Airport, Covid-19, Latvia, Transport

Linkaits explained that the EC decision is a "very thick document", but the basic idea is that the state must recover the funds invested by airBaltic within five to seven years.

"Penalties are also possible if these funds are not recovered in time. According to the decision, the Latvian state must submit a specific plan on how the state will recover these funds. We have agreed that the airline's management will present a detailed vision within the next six months," said the minister.

Asked what are the ideas on how the state could recover these funds, Linkaits pointed out that even before the crisis caused by Covid-19, the management of airBaltic was working on an international public offering of shares or IPO. "This work will be continued and consultants will be involved, who will assess when it is more appropriate to offer the airline's shares to private investors. This will largely depend on the general development of the situation in the aviation sector," the minister of transport emphasized.

The minister added that in case of penalties, if the Latvian state does not recover the investment within the stipulated time, the state will receive additional shares from the airline, regardless of its financial results.

"There are other mechanisms that will motivate the airline to normalize the situation as soon as possible. The amount invested by airBaltic must be returned to the State Treasury. This means either selling the shares on the capital markets or buying back the shares," said Linkaits.

Latvia has to submit the plan to the EC in a year. "The management of airBaltic will come with a concrete proposal in six months, and we will also prepare for a long enough discussion within the government," said Linkaits.

As reported, the European Commission earlier this month supported Latvian government's decision to invest up to EUR 250 mln in the share capital of Latvian airline airBaltic to help the airline overcome the consequences of the Covid-19 crisis.

The government plans to inject EUR 250 mln in airBaltic's share capital and convert a EUR 36 mln government loan into company shares. As a result of these support measures, the state will increase its stake in airBaltic from 80.05% to 91%.