VZCZCXYZ0002
RR RUEHWEB

DE RUEHLP #1078 1101813
ZNR UUUUU ZZH
R 201813Z APR 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 8925
INFO RUEHAC/AMEMBASSY ASUNCION 5777
RUEHBO/AMEMBASSY BOGOTA 3065
RUEHBR/AMEMBASSY BRASILIA 6930
RUEHBU/AMEMBASSY BUENOS AIRES 4171
RUEHCV/AMEMBASSY CARACAS 1471
RUEHPE/AMEMBASSY LIMA 1435
RUEHME/AMEMBASSY MEXICO 1685
RUEHMN/AMEMBASSY MONTEVIDEO 3727
RUEHQT/AMEMBASSY QUITO 4113
RUEHSG/AMEMBASSY SANTIAGO 8658
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUEANHA/FAA NATIONAL HQ WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC

UNCLAS LA PAZ 001078 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EB/TRA JHORWITZ AND EB/TRA/OTP BMATTINGLEY 
STATE ALSO FOR WHA/AND LPETRONI 
STATE PASS TO FAA FOR CCAPESTANY 
STATE PASS TO DOT FOR CCOLDREN 
COMMERCE FOR JANGLIN 
 
E.O. 12958: N/A 
TAGS: EAIR ECON PGOV BL
SUBJECT: BOLIVIA'S TROUBLED AVIATION SECTOR 
 
REF: LA PAZ 913 (AND PREVIOUS) 
 
¶1. (U) Summary: Lloyd Aero Boliviano's crisis continues, but 
it is not alone in its troubles.  The carrier's principal 
competitor, AeroSur, is rumored to be struggling with its own 
financial problems, and civil and military airlines only 
narrowly avoided serious accidents over the weekend.  Taken 
together, current difficulties and near disasters may 
indicate growing weaknesses in Bolivia's aviation sector. 
End summary. 
 
¶2. (U) Lloyd Aero Boliviano continues to teeter on the brink 
of collapse (reftels).  Flight cancellations and rapidly 
falling revenues have made it almost impossible for Lloyd to 
buy fuel, and many suspect the airline may be forced to 
suspend all operations.  In a last-ditch attempt to save the 
carrier, its pilots' union recently proposed that employees 
buy all shares belonging to chief executive Ernesto Asbun and 
take control of the airline, but workers have been unable to 
raise the $1.5 million needed for the transaction.  GOB 
officials have repeatedly declined pilots' requests for 
assistance, refusing to fund the share purchase or to assume 
liability for Lloyd's estimated $170 million debts.  While 
those involved struggle to find a solution, the fate of 
Lloyd's 2,200 hangs in the balance. 
 
¶3. (SBU) Lloyd's principal competitor, AeroSur, is rumored to 
be struggling with its own financial problems.  The carrier 
reportedly owes the Bolivian superintendent of transport more 
than $620,000 in unpaid regulatory fees and has failed to 
meet pension fund obligations totaling $310,000.  What's 
more, outstanding trade complaints indicate the company may 
owe as much as $400,000 to U.S. parts and equipment 
suppliers.  Industry observers say AeroSur has a history of 
financial problems. 
 
¶4. (U) Meanwhile, civil and military airlines only narrowly 
avoided serious accidents over the weekend.  A small aircraft 
owned by Amaszonas, a carrier serving niche markets in remote 
locations, crash landed outside La Paz on April 14, and a 
plane operated by Transportes Aereos Militares (TAM), a 
carrier associated with the Bolivian Air Force, experienced 
similar problems on April 16.  Investigators have not 
determined the cause of the difficulties. 
 
¶5. (SBU) Comment: Taken together, current difficulties and 
near disasters may indicate growing weaknesses in Bolivia's 
aviation sector.  Both leading carriers are struggling, and 
Lloyd seems increasingly close to collapse.  Its troubles 
have left thousands of passengers stranded and scattered 
exporters' merchandise on runways across the country, forcing 
some businessmen, including a leading apparel manufacturer, 
to truck cargo across Bolivia and into Chile for shipment to 
the United States.  Lloyd's continuing crisis seems to 
reflect deeper problems, not least a possible decline in 
maintenance standards, which should worry domestic and 
international observers alike.  End comment. 
GREENLEE