Troubled Peruvian carrier AeroPeru has suspended flights for 60 days while it attempts to renegotiate its $174 million debts.

Peruvian president Alberto Fujimori says his government, which holds a 20% stake in the carrier, may bail it out if the debt is restructured, while the carrier's legal advisor Raul Del Solar claims $90 million of the debt is about to be refinanced by foreign investors.

He adds, however, that the airline - with assets worth $50 million - has run out of cash to pay for fuel and services. Unions representing AeroPeru staff meanwhile claim to have found a partner willing to refinance the debt, and have asked to be involved in the company's future.

AeroPeru was privatised in 1993, but faces tough competition from low-cost rival AeroContinente on domestic routes and foreign airlines on international services.

Delta Air Lines and Mexico's Cintra have 35% stakes in the carrier, but are thought to be planning a reduction in their holdings.

Source: Flight International