Varig ceased to operate its own flights and started to use Gol's flight numbers.

From 2006 to 2009 "new" Varig was obliged by contract to purchase a minimum of 140 hours/month of services from "old" Varig. Therefore, some of VRG Linhas Aéreas flights operated with Gol flight numbers are actually flown with chartered aircraft from Flex Linhas Aéreas.

Destinations

Fleet

The fleet list below is related to "old" VARIG and based on the standard published Varig history.

Accidents and incidents

As of February 2011, Aviation Safety Network reports 39 accidents or incidents for Varig since August 1949.

Major accidents involving fatalities

28 February 1942: the Junkers Ju-52/3m registration PP-VAL crashed shortly after take-off from Porto Alegre. Six of the 21 occupants died, including 2 crew members. 2 August 1949: a Curtiss C-46AD-10-CU Commando registration PP-VBI operating a flight from São Paulo-Congonhas to Porto Alegre made an emergency landing on rough terrain near the location of Jaquirana, approximatelly 20 minutes before landing in Porto Alegre, following fire on the cargo hold. Of the 36 passengers and crew aboard, 5 died. 4 June 1954: a Curtiss C-46A-45-CU Commando registration PP-VBZ operating a cargo flight between São Paulo-Congonhas and Porto Alegre crashed during take-off from São Paulo. All crew of 3 died. 7 April 1957: a Curtiss C-46A-45-CU Commando registration PP-VCF operating a flight from Bagé to Porto Alegre crashed during take-off in Bagé following a fire developed in the left main gear wheel well and consequent technical difficulties. All 40 passenger and crew died. 18 October 1957: a Douglas C-47A-80-DL registration PP-VCS operating a cargo flight from Porto Alegre crashed upon take-off. The crew of two died.

27 November 1962: flight 810, a Boeing 707-441 registration PP-VJB flying from Rio de Janeiro-Galeão to Lima, after initiating an overshoot procedure at the suggestion of the control tower because it was too high, proceeded to start another approach when it crashed into La Cruz peak, 8 miles away from Lima Airport. Possibly there was a misinterpretation of navigation instruments. All 97 passengers and crew aboard died.

22 December 1962: a Convair CV-240-2, registration PP-VCQ, flying from Rio de Janeiro to Brasília via Belo Horizonte-Pampulha , descended below the prescribed altitude while on final approach to Brasília, struck trees, skidded and fell to one side. One crew member died, out of 40 occupants of the aircraft. 1 July 1963: a Douglas C-47B-20-DK registration PP-VBV flying from Porto Alegre to Passo Fundo collided with trees on high ground and crashed shortly before arriving in Passo Fundo. Of the 18 passengers and crew aboard, 15 died.

5 March 1967: flight 837, a Douglas DC-8-33 registration PP-PEA flying from Rome-Fiumicino to Rio de Janeiro-Galeão via Monrovia, caught fire after a mistaken approach to Monrovia, missing the threshold of the runway by 6,023 ft. Of the 90 passengers and crew aboard, 51 died.

9 June 1973: a cargo Boeing 707-327C registration PP-VJL flying from Viracopos-Campinas International Airport to Rio de Janeiro-Galeão while making an instrument approach to Rio de Janeiro-Galeão had technical problems with the spoilers which eventually caused the aircraft to pitch down, descended fast, struck approach lights and ditch. All 6 occupants died.

11 July 1973: flight 820, a Boeing 707-345C registration PP-VJZ flying from Rio de Janeiro-Galeão to Paris-Orly, made a successful emergency landing at an open field 5 km before landing, after reporting fire in a rear lavatory. However, 123 of the 134 passengers and crew aboard died, overcome by smoke and carbon monoxide poisoning before the aircraft could be evacuated.

30 January 1979: a 707-323C freighter, registration PP-VLU en route from Tokyo - Narita to Rio de Janeiro-Galeão via Los Angeles went missing over the Pacific Ocean some 30 minutes (200 km ENE) from Tokyo. Causes are unknown since the wreck was never found. Among other cargo, the aircraft was carrying 153 paintings by the Japanese Brazilian artist Manabu Mabe, worth USD 1.24 million. The aircraft was flown by Gilberto Araújo da Silva, who was also the captain and survivor of the accident with Flight 820 six years earlier. The crew of 6 died and their bodies were never recovered.

3 January 1987: flight 797, a Boeing 707-379C registration PP-VJK, flying from Abidjan to Rio de Janeiro-Galeão crashed due to a failure with its number one engine shortly after take-off. While attempting to return to the airport for an emergency landing, it crashed on a field 18 km away from Abidjan’s airport. Of the 51 passengers and crew aboard, a single passenger survived. 3 September 1989: a Boeing 737-241 registration PP-VMK operating flight 254 flying from São Paulo-Guarulhos to Belém-Val de Cães via Uberaba, Uberlândia, Goiânia, Brasília, Imperatriz, and Marabá crashed near São José do Xingu while on its last leg of the flight due to a pilot navigational error, which led to fuel exhaustion and a subsequent belly landing into the jungle, southwest of Marabá. Out of 54 occupants, there were 13 fatalities, all of them passengers. The survivors were discovered two days later. 14 February 1997: a Boeing 737-241 registration PP-CJO operating flight 265, flying from Marabá to Carajás while on touch-down procedures at Carajás during a thunderstorm, had its right main gear collapsed rearwards causing the aircraft to veer off the right of the runway. The aircraft ended in the forest. One crew member died.

Incidents

30 May 1972: a Lockheed L-188 Electra registration PP-VJL operating a flight between São Paulo-Congonhas to Porto Alegre was hijacked. The hijacker demanded money. The aircraft was stormed and the hijacker shot.

References

External links

Varig Archive (2000-2002)

Varig Archive (1997-1999)

Varig Archive

VARIG Accidents as per Aviation Safety Database

Timetable Images of Varig

Varig Photo Archive at airliners.net

Dornier Wal Documentation Center

Category:Defunct airlines of Brazil Category:Airlines established in 1927 Category:Airlines disestablished in 2006 Category:Latin American and Caribbean Air Transport Association Category:Former IATA members

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