Bolivia conditions support to Aerosur rescue to debt agreement

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The Bolivian government has cooled down expectations for an imminent rescue of grounded carrier Aerosur.

William Petty, the CEO of the Franklin Mining Company, had signed a letter of intent with the Aerosur shareholders to invest $15 millions to refloat the airline, according to local news reports last week.

However, a source at the Bolivian Vice Ministry of Transport, which belongs to the Ministry of Public Works and oversees the activities of Bolivia's Civil Aviation Authority (DGAC), says that the airline "must show some real money" and reach an "agreement with key creditors".

The DGAC must agree to any relaunch plan presented by Aerosur.

"The government has impounded income from ticket sales until the tax debts are settled", he says, adding that a procedure to determine if Aerosur's shareholders could be accused of "fraudulent bankruptcy" has been initiated.

"But if Aerosur comes up with proof that they are financially strong enough to operate and if the other affected government agencies agree, we will certainly support their comeback", he says.

Aerosur stopped operating gradually after a temporary initial grounding in late March when it stopped flying to Madrid. Its domestic competitor, state owned Boliviana de Aviacion (BoA), has already absorbed much of Aerosur's local traffic and plans to incorporate Airbus A340 aircraft to operate Aerosur's abandoned long haul routes to Madrid and Miami.

After initially planning for a June start of its flights to Madrid, it now says that operations witll "begin in July". Spain's SkyTeam member Air Europa has also declared its interest in operating between Madrid and Santa Cruz de la Sierra, but not until November.

Petty had broken off negotiations earlier in May after he could not agree with the original shareholders on how to structure the historic debt load of the airline, mostly tax and social security related.

Bolivia's Minister of Public Works quantified the value of the debt as being "in the range of $330 million".

According to the agreement, Petty and the other shareholder would share the future profits, being the original shareholders entirely responsible for the historic debts.