=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/n/a/2005/06/02/financial/= f133351D05.DTL --------------------------------------------------------------------- Thursday, June 2, 2005 (AP) Brazil's Government OKs TAP Plan for Varig (06-02) 13:33 PDT BRASILIA, Brazil (AP) -- Brazil's government has tentatively approved a plan for Portugal's state-owned airline to take a 20 percent stake in Brazilian flagship carrier Varig to prevent the South American company from collapsing under a mountain of debt, executives said Thursday. The approval is not formal, but Varig Chairman David Zylberstajn and TAP Air Portugal Chief Executive Fernando Pinto said senior government officials agreed in principle to their rescue plan for Varig after a three-hour meeting. No financial details were disclosed, but Pinto told reporters after the meeting that "there's a lot of money involved, no doubt." "Our plan will be revealed over time," he said. "But the volume of capit= al that will enter Varig in the near future will be very large." The airlines have been negotiating for weeks, but the Brazilian government's blessing was crucial because it is Varig's largest creditor. Both TAP and Varig have said the deal will not be a merger, calling the arrangement an alliance. Analysts say such an arrangement would allow the two carriers to consolidate identical trans-Atlantic routes, expand their existing code sharing agreement and get better deals on purchases ranging from jetliners to fuel. Varig, whose full name is Viacao Aerea Riograndense SA, has debt of 9.5 billion reals ($4 billion). Much of it was incurred after the 2001 terror attacks prompted steep declines in air travel, and a depreciation of the Brazilian currency in 2002 forced it to pay more for dollar-linked costs like fuel and aircraft leasing payments. ---------------------------------------------------------------------- Copyright 2005 AP