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Cablegate: New Airline Financed by Venezuela -- Old Airline

VZCZCXYZ0008
PP RUEHWEB

DE RUEHLP #1569 1571903
ZNR UUUUU ZZH
P 061903Z JUN 07
FM AMEMBASSY LA PAZ
TO RUEHC/SECSTATE WASHDC PRIORITY 3844
INFO RUEHAC/AMEMBASSY ASUNCION 6824
RUEHBO/AMEMBASSY BOGOTA 4167
RUEHBR/AMEMBASSY BRASILIA 8052
RUEHBU/AMEMBASSY BUENOS AIRES 5301
RUEHCV/AMEMBASSY CARACAS 2535
RUEHPE/AMEMBASSY LIMA 2680
RUEHMD/AMEMBASSY MADRID 3497
RUEHMN/AMEMBASSY MONTEVIDEO 4651
RUEHQT/AMEMBASSY QUITO 5164
RUEHSG/AMEMBASSY SANTIAGO 9765
RHMFIUU/HQ USSOUTHCOM MIAMI FL
RUMIAAA/USCINCSO MIAMI FL
RUEHUB/USINT HAVANA 0348
RHEHNSC/NSC WASHINGTON DC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC

UNCLAS LA PAZ 001569

SIPDIS

SENSITIVE
SIPDIS

STATE FOR WHA/AND
TREASURY FOR SGOOCH

E.O. 12958: N/A
TAGS: EAIR ECON EAID BL
SUBJECT: NEW AIRLINE FINANCED BY VENEZUELA -- OLD AIRLINE
FINANCED BY US FIRM?


1. (SBU) The Bolivian press announced on June 6 that,
according to sources from the GOB, a new national airline
"Aerolineas Bolivianas" will soon be launched with USD 30
million of financing provided by Venezuela under the auspices
of the People's Trade Agreement and the Bolivarian
Alternative for the Americas. The GOB sources indicated that
an Executive Unit would be formed this year to undertake
marketing studies, elaborate regulations, and complete
necessary procedures to launch the new airline, which would
function "autonomously" using a competitive business model to
offer Bolivians cheaper fares. Aerosur (the main Bolivian
airline following the collapse of the formerly state-owned
LLoyd Aero Boliviano) La Paz Manager Gerad Lopez told Emboff
that Aerosur is concerned about unfair competition in the
private sector from the GOB and Venezuelan financing of a
state airline. Aerosur has also received information that
Venezuela has offered to provide discount jet fuel to
Aerolineas Bolivianas.

2. (U) Meanwhile, the press reported on June 3 that the
bankrupt, partially-privatized LLoyd Aero Boliviano (LAB) had
reached agreement with a U.S. firm, Swiss TransAtlantic
Corp., in which the U.S. company would invest USD 80 million
to purchase 50.3 percent of LAB's shares, enabling the failed
company to relaunch domestic and international flights.
(Note: LAB is currently 50.3 percent owned by workers and
48.6 percent held in trust to pay Bolivian pensions. End
note.) LAB workers lacked knowledge of the deal and demanded
transparent negotiations. LAB's general manager said on June
5 that the meeting scheduled for that day with the U.S. firm
had been postponed, but predicted that domestic flights,
which were suspended last March, would be relaunched between
June 11 and 18.

3. (SBU) Comment: On several occasions, Post has heard talk
of setting up a state-owned "Bolivarian" airline linking
Bolivia, Venezuela, and Cuba. The effective collapse of LAB
has left a void in the aviation market that the GOB is
apparently interested in filling. We suspect that the USD 80
million investment supposedly agreed upon with LAB will not
come to pass. In September 2006, a UK Virgin Islands Firm,
Trans-Atlantic Aviation, Ltd., expressed interest in
investing in LAB, but was unable to prove its legitimacy and
repeatedly delayed the presentation of registration
documents. As we have been unable to find any information
about Swiss TransAtlantic Corp. on-line, it seems that this
new interest in LAB may be more smoke and mirrors. End
comment.
URS

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