Uruguay Seeks Investors for Airline to Replace Defunct Pluna

The Uruguayan government plans to auction off the Bombardier jets from defunct national airline Pluna SA and is looking for buyers to acquire the planes, hire the company's employees and re-establish a local airline in the small South American country.

The Uruguayan state may provide financing for the new buyers if the jobs are saved and debts owed to the state are honored, according to a draft bill outlined in a statement from the country's transport ministry.

The government expects the congress to pass the bill this week and to have the auction wrapped up as soon as possible, but within 60 days at the latest, the ministry said.

Last week, Pluna suspended all flights indefinitely as it struggles with insolvency.

Uruguay's government took control of the carrier last month and has been seeking a strategic investor.

Canadian investment group Chorus Aviation Inc. (CHRVF, CHR.A.T, CHR.B.T) said June 21 that its minority stake in Pluna had been transferred to a trust while it works with the government on a potential recapitalization of the airline.

Chorus paid $15 million in 2010 for a one-third stake in the holding company that owns 75% of Pluna's shares, with the Uruguayan government owning the remaining 25%.

Pluna flew to Argentina, Brazil, Chile and Paraguay. It also operated flights to Spain and Miami through partnerships with Iberia and American Airlines.

Other carriers also service Uruguay's capital, Montevideo, including Latam Airlines Group SA (LAN.SN), formed by the merger of Brazil's TAM and Chile's Lan, and state-run Argentine airline Aerolineas Argentinas.

Aerolineas Argentinas is honoring tickets sold by Pluna and will boost flights between Argentina and Uruguay to make up for the loss of Pluna, the Argentine carrier said in a statement over the weekend.

Write to Shane Romig at shane.romig@dowjones.com