Judge ends bankruptcy proceedings against Bolivia's LAB

By Rainer Uphoff

Bolivia's former flag carrier Lloyd Aereo Boliviano's (LAB) relaunch ambitions have moved a step closer following a Cochabamba court's decision to withdraw bankruptcy proceedings against the carrier.

LAB, which was grounded in April 2007, resumed charter flights later that year to avoid losing its air operator's certificate. It has since been aiming to restore operations as a company partly-owned by pension funds and its employees.

Labour issues judge Teresa Arana has now withdrawn bankruptcy proceedings against LAB after the last former employee, a pilot, agreed to withdraw his demands against the carrier.

Although the decision removes an important obstacle to LAB's comeback, the launch of state-owned replacement carrier Boliviana de Aviacion (BoA) is putting additional pressure on the former flag carrier's commercial viability.

Cochabamba-based BoA plans to start operations later this month and is planning to operate five Boeing 737-500s by the end of the year. This could effectively lead to an overcapacity crisis in the small Bolivian home market, which is currently dominated by Santa Cruz-based Aerosur.

© Reed Business Information 2009