The inability of Lloyd Aereo Boliviano (LAB) to sustain even a partial flight schedule has prompted Bolivian aviation officials to suspend its licence to operate scheduled services.

LAB has been plagued by cutbacks and flight cancellations. The government lost patience after LAB stranded 1,200 passengers bound for Madrid at the end of March.

LAB may still offer charters under close supervision, but it faces bigger problems with insurance, an asset auction to cover unpaid salaries, and a $400,000 debt for fuel. Air BP, Bolivia's fuel supplier, is threatening to cut off deliveries. Franklin Taendler, LAB's general manager, complains the current jet fuel price is higher than the airline is able to pay.

The government has offered to cover the back pay but refuses to bail out LAB, claiming it cannot afford to assume the airline's debts. A group of Bolivian and foreign investors proposed to inject $50 million in new capital, but the offer has languished since February.

Bolivia's second carrier, Aerosur, would like a bigger role, but the government seems more interested in boosting its military airline, Transporte Aereo Militar (TAM). The airline has flown social routes for years, but recently acquired its first jet, a BAe 146, and used it to ferry LAB's stranded passengers to São Paulo for other flights to Madrid.

Source: Airline Business