LIMA, Peru (AP) -- Peru's largest airline, grounded because of its reputed ties to cocaine trafficking, has transferred ownership to its employees in a bid to obtain an insurance policy to restart flights, the transportation minister said Wednesday.

Aero Continente's flights could resume immediately under the new name, Nuevo Continente, or "New Continent," Jose Ortiz told a congressional commission.

"I have been officially informed that the company has transferred 100 percent of its capital from the sale of shares to the company's 1,500 managers, employees, flight crews and workers," Ortiz said. "This will permit the insurance to be issued without further difficulties."

The world's largest airline insurer, Global Aerospace, pulled its contract with Aero Continente after the U.S. government blacklisted the airline on June 1. The carrier, which handled more than 60 percent of Peru's domestic aviation market, stopped operating July 12.

Peru is desperate to restart the airline, which stopped flying amid Peru's peak tourist season and the Copa America soccer tournament being held in several Peruvian cities.

The American blacklisting prohibits U.S. citizens or companies from conducting business with Aero Continente, its top executives or its subsidiary companies. Global Aerospace is partially owned by U.S. interests.

Aero Continente founder Fernando Zevallos, 47, has been the subject of numerous U.S. drug probes, but has never been convicted of a crime and denies any wrongdoing. He is now on trial in Peru on drug trafficking and money laundering charges.

He is also wanted in Chile, along with his sister, Aero Continente President Lupe Zevallos, on witness tampering charges in a money laundering case there.

Zevallos in 1995 transferred his 80 percent majority share interest in Aero Continente to his family without compensation. U.S. investigators believe the move was to avoid a shutdown of the airline and to prevent the seizure of Aero Continente assets after Zevallos was implicated in a 3.3-ton cocaine shipment seized in northern Peru.

Copyright 2004 The Associated Press.