TAM/Varig merger gets closer

From Airwise.
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The proposed merger between struggling Brazilian airline Varig and its smaller rival TAM is looking more likely after moves by its parent organization.

The Ruben Berta Foundation, which controls the airline, has approved the legal terms of the tie-up which is seen as the only way for Varig, burdened with huge debts, to survive.

The timing of the merger between the country’s two leading carriers now rests with the Brazilian government which is keen to see it go through. The merger could be completed by the end of this year.

Following the Ruben Berta decision, Varig said that it estimated the merger may take about three months to be concluded, once the agreement as signed.

Opposition to the tie-up has come from within Varig where the company’s pilots have mounted a legal challenge to the proposed deal with TAM because of worries over pensions. Varig said it would appeal against the legal blocking tactic.
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I’ve said it before but I don’t believe that this is the best deal for TAM. History shows what happens when debt ridden companies merge.