Identifier
Created
Classification
Origin
06LAPAZ816
2006-03-23 20:09:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy La Paz
how-toVZCZCXYZ0003 RR RUEHWEB DE RUEHLP #0816 0822009 ZNR UUUUU ZZH R 232009Z MAR 06 FM AMEMBASSY LA PAZ TO RUEHC/SECSTATE WASHDC 8560 INFO RUEHAC/AMEMBASSY ASUNCION 5714 RUEHBO/AMEMBASSY BOGOTA 2986 RUEHBR/AMEMBASSY BRASILIA 6864 RUEHBU/AMEMBASSY BUENOS AIRES 4095 RUEHCV/AMEMBASSY CARACAS 1414 RUEHPE/AMEMBASSY LIMA 1347 RUEHME/AMEMBASSY MEXICO 1676 RUEHMN/AMEMBASSY MONTEVIDEO 3663 RUEHQT/AMEMBASSY QUITO 4056 RUEHSG/AMEMBASSY SANTIAGO 8582 RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC RUEANHA/FAA NATIONAL HQ WASHINGTON DC RUEAYVF/FAA MIAMI ARTCC MIAMI FL RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
UNCLAS LA PAZ 000816
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EB/TRA JHORWITZ AND EB/TRA/OTP BMATTINGLEY
STATE ALSO FOR WHA/AND LPETRONI
STATE PASS TO FAA MIAMI FOR LHART
STATE PASS TO DOT FOR CCOLDREN
COMMERCE FOR JANGLIN
E.O. 12958: N/A
TAGS: EAIR ECON PGOV BL
SUBJECT: LLOYD LIMPS ALONG
REF: LA PAZ 567
UNCLAS LA PAZ 000816
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EB/TRA JHORWITZ AND EB/TRA/OTP BMATTINGLEY
STATE ALSO FOR WHA/AND LPETRONI
STATE PASS TO FAA MIAMI FOR LHART
STATE PASS TO DOT FOR CCOLDREN
COMMERCE FOR JANGLIN
E.O. 12958: N/A
TAGS: EAIR ECON PGOV BL
SUBJECT: LLOYD LIMPS ALONG
REF: LA PAZ 567
1. (U) Summary: Mid-way through a 90-day government
intervention, Bolivian national airline Lloyd Aero Boliviano
is barely limping along. With its chief executive under
attack, its finances increasingly shaky, and a U.S.-based
company initiating legal proceedings to repossess the four
aircraft Lloyd leases, survival is at best uncertain. End
summary.
2. (U) Six weeks into a 90-day GOB-mandated intervention,
Bolivian national carrier Lloyd Aero Boliviano is struggling
to overcome a series of challenges. Government attorneys
have accused its chief executive, Ernesto Asbun, of
corruption and mismanagement, and local newspapers have
suggested he could be indicted within a few weeks. Observers
say Asbun should be prosecuted for failing to meet Lloyd's
pension fund obligations, noting that he broke the law by
diverting money meant for this purpose to other uses.
3. (U) Government-appointed controller Angel Zaballa publicly
stated that Lloyd may owe as much as $149 million to pension
funds, the Bolivian national treasury, employees, and
aircraft leasing companies. The firm is undergoing a
comprehensive audit to determine the extent of its debts and
to fill a two-year gap in the publication of financial
statements, but results are not expected anytime soon. The
carrier's cash flow, meanwhile, has been undercut by
declining passenger loads (industry contacts told Econoff
March 20 that Lloyd is operating at less than 50 percent
capacity) and limited flight schedules, making it
increasingly difficult to pay for fuel and keep the company's
few remaining planes in the air.
4. (SBU) Four of Lloyd's Boeing 727 and 767 jets may soon be
repossessed by U.S.-based Pegasus Aviation, a leading
aircraft leasing company. Pegasus' deputy general counsel
told Econoff March 23 that the firm initiated legal
proceedings in U.S. District Court in Miami, with a judge
issuing an order entitling Pegasus to repossess its aircraft
upon arrival in Miami. Pegasus has formally terminated its
lease agreements and filed aircraft deregistration requests
with the Bolivian Civil Aviation Authority (reftel),making
Lloyd's continued operation of Pegasus planes illegal.
5. (SBU) Comment: Pegasus representatives told Econoff they
may be willing to renegotiate their lease agreements, but
only if Lloyd secures GOB backing. Government officials
recently said they were considering a $10 million loan for
Lloyd, but this would clearly be insufficient given the
airline's reported liabilities. Other contacts have
indicated the GOB may be drafting a decree assuming
responsiblity for the carrier's debts. Lloyd is facing the
potential loss of its chief executive, its income, and its
aircraft, which severely weakens its chances of survival.
Some say its chances are slim to none. End comment.
GREENLEE
SIPDIS
SENSITIVE
SIPDIS
STATE FOR EB/TRA JHORWITZ AND EB/TRA/OTP BMATTINGLEY
STATE ALSO FOR WHA/AND LPETRONI
STATE PASS TO FAA MIAMI FOR LHART
STATE PASS TO DOT FOR CCOLDREN
COMMERCE FOR JANGLIN
E.O. 12958: N/A
TAGS: EAIR ECON PGOV BL
SUBJECT: LLOYD LIMPS ALONG
REF: LA PAZ 567
1. (U) Summary: Mid-way through a 90-day government
intervention, Bolivian national airline Lloyd Aero Boliviano
is barely limping along. With its chief executive under
attack, its finances increasingly shaky, and a U.S.-based
company initiating legal proceedings to repossess the four
aircraft Lloyd leases, survival is at best uncertain. End
summary.
2. (U) Six weeks into a 90-day GOB-mandated intervention,
Bolivian national carrier Lloyd Aero Boliviano is struggling
to overcome a series of challenges. Government attorneys
have accused its chief executive, Ernesto Asbun, of
corruption and mismanagement, and local newspapers have
suggested he could be indicted within a few weeks. Observers
say Asbun should be prosecuted for failing to meet Lloyd's
pension fund obligations, noting that he broke the law by
diverting money meant for this purpose to other uses.
3. (U) Government-appointed controller Angel Zaballa publicly
stated that Lloyd may owe as much as $149 million to pension
funds, the Bolivian national treasury, employees, and
aircraft leasing companies. The firm is undergoing a
comprehensive audit to determine the extent of its debts and
to fill a two-year gap in the publication of financial
statements, but results are not expected anytime soon. The
carrier's cash flow, meanwhile, has been undercut by
declining passenger loads (industry contacts told Econoff
March 20 that Lloyd is operating at less than 50 percent
capacity) and limited flight schedules, making it
increasingly difficult to pay for fuel and keep the company's
few remaining planes in the air.
4. (SBU) Four of Lloyd's Boeing 727 and 767 jets may soon be
repossessed by U.S.-based Pegasus Aviation, a leading
aircraft leasing company. Pegasus' deputy general counsel
told Econoff March 23 that the firm initiated legal
proceedings in U.S. District Court in Miami, with a judge
issuing an order entitling Pegasus to repossess its aircraft
upon arrival in Miami. Pegasus has formally terminated its
lease agreements and filed aircraft deregistration requests
with the Bolivian Civil Aviation Authority (reftel),making
Lloyd's continued operation of Pegasus planes illegal.
5. (SBU) Comment: Pegasus representatives told Econoff they
may be willing to renegotiate their lease agreements, but
only if Lloyd secures GOB backing. Government officials
recently said they were considering a $10 million loan for
Lloyd, but this would clearly be insufficient given the
airline's reported liabilities. Other contacts have
indicated the GOB may be drafting a decree assuming
responsiblity for the carrier's debts. Lloyd is facing the
potential loss of its chief executive, its income, and its
aircraft, which severely weakens its chances of survival.
Some say its chances are slim to none. End comment.
GREENLEE