Brazil Varig still seeking partner, restructuring

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RIO DE JANEIRO, Brazil, Jan 10 (Reuters) - Brazil's flagship airline Varig
(VAGV4) remains in talks with a number of potential partners, the company's
president said Thursday, two days after Boeing Co. (BA) said it had no plans
to invest in the airline.

"We are working pretty hard toward this goal and we are talking with
possible partners," Varig President Ozires Silva told reporters at an event
in Rio de Janeiro.

Silva reiterated that Varig was not negotiating with Boeing, nor with
General Electric Co. (GE).

Boeing Tuesday denied a Brazilian news report that said it and General
Electric Co. (GE) could invest $1 billion in Varig, eliminating an onerous
$830 million debt load. The report gave Varig shares a boost.


Silva added Varig continued to negotiate a restructuring of its capital.

Boeing, the world's largest aircraft maker, struck a leasing contract in
December with Varig that allowed the Brazilian airline to reduce its debt.
The contract contained a clause saying Boeing would consider investing in
the airline.

Boeing said Tuesday it had no plans in the near future to invest in Varig,
whose operations have suffered due to a slowdown in world air traffic and a
slide in Brazil's currency against the dollar that raised operating costs.

Silva said Varig's difficulties finding a partner to take 20 percent of its
capital were similar to problems faced by the airline sector as a whole,
particularly after the Sept. 11 attacks on the United States.

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