Aviation Authorities Block Brazil´s Varig Bailout Package

Aviation authorities blocked a deal that would have thrown a lifeline to Varig, Brazil´s troubled flagship airline as employees held protests in the nation´s capital last week calling for a federal aid response.

Brazil´s Civil Aviation Authority shot down a proposed deal that would have let a small local airline, Ocean Air, take over some of the unprofitable routes of Varig, the company´s press office said.

The deal was vetoed on the grounds that flight slots and airport space cannot be negotiated, the Varig press office said.

Varig is reeling under an estimated $3.3 billion in debt and is currently in the restructuring phase of bankruptcy proceedings.

In recent days, the airline has been forced to cancel flights because it cannot meet operating payments. It also risks having its planes grounded for nonpayment of airport fees in Brazil.