Reuters just reported that GOL has bought the Varig leftovers. GOL beat out another group led by LAN. The good news here is this: "The acquisition will give Gol, which flies to several international destinations in South America, access to Nova Varig's routes to the United States and Europe. It will also get Nova Varig's sought after and profitable slots at Sao Paulo's airport for domestic flights."

GOL is a Boeing customer. But its 737s simply cannot fly between Brazil and the US. The US market is huge. What Varig lacked in domestic feed, GOL has in spades. problem is that GOL does not have the planes to serve long haul flights. So the next steps are complex.

With Varig under the GOL wing, this is a short term win for GOL. Longer term how can GOL integrate these two firms? How does GOL exploit the new routes it acquired? No doubt there is a scramble going on – these routes decay in value if they are not flown because people learn to fly somebody else. Varig's brand value declines if it is not used. Boeing is probably scrambling to figure out a solution. But, it has to be very careful – Brazil's other airline TAM is now a customer and it cannot be seen to be too helpful to GOL at TAM's expense.

Reuters just reported that GOL has bought the Varig leftovers. GOL beat out another group led by LAN. The good news here is this: "The acquisition will give Gol, which flies to several international destinations in South America, access to Nova Varig's routes to the United States and Europe. It will also get Nova Varig's sought after and profitable slots at Sao Paulo's airport for domestic flights."

GOL is a Boeing customer. But its 737s simply cannot fly between Brazil and the US. The US market is huge. What Varig lacked in domestic feed, GOL has in spades. problem is that GOL does not have the planes to serve long haul flights. So the next steps are complex.

With Varig under the GOL wing, this is a short term win for GOL. Longer term how can GOL integrate these two firms? How does GOL exploit the new routes it acquired? No doubt there is a scramble going on – these routes decay in value if they are not flown because people learn to fly somebody else. Varig's brand value declines if it is not used. Boeing is probably scrambling to figure out a solution. But, it has to be very careful – Brazil's other airline TAM is now a customer and it cannot be seen to be too helpful to GOL at TAM's expense.