BOLIVIA'S NATIONAL CARRIER: FINALLY GROUNDED?

UNCLAS LA PAZ 000884 SIPDIS SENSITIVE SIPDIS STATE FOR EB/TRA/OTP, EB/TRA/AN, WHA/AND LPETRONI STATE PASS TO DOT FOR CCOLDREN AND BHEDBERG STATE PASS TO FAA FOR CCAPESTANY AND KBERQUIST STATE PASS TO FAA MIAMI FOR MASHBY COMMERCE FOR JANGLIN E.O. 12958: N/A TAGS: EAIR ECON PGOV BL SUBJECT: BOLIVIA'S NATIONAL CARRIER: FINALLY GROUNDED? REF: LA PAZ 725 ¶1. (U) Bolivia's transportation superintendent suspended Lloyd Aereo Boliviano's domestic and international operations March 30, citing the firm's frequent flight cancellations and shaky finances. The carrier now has 90 days in which to demonstrate operating capacity and financial solvency; if it fails, it will lose its license. ¶2. (U) Labor Union President Willy Quinteros declared March 30 that the government's decision would deliver a "final blow" to the airline, calling on the GOB to intervene to save the carrier's 900 jobs and hinting at the possibility of "pressure measures" if the government refused to help. Vice President Garcia Linera did just that, announcing that the GOB "would not take charge of a business with a multi-million dollar debt" and vowing not to "risk public patrimony for the misdeeds of bad businessmen." The vice president added that the government would consider establishing a new national carrier to serve the domestic market. ¶3. (U) Comment: Despite some employees' reported optimism, resuscitating the carrier seems an almost impossible task. Cash flow problems have forced it to survive week to week (reftel),and debts stand at an estimated $140 million. Foreign investors could offer salvation, but the chances of finding a willing investor are slim -- and with the company's top executives in jail, there seem few people capable of devising a solution. End comment. GOLDBERG