A NEW OUTLOOK FOR BOLIVIA’S NATIONAL CARRIER?

Código Fecha Clasificación Origen
06LAPAZ3053 14 November 2006 Solo uso oficial Embassy La Paz

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DE RUEHLP #3053/01 3181532
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R 141532Z NOV 06
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC 1266
INFO RUEHAC/AMEMBASSY ASUNCION 6273
RUEHBO/AMEMBASSY BOGOTA 3594
RUEHBR/AMEMBASSY BRASILIA 7455
RUEHBU/AMEMBASSY BUENOS AIRES 4716
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RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEANHA/FAA NATIONAL HQ WASHINGTON DC

UNCLAS LA PAZ 003053

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SENSITIVE
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STATE FOR EB/TRA/OTP, EB/TRA/AN, AND WHA/AND LPETRONI
STATE PASS TO DOT FOR CCOLDREN AND BHEDBERG
STATE PASS TO FAA FOR CCAPESTANY AND KBERQUIST
COMMERCE FOR JANGLIN

E.O. 12958: N/A
TAGS: EAIR, ECON, PGOV, BL
SUBJECT: A NEW OUTLOOK FOR BOLIVIA’S NATIONAL CARRIER?

REF: LA PAZ 2610


SUMMARY


1. (SBU) Lloyd Aereo Boliviano’s general manager recently
predicted a new outlook for Bolivia’s national carrier,
noting that the firm now has seven jets, up from one a few
months ago, and has renewed service to a range of domestic
and international destinations. Executives have made
progress identifying and settling debts, and they
increasingly believe the carrier is making a comeback.
Despite this, Lloyd continues to live month-to-month, which
suggests a full recovery may take time.


A NEW OUTLOOK?


2. (SBU) Lloyd Aereo Boliviano General Manager Franklin
Taendler spoke optimistically November 9, predicting a new
outlook for Bolivia’s national carrier. Taendler noted that
the firm now has seven jets, up from one in mid-July, and has
renewed service to a range of domestic and international
destinations, including Miami and Madrid. Flights operate
regularly and largely depart on time, with relatively few
delays of the sort once typical of the carrier. Taendler
hopes to lease three additional aircraft in the next few
months, in hopes of operating more frequent flights to the
company’s most lucrative destinations and adding new cities
to the carrier’s list of services.

3. (SBU) According to Taendler, executives have made progress
identifying and settling outstanding debts - the firm owes an
estimated $11 million to Bolivian pension funds and several
million more to suppliers, banks, and other organizations -
and expect to gradually agree payment plans with creditors,
many by year-end. Taendler noted that Lloyd has settled
debts to its previous insurer and secured aircraft insurance
through a new company. He and other executives increasingly
believe the carrier is making a comeback; as evidence, they
point to the fact that weekly revenues have increased from a
mere $50,000 to an estimated $500,000 since mid-July.


SURVIVING MONTH-TO-MONTH


3. (SBU) Despite this, Lloyd continues to live
month-to-month, which suggests a full recovery may take time.
Workers receive their salaries, but payments are often a
week or two late; executives find they must balance salary
disbursements with fuel and aircraft insurance payments.
Every dollar counts, as illustrated by Lloyd’s tentative plan
to loan one of its jets to a U.S. company operating New
York-Miami-Havana charters; according to Taendler, Lloyd
would earn $3,500 per flight, a significant sum to a company
perpetually short of cash, but relatively small change in the
airline industry.


COMMENT


4. (SBU) Lloyd’s future may look brighter than it has since
mid-July, but its recovery is far from assured. The firm has
certainly made progress, but it appears to be no more than a
few steps from the edge of the abyss, at risk of toppling
over at the first sign of renewed trouble. Recent jet fuel
shortages have complicated matters, causing Lloyd and other
carriers to delay flights, and the GOB shows little sign of
quickly resolving the issue.
GOLDBERG