Estimated Going Concern Enterprise Valuation

UBS Securities LLC 299 Park Avenue New York NY 10171 www.ubs.com September 12, 2005 VARIG, S.A. (VIAÇÃO AÉREA RIO-GRANDENSE) Em Recuperação Judicial Brazilian Bankruptcy Court in Rio de Janeiro, Brazil Introduction Estimated Going Concern Enterprise Valuation VARIG, S.A. (VIAÇÃO AÉREA RIO-GRANDENSE) Em Recuperação Judicial and its subsidiaries and affiliates including RIO SUL LINHAS AÉREAS S.A. Em Recuperação Judicial and NORDESTE LINHAS AÉREAS S.A. Em Recuperação Judicial (together VARIG or the COMPANIES ) retained Banco UBS S.A. and UBS Securities LLC (together UBS ) as its financial advisors on August 5, 2005. In connection with the Proposed Court Supervised Recovery Plan prepared by VARIG (the Recovery Plan ), VARIG requested that UBS, as VARIG s financial advisor, in accordance with Section 53, III of the Brazilian Bankruptcy Law, undertake an analysis of the estimated range of the going concern enterprise value of NEW COMPANY (as defined below), after giving effect to the reorganization as set forth in the Recovery Plan. The Recovery Plan provides for the COMPANIES to be reorganized by, among other things, (i) forming a new company ( NEW COMPANY ) to operate the COMPANIES airline businesses, (ii) transferring certain operational segments (as provided for in the Recovery Plan) to NEW COMPANY, and (iii) leaving certain assets and liabilities with old VARIG, subject to NEW COMPANY s right to use remaining assets under a Consortium Agreement. VARIG has provided UBS with the VARIG Recovery Plan; Operational Restructuring Plan submitted by Lufthansa Consulting GmbH on September 5, 2005, as revised on September 9, 2005 (the Lufthansa Report ) and directed UBS to rely upon the Operational Restructuring outlined in that report as the business plan ( Business Plan ) of NEW COMPANY. At VARIG s direction and request, UBS completed its analysis on September 9, 2005. IN CONNECTION WITH UBS REVIEW, GIVEN THE SHORT TIME FRAME FOR VARIG TO PREPARE THE BUSINESS PLAN, VARIG HAS NOT BEEN ABLE TO PROVIDE UBS WITH ALL THE INFORMATION UBS HAS REQUESTED THAT UBS WOULD CUSTOMARILY REVIEW OR THE CUSTOMARY TIME IN WHICH TO REVIEW SUCH INFORMATION. AS A RESULT, UBS HAS ONLY BEEN ABLE TO CONDUCT A LIMITED PRELIMINARY VALUATION ANALYSIS OF NEW COMPANY. UBS LIMITED ANALYSIS TO DATE DOES NOT ENCOMPASS ALL THE WORK UBS WOULD PERFORM FOR A MORE CUSTOMARY VALUATION ANALYSIS OF THE NEW COMPANY GIVEN ACCESS TO THE INFORMATION UBS WOULD CUSTOMARILY REVIEW AND SUFFICIENT TIME TO REVIEW SUCH INFORMATION IN CUSTOMARY FASHION. IN CONNECTION WITH A MORE CUSTOMARY VALUATION ANALYSIS, UBS WOULD CUSTOMARILY PERFORM A NUMBER OF ADDITIONAL FINANCIAL STUDIES, ANALYSES AND INVESTIGATIONS, AS APPROPRIATE. ACCORDINGLY, THE UBS VIEW EXPRESSED HEREIN IS ONLY A LIMITED PRELIMINARY VIEW. UBS DOES NOT PURPORT THAT SUCH LIMITED PRELIMINARY VIEW IS A SUFFICIENT BASIS FOR A UBS Investment Bank is a business group of UBS AG

of 8 DETERMINATION CONCERNING ANY TRANSACTION INVOLVING THE COMPANIES. UBS PRELIMINARY VIEW IS SUBJECT TO CHANGE AS UBS RECEIVES ADDITIONAL INFORMATION AND HAS ADDITIONAL TIME TO CONSIDER THE INFORMATION UBS HAS RECEIVED, AND UBS UNDERTAKES NO OBLIGATION TO UPDATE VARIG OR ITS STAKEHOLDERS WITH RESPECT TO ANY SUCH CHANGES IN UBS VIEW. Confidentiality UBS has prepared its limited preliminary estimated going concern enterprise valuation as directed by VARIG and VARIG will submit this summary description to the Brazilian Bankruptcy Court in Rio de Janeiro, Brazil (the Court ). Certain details of this document are intended to be confidential pending the outcome of a process to obtain the New Equity Investment (the New Equity Investment ), as provided for in the Recovery Plan (the New Equity Investment Process ). UBS and VARIG believe the disclosure of this document may have a material adverse impact to the maximization of proceeds available to VARIG pursuant to the New Equity Investment Process and that such process is better served by keeping certain details confidential. Certain Limitations and Assumptions In conducting its analysis, UBS, among other things: (a) reviewed certain publicly available business and historical financial information relating to VARIG; (b) reviewed certain internal financial information and other data relating to the business and financial prospects of NEW COMPANY, including the Projections set forth in Section VI of the Recovery Plan, which were provided to UBS by VARIG; (c) conducted limited discussions with Management concerning the business and financial prospects of NEW COMPANY; (d) reviewed publicly available financial and stock market data with respect to certain other airline companies UBS believed to be generally relevant; (e) reviewed the financial terms, to the extent available, of certain transactions that UBS believed to be generally relevant; (f) reviewed the Lufthansa Report (g) reviewed drafts of the Recovery Plan to be submitted to the Court September 12, 2005; and (h) conducted such other financial studies, analyses and investigations, and considered such other information, as UBS deemed necessary or appropriate given the limited information and limited time available to UBS for its analysis. VARIG has directed UBS to make certain assumptions. UBS expresses no view as to whether such assumptions are reasonable. Such assumptions include, among others: VARIG HAS DIRECTED UBS TO ASSUME THAT THE FINANCIAL PROJECTIONS FOR NEW COMPANY CONTAINED IN THE RECOVERY PLAN FROM 2006 THROUGH 2009 (THE PROJECTIONS ) PROVIDED BY VARIG TO UBS HAVE BEEN REASONABLY PREPARED ON A BASIS REFLECTING THE BEST CURRENTLY AVAILABLE ESTIMATES AND JUDGMENTS OF VARIG S SENIOR MANAGEMENT AS TO THE FUTURE PERFORMANCE OF NEW COMPANY AFTER GIVING EFFECT TO THE REORGANIZATION AS SET FORTH IN THE RECOVERY PLAN. VARIG HAS DIRECTED UBS TO DISREGARD THE FINANCIAL PROJECTIONS FOR 2010 CONTAINED IN THE RECOVERY PLAN. The Projections make certain assumptions regarding the future growth of domestic travel in Brazil and the future general economic growth in the countries in which VARIG operates, as

of 8 well as assumptions regarding NEW COMPANY s future market share domestically and internationally. The Projections also make numerous assumptions regarding specific measures to be taken by NEW COMPANY and the timing and success of those measures VARIG has directed to UBS to assume that the Recovery Plan will be confirmed and consummated in accordance with its terms, VARIG will be reorganized as set forth in the Recovery Plan, NEW COMPANY will operate in accordance with the Business Plan and NEW COMPANY will achieve the financial results as projected in the Projections. VARIG has directed UBS to assume that the legal restructuring of VARIG is implemented as outlined in the Financial Restructuring Plan section of the Recovery Plan, including the separation of certain operational segments and the formation of NEW COMPANY, as well as the operation of all airline assets, including those retained by VARIG, by NEW COMPANY under a Consortium Agreement. VARIG has directed UBS to assume there are no net fees paid by NEW COMPANY to VARIG in respect of certain claims that will remain at VARIG pursuant to the Recovery Plan. UBS expresses no view as to the legal or operational feasibility of this restructuring. VARIG has directed UBS to assume that the New Equity Investment Process has already occurred, that the New Equity Investment has been made into NEW COMPANY and that the New Equity Investment is in a sufficient amount for NEW COMPANY to execute the Recovery Plan and the Business Plan and achieve the Projections. VARIG has directed UBS to assume that $ to $ is an adequate amount of New Equity Investment required to make payments necessary to implement the Recovery Plan and to provide sufficient working capital for NEW COMPANY going forward. Accordingly, UBS analysis addresses only the estimated range of the going concern enterprise value of NEW COMPANY after such New Equity Investment has been raised. UBS has not been asked to, and does not, express any view as to the valuation or price at which such New Equity Investment may be raised. VARIG has directed UBS to assume that VARIG will obtain sufficient interim liquidity prior to the Effective Date (defined below) of the Recovery Plan such that it is able to continue its operations and execute the Recovery Plan without material deterioration of its business. NEW COMPANY s equity will be publicly traded, such that no illiquidity or private company discount has been applied by UBS in calculating the estimated going concern enterprise value of NEW COMPANY. NEW COMPANY will have full time, dedicated professional management with relevant industry experience. NEW COMPANY will have a full financial management staff including a Chief Financial Officer and relevant financial planning, reporting and management functions. The Effective Date of the Recovery Plan will be December 31, 2005 (the Effective Date ). NEW COMPANY will not engage in any material asset sales or other strategic transaction, and no such asset sales or strategic transactions are required to meet NEW COMPANY s ongoing cash requirements, other than the New Equity Investment contemplated in the Recovery Plan.

of 8 All governmental, regulatory or other consents and approvals necessary for the consummation of the Recovery Plan will be obtained without any material adverse effect on NEW COMPANY or the Recovery Plan. There will not be any material change in the business, condition (financial or otherwise), results of operations, assets, liabilities or prospects of VARIG other than as reflected in the Recovery Plan and the Projections. THE LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE OF NEW COMPANY SET FORTH HEREIN REPRESENTS A HYPOTHETICAL VALUATION OF NEW COMPANY, ASSUMING THAT NEW COMPANY CONTINUES AS AN OPERATING BUSINESS, ESTIMATED BASED ON VARIOUS CUSTOMARY VALUATION METHODOLOGIES. THE LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE OF NEW COMPANY SET FORTH HEREIN DOES NOT PURPORT TO CONSTITUTE AN APPRAISAL OR NECESSARILY REFLECT THE ACTUAL MARKET VALUE THAT MIGHT BE REALIZED THROUGH A SALE OR LIQUIDATION OF NEW COMPANY, ITS SECURITIES OR ITS ASSETS, WHICH VALUE MAY BE SIGNIFICANTLY HIGHER OR LOWER THAN THE ESTIMATE SET FORTH HEREIN. ACCORDINGLY, SUCH LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE IS NOT NECESSARILY INDICATIVE OF THE PRICES AT WHICH THE NEW COMMON STOCK OR OTHER SECURITIES OF NEW COMPANY MAY TRADE AFTER GIVING EFFECT TO THE REORGANIZATION SET FORTH IN THE RECOVERY PLAN, WHICH PRICES MAY BE SIGNIFICANTLY HIGHER OR LOWER THAN IMPLIED BY SUCH ESTIMATE. The actual value of an operating business, such as NEW COMPANY, is subject to various factors, many of which are beyond the control or knowledge of VARIG or UBS, and such value will fluctuate with changes in such factors. In addition, the market prices of NEW COMPANY's securities will depend upon, among other things, prevailing interest rates, conditions in the financial markets, the investment decisions of stakeholders receiving such securities under the Recovery Plan (some of whom may prefer to liquidate their investment rather than hold it on a long-term basis), and other factors that generally influence the prices of securities. There can be no assurance as to the trading market, if any, that may be available in the future with respect to NEW COMPANY's securities. UBS' analysis was undertaken at the request of VARIG s Board of Directors, pursuant to Section 53, III of the Brazilian Bankruptcy Law. UBS' analysis addresses the estimated going concern enterprise value of NEW COMPANY and does not address any other aspect of the proposed reorganization, the Recovery Plan or any other transactions and does not address the VARIG S underlying business decision to effect the reorganization set forth in the Recovery Plan. UBS' LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE OF NEW COMPANY DOES NOT CONSTITUTE A RECOMMENDATION TO ANY CREDITORS, HOLDERS OF EQUITY INTERESTS, OR OTHER STAKEHOLDERS AS TO HOW SUCH PERSON SHOULD VOTE OR OTHERWISE ACT WITH RESPECT TO THE RECOVERY PLAN. UBS has not been asked to, nor did UBS, express any view as to what the value of NEW COMPANY s securities will be when issued pursuant to the Recovery Plan or the prices at which they may trade in the future. The limited preliminary estimated going concern enterprise value of NEW COMPANY set forth herein does not constitute an opinion as to fairness

of 8 from a financial point of view to any person of the consideration to be received by such person under the Recovery Plan or of the terms and provisions of the Recovery Plan. UBS' analysis is based upon, among other things, NEW COMPANY achieving the Projections prepared by Management. The future results of NEW COMPANY are dependent upon various factors, many of which are beyond the control or knowledge of VARIG, and consequently are inherently difficult to project. The financial results reflected in the Projections are in certain respects materially better than the recent historical results of operations of VARIG. NEW COMPANY s actual future results may differ materially from the Projections and such differences may affect the value of NEW COMPANY. The Recovery Plan also assumes that NEW COMPANY will be able to raise sufficient new capital pursuant to the New Equity Investment Process to execute the Recovery Plan. ACCORDINGLY, FOR THESE AND OTHER REASONS, THE LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE OF NEW COMPANY SET FORTH HEREIN MUST BE CONSIDERED INHERENTLY UNCERTAIN. AS A RESULT, SUCH LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE IS NOT NECESSARILY INDICATIVE OF ACTUAL VALUE, WHICH MAY BE SIGNIFICANTLY HIGHER OR LOWER THAN THE ESTIMATES HEREIN. NONE OF THE DEBTORS, UBS OR ANY OTHER PERSON ASSUMES RESPONSIBILITY FOR THE ACCURACY OF SUCH LIMITED PRELIMINARY ESTIMATED GOING CONCERN ENTERPRISE VALUE. As part of its investment banking business, UBS is regularly engaged in evaluating businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements, restructurings and reorganizations and valuations for estate, corporate and other purposes. In the ordinary course of business, UBS, its successors and affiliates may trade securities of VARIG for the accounts of their customers and may in the future trade, for their own accounts and the accounts of their customers, securities of NEW COMPANY and, accordingly, may at any time hold a long or short position in such securities. Methodology In preparing its valuation, UBS performed a variety of financial analyses and considered a variety of factors. The following is a brief summary of the material financial analyses performed by UBS, which consisted of (a) a selected publicly traded companies analysis, (b) a discounted cash flow analysis, and (c) a selected transactions analysis. The summary does not purport to be a complete description of the analyses performed and factors considered by UBS. The preparation of a valuation analysis is a complex analytical process involving various judgmental determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to particular facts and circumstances, and such analyses and judgments are not readily susceptible to summary description. UBS believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all its analyses, could create a misleading or incomplete view of the processes underlying UBS' conclusions. UBS did not draw, in isolation, conclusions from or with regard to any one analysis or factor, nor did UBS place any particular reliance or weight on any

of 8 individual analysis. Rather, UBS arrived at its views based on all the analyses undertaken by it, assessed as a whole. For purposes of UBS' analysis, the estimated going concern enterprise value of NEW COMPANY equals the unlevered value of NEW COMPANY, before taking into consideration any cash that NEW COMPANY may have on its balance sheet, and without regard to how the company may elect to be capitalized with respect to equity and debt, determined based on NEW COMPANY, as an operating business, after giving effect to the reorganization set forth in the Recovery Plan. Further, for purposes of UBS' analysis, the enterprise value of the selected public companies and of the companies acquired in the selected transactions is defined as the market value of fully diluted common equity, plus book or market value of preferred stock, as appropriate, plus book value of outstanding debt and book value of minority interest, minus unrestricted cash, adjusted, where appropriate, to reflect recent divestitures and special dividends on a pro forma basis. Adjusted enterprise value is defined as enterprise value plus aircraft rental expense, capitalized at 7.0x the amount of aircraft rental expense. Selected Publicly Traded Companies Analysis. UBS analyzed the market value of equity, enterprise value, adjusted enterprise value and trading multiples of selected publicly held airline companies in lines of business UBS believed to be generally relevant. UBS calculated the enterprise value trading multiples and adjusted enterprise value trading multiples of the selected companies as a multiple of certain projected financial data of such companies. The projected financial data for the selected companies were based on IBES consensus estimates and, as appropriate, publicly available research analyst reports and other publicly available information. UBS then analyzed those multiples and compared them with multiples derived by assigning a range of enterprise values to NEW COMPANY, calculating the resulting adjusted enterprise values, where appropriate, and dividing those values by the corresponding projected financial data of NEW COMPANY. The projected financial data for NEW COMPANY were based on the Projections. Although the selected companies were used for comparison purposes, no selected company is either identical or directly comparable to the business of NEW COMPANY. Accordingly, UBS' comparison of the selected companies to the business of NEW COMPANY and analysis of the results of such comparisons was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in financial and operating characteristics and other factors that could affect the relative values of the selected companies and of NEW COMPANY. Discounted Cash Flow Analysis. UBS performed a discounted cash flow analysis to estimate the present value as of December 31, 2005 of NEW COMPANY s future consolidated unlevered, aftertax cash flows available to debt and equity investors based on the Projections. UBS used the Projections of NEW COMPANY s consolidated cash flows from 2006 through 2009. UBS calculated the present value of NEW COMPANY s future consolidated, unlevered, after-tax cash flows as the sum of the present value of its cash flows through 2009 and the present value of its terminal value as of the end of 2009, using two methodologies to calculate the terminal value. Present values were calculated by applying a range of discount rates to the cash flows and terminal value. The

of 8 discounted cash flow analysis also involves complex considerations and judgments concerning, among other things, appropriate discount rates, terminal year EBITDAR multiples and terminal year perpetuity growth rates. In the first method for calculating the terminal value as of the end of 2009 for NEW COMPANY, UBS applied a range of EBITDAR (Earnings Before Interest, Taxes, Depreciation, Amortization and aircraft Rent) multiples selected by UBS to the projected 2009 EBITDAR as set forth in the Projections to calculate a range of adjusted enterprise values as of the end of 2009. UBS then deducted the capitalized value of the projected 2009 aircraft rental expense, capitalized at 7.0x, in order to derive a range of terminal values. UBS then applied a range of discount rates to the terminal values as of the end of 2009 to arrive at a range of present values of the respective terminal values. In the second method for calculating the terminal value as of the end of 2009 for NEW COMPANY, UBS applied a range of perpetuity growth rates selected by UBS to the projected 2009 cash flow to determine a range of terminal free cash flows. UBS then divided these values by the difference between a range of discount rates and the range of perpetuity growth rates to derive a range of terminal values. UBS then applied a range of discount rates to the terminal values as of the end of 2009 to arrive at a range of present values of the respective terminal values. Selected Transactions Analysis. UBS reviewed selected recently completed or announced transactions involving companies UBS believed to be generally relevant. UBS analyzed the enterprise values and adjusted enterprise values implied by the transactions, and calculated the transaction multiples of the selected companies based on certain historical financial data, including revenue, EBITDAR and EBITDA. The historical financial data for the companies involved in the selected transactions were based on publicly available information. UBS reviewed seven completed or announced transactions that were announced between 1999 and 2005. Although the selected transactions were used for comparison purposes, no selected transaction is either identical or directly comparable to the transaction contemplated by the Recovery Plan and no companies involved in the selected transactions were either identical or directly comparable to NEW COMPANY. Accordingly, UBS' analysis of the selected transactions was not purely mathematical, but instead necessarily involved complex considerations and judgments concerning differences in transaction structure, financial and operating characteristics of the companies involved and other factors that could affect the relative values achieved in such transactions and the estimated going concern enterprise value of NEW COMPANY. Limited Preliminary Estimated Going Concern Enterprise Value of NEW COMPANY IN CONNECTION WITH UBS ANALYSIS, WITH VARIG S CONSENT, UBS HAS NOT ASSUMED ANY RESPONSIBILITY FOR INDEPENDENT VERIFICATION OF ANY OF THE INFORMATION PROVIDED TO UBS, PUBLICLY AVAILABLE TO UBS OR OTHERWISE REVIEWED BY UBS, AND UBS, WITH VARIG S CONSENT, HAS RELIED ON SUCH INFORMATION BEING COMPLETE AND ACCURATE IN ALL MATERIAL RESPECTS. UBS HAS FURTHER RELIED UPON THE REPRESENTATIONS OF VARIG S SENIOR MANAGEMENT THAT THEY ARE NOT AWARE OF ANY FACTS OR CIRCUMSTANCES THAT WOULD MAKE SUCH INFORMATION INACCURATE OR MISLEADING.

of 8 In addition, with VARIG s consent, UBS has not independently evaluated the achievability of the Projections or the reasonableness of the assumptions upon which they are based, has not contacted any of VARIG s customers, or suppliers, regarding the likelihood that such customers, or suppliers, will continue to do business with NEW COMPANY and has not conducted a physical inspection of the properties and facilities of NEW COMPANY. Furthermore, with VARIG s consent, UBS has not made any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise) of NEW COMPANY, nor has UBS been furnished with any such evaluation or appraisal. The estimated range of the going concern enterprise value of NEW COMPANY is necessarily based on economic, market, financial and other conditions as they existed on, and on the information available to UBS as of the date of its analysis, September 9, 2005. Although subsequent developments may affect UBS' analysis and views, UBS does not have any obligation to update, revise or reaffirm its estimate. Based upon and subject to the limited and preliminary review and analysis described herein, and subject to the assumptions, limitations and qualifications described herein, UBS' limited preliminary view, as of September 9, 2005, was that, subject to no material change in economic, market, financial or other conditions between such date and the Effective Date and no material change in the condition, projections (including the Projections) or prospects of NEW COMPANY between such date and the Effective Date, the estimated going concern enterprise value of NEW COMPANY, as of the assumed Effective Date, would be in a range between $ and $. UBS limited preliminary estimated range of the going concern value of NEW COMPANY presumes NEW COMPANY will have obtained the New Equity Investment. The New Equity Investment adds significant going concern value to NEW COMPANY. There can be no assurance that a provider of the New Equity Investment would value NEW COMPANY on the same basis as presented herein, particularly in view of the criticality of the New Equity Investment to the success of NEW COMPANY. UBS Securities LLC