Varig economic difficulty. This purchase not only made Varig the largest airline in South America but also granted rights to other cities in Latin America, Miami, the West Coast of the United States and to Japan. European services started on . Varig had been lobbying for European concessions for more than ten years, but after the sudden shutdown of Panair do Brasil by the Brazilian military government Varig was granted rights previously held by Panair and was ordered to immediately operate all scheduled services, including Panair's flight scheduled to depart that very night from Rio de Janeiro-Galeão to Recife, Lisbon, Paris-Orly
Varig a new competitor in the Brazilian market: Gol Airlines and increasing competition of VASP and Transbrasil fighting for survival by dumping fares. Furthermore, for the first time since 1961, Varig lost the first place in the domestic market share in terms of passengers/km for TAM Airlines. Later in the year, the September 11 attacks further increased operational and economic difficulties of Varig. In 2002, Ruben Berta Foundation merged the administration of Varig and its subsidiary Rio Sul Serviços Aéreos Regionais (which included the brand Nordeste Linhas Aéreas Regionais). The three brands were used separately with Rio-Sul and Nordeste providing feeder