=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/2006/04/05/financial/= f143650D24.DTL --------------------------------------------------------------------- Wednesday, April 5, 2006 (AP) Varig Denies Reports Grounding Is Imminent By MICHAEL ASTOR, Associated Press Writer (04-05) 14:36 PDT RIO DE JANEIRO, Brazil (AP) -- The president of Brazil's flagship airline denied reports Wednesday that his company could be forced to stop flying within the next 24 hours but acknowledged the company was short on cash. Marcelo Bottini told reporters there was no risk that Viacao Aerea Rio-Grandense SA, or Varig, would be grounded in the near term, despite heavy debt and federal demands for payment. Varig is juggling more than $2 billion in debt, and the federal airport administration has threatened to ground the company if it fails to pay its airport fees before each flight. "I discard it (the risk of being grounded), yes, without a doubt," Botti= ni said. But he added: "Our cash-flow is very limited." Bottini said he has requested a meeting with President Luiz Inacio Lula = da Silva to discuss plans to rescue the ailing company, which already is operating under bankruptcy protection. He also said he was seeking a line of credit to cover airport fees and fuel costs, to help the airline through Brazil's offseason. Brazilian summer, the high season for travel, ended in March. Varig owes the federal airport administration some 116 million reals ($54 million) and spends about 900,000 reals ($422,000) to cover its airport fees each day. On Wednesday, creditors appeared to reject an offer from Volo do Brasil, which purchased the airline's former cargo subsidiary VarigLog in January for $46 million. Volo do Brasil had offered to buy Varig for $350 million, without assumi= ng any of the company's debts. Under the proposed deal, Volo do Brasil was expected to lay off about half of the airline's 10,000 employees. Volo do Brasil is headed by Brazilian businessmen Marco Antonio Audi, Marcos Haftel and Luiz Eduardo Gallo. American investment fund Matlin Patterson has a stake of less than 20 percent in the company. Varig is still Brazil's largest international airline but has fallen to No. 3 for domestic flights in Latin America's largest country, behind TAM Linhas Aereas SA and Gol Linhas Intelligentes SA. -------------------------= --------------------------------------------- Copyright 2006 AP