The survival of Brazil's flagship airline Varig is on the line as a group of employees scramble to raise enough money for a first payment on the carrier, which faces liquidation if the money isn't paid or another suitor doesn't emerge.
The workers' group, TGV, faces a Friday deadline to make the $75 million payment, but acknowledged it may not be able to come up with the cash.
Meanwhile, Varig continued to strand passengers in Brazil and abroad on Thursday. By the afternoon it had canceled 118 of its 189 flights, Brazil's National Civil Aviation Authority said.
Other domestic and international airlines geared up to take over Varig's routes if the company is broken up, but there could be an incredible crush of people trying to get back to Brazil if the carriers can't meet the demand.
Thursday night, officials said there are 28,000 people abroad who have tickets to fly to Brazil on the airline between this week and June 30. Thirteen thousand of them are in Europe, many of them Brazilians in Germany for the World Cup. Varig also transported Brazil's national soccer team to Germany and is scheduled to bring the defending World Cup champion team back.
But the authorities insisted that some airlines were abiding with government pleas to honor Varig tickets, making it possible for Brazilians who got stuck overseas to get home - despite delays sometimes lasting days.
"I'm not minimizing the hassles for the passengers, but in the context of an emergency plan, I think it is a success," said Milton Zuanazzi, the aviation authority's general director.
Brazilian authorities have said Air Force planes could be used to bring back stranded Brazilians in a worst case scenario, and the military said Thursday that two aging Boeing 707s are available if needed.
Varig's troubles deepened Wednesday, when the airline suspended dozens of routes in Brazil, Latin America, Europe and the United States and commenced cancellations amid efforts by leasing companies to seize planes and the carrier's inability to pay everything from jet fuel to airport departure fees.
TGV's $449 million offer for Varig is far below the minimum bid set at $860 million, but Brazilian Judge Luiz Roberto Ayoub said he would accept it if TGV makes its first deposit by Friday.
Failure to do so could prompt Ayoub to order the liquidation of 79-year-old Viacao Aerea Rio-Grandense SA, or Varig.
As the deadline approached, the airline's liquidation appeared imminent, with TGV head Marcio Marsillac acknowledging that his group might not manage to scrape together the initial payment.
"No one is 100 percent sure if this money will be available on Friday," Marsillac told reporters. "If it doesn't work out with the people we are negotiating with, we won't have the money to deposit."
Marsillac said TGV was negotiating with three unnamed groups to try to raise the money.
Analysts said the judge should consider other alternatives before deciding whether to let the company die - but must act quickly before customers, who are already irate and waiting days in some cases to fly, lose complete faith in Varig.
"If the workers' consortium doesn't have the money to live up to their commitment, then let's bring in other investors," said Robert Booth, a Miami-based aviation consultant and editor of an aviation newsletter focusing on Latin America.
"This has to be done in hours, not weeks or months," he added.
Other possible investors, like Brazil's OceanAir and Portugal's TAP Portugal SA, which had expressed interest in the past, said they no longer plan to try to acquire Varig because the company's financial problems have become almost insurmountable.
Burdened with some $3.5 billion in debt, Varig has been under protection from its creditors since June 2005, when it became one of the first companies to use a new Brazilian bankruptcy law similar to U.S. Chapter 11 proceedings.
The 79-year-old company - a source of pride for Brazil and renowned until recently for stellar service - seemed on the verge of collapse this week after canceling hundreds of flights and suspending...
The bankruptcy court judge asked for clarification on how the group planned to finance the deal.