Bailout plan rejected for Bolivia's AeroSur

The decision highlights what critics have called politically biased treatment of the airline in favor of 3-year-old state-owned Boliviana de Aviacion.

The upstart state airline now has a virtual domestic monopoly, and says it plans to begin flying soon to Spain and the United States, destinations AeroSur abandoned last year.

AeroSur is saddled with debts of more than $100 million, including back taxes that authorities says it owes. It halted flights last month after failing to secure new financing.

Bolivia's public works minister, Vladimir Sanchez, said last week that the company owes its more than 1,200 workers more than $30 million alone for back wages and medical insurance payments.

Its owners claim political persecution.

Former AeroSur president Humberto Roca, who still owns 7 percent of the airline, moved out of the country to avoid prosecution for alleged subversion. Bolivian prosecutors alleged the airline provided tickets to foreign mercenaries who were slain in 2009 in the eastern city of Santa Cruz, seat of opposition to President Evo Morales.

AeroSur's apparent last hope was William Petty, an American mining investor whose offer to invest $15 million to keep the airline flying was rejected by the government on Wednesday as insufficient.