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Venezuela to settle part of $4 billion debt to airlines

Staff writer |
Venezuela's cash-strapped government has agreed to pay part of $4 billion owed to foreign airlines and may soon allow them to aggressively raise airfares as it works to head off more carriers from leaving the country.

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Finance Minister Rodolfo Marco Torres announced a deal to allow six Latin American airlines including Colombia's Avianca and AeroMexico to repatriate revenue from local sales in 2012 and 2013. The debt deal was reached in a closed-door meeting with representatives of the airline industry.

Alitalia of Italy and Panama's Copa this month became the latest airlines to cut flights to Venezuela, citing the debt impasse.

The deal came just a few days after President Nicolas Maduro denied that airlines are leaving over debts, arguing that some are temporarily rerouting planes to meet surging demand to travel to Brazil for next month's World Cup.

Airline representatives reported that Venezuela's government also said airfares starting in July will be based on the country's weaker Sicad II exchange rate of about 50 bolivars per dollar compared with the official rate of 6.3 to the dollar. The government did not comment on that possible change.

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