The formerly state-owned carrier, Varig, is badly run, bankrupt and on the auction block.

FORBES: Stepping South Of The Border

But inefficiency and the cannibalising effects of competition combined to put three of the five, Transbrasil, VASP and VARIG, out of business.

ECONOMIST: Business travel

One airline that's benefited from Varig's woes is TAM, the country's largest.

FORBES: Stepping South Of The Border

When GOL bought VARIG, it ran its new purchase as a separate entity, but it has now changed tack to merge the two operations.

ECONOMIST: Business travel

To shore up its international position, Varig last year joined the Star alliance, a loose association whose members include United Airlines and Germany's Lufthansa.

ECONOMIST: Brazilian airlines: As free as a bird | The

Uniteds reach is getting broader with the recent launch of the Star Alliance, a partnership with Lufthansa, SAS, Air Canada, Thai Airways and Brazils Varig.

FORBES: Teaching an airline to fly

The failure of Brazil's state-owned airline, Varig, was a turning-point.

ECONOMIST: Aviation

Last year GOL, the country's second-largest carrier and itself a budget airline, quietly bought the remnants of VARIG, the national airline that had imploded after the government refused to save it.

ECONOMIST: Business travel

But Varig has started to change.

ECONOMIST: Brazilian airlines