BRA Needs Cash To Remain In Operation

This is the last thing the oft-beleaguered Brazilian airline industry needed. This week, BRA Transportes Aereos (BRA) announced it has suspended all flights -- a move the airline hopes will be temporary, as it seeks a massive infusion of operating capital.

Reuters reports the airline asked Brazil's aviation authority Tuesday for permission to suspend operations. The carrier started service in 1999 as a small charter operation, but today flies to 26 cities in Brazil and three international routes using a 10-plane fleet of Boeing 737s and 767s.

"BRA is seeking a cash infusion from its shareholders so that it can normalize its operations," said an airline spokeswoman, who declined to specify just how much money BRA needs.

BRA is the fourth-largest Brazilian airline, with 4.6 percent of the domestic market.

In addition to causing Brazilian passengers additional strife -- as the country struggles to deal with problems ranging from striking air traffic controllers, technical problems plaguing the nation's radar systems, and two high-profile fatal accidents in the last 14 months -- BRA's announcement also puts homegrown planemaker Embraer in a pinch.

In June, BRA announced an order for 20 passenger jets, a deal worth an estimated $736 million list. In a statement to ANN Wednesday, Embraer said "it is carefully following the subject, as it unfolds, and that any developments which may arise will not have a negative affect on delivery forecasts previously disclosed by the Company."

BRA sold off a 20 percent stake in the airline in December 2006, to a group of seven investors including Bank of America, Goldman Sachs, and Darby Investments -- the latter a firm founded by former US Treasury Secretary Nicholas Brady.

The airline is controlled by two brothers, Humberto and Walter Folegatti, according to Reuters.

FMI: www.voebra.com.br/, www.embraer.com