MercoPress. South Atlantic News Agency

Brazil approves the merger of Varig with low fare Gol

Brazil's Antimonopoly agency, CADE, finally approved the takeover of the once Brazilian flag carrier Varig by the low fare airline GOL, an operation which took place last year.

"The operation does not present anti competition effects", said the official release from the CADE office. With the incorporation of Varig, Gol will now dominate 45% of the Brazilian air domestic market compared to the 49% of TAM, its main rival, according to the latest May data. Varig which for decades was Brazil's main airline in 2006 definitively went bankrupt and asked for protection from creditors after President Lula da Silva administration refused to grant the highly indebted company a support loan In July 2006 the few assets of Varig were auctioned and acquired by the US fund Matlin Patterson which paid 24 million US dollars. In March 2007 Gol purchased the fund's rights for 320 million US dollars. However taking over Varig has not been without problems for the once very profitable Gol low cost carrier. "The only reason Gol is loosing money is because the holding company reports include Varig which is the big money loser - Gol itself is still profitable" pointed out Robert Booth, chairman of US based consultancy AvGroup. Gol Linhas Aereas Inteligentes SA posted a first quarter loss of 3.5 million Reais (2 million US dollars) after revenues of 1.6 billion Reais (one billion US dollars),reported CEO Constantino de Oliveira Júnior. But in spite of the losses, Oliveira Junior said that Gol "remains committed to transparency and equality among all shareholders and the public".