Airport, Financial Services, Investments, Latvia, Transport

Matiss admitted that the state should not be managing the airline business. When the financial situation at airBaltic stabilizes, it will be necessary to attract a strategic investor to develop the airline's routes and fleet, writes LETA.

However, according to the European Union regulations, for the airline to maintain its status as the national airline, the given EU member state or its citizen must have "effective control over the airline".

Commenting airBaltic shareholders' finances after the airline's share capital increase, Matiss pointed out that, first of all, the airline has still not settled its debts with various suppliers, airports and leasing companies. Secondly, the investment will be used to modernize the airline's fleet. In November, the airline will stop using "Fokker" airplanes and buy new planes on lease. The first installment for the ten new planes could amount to LVL 10 million.

Matiss confirmed that the airline still intends to lay off 200-250 employees, who are currently servicing "Fokkers". Some of them could be retrained to service the new planes.

Commenting airBaltic President Bertolt Flick's forecasts that the airline will operate fewer flights already this autumn, Matiss pointed out that air transportation is a seasonal business and, due to several objective reasons, there are fewer passengers in winter. The airline could also optimize its routes, which was one of the main reasons for its losses.

At the same time, Matiss disagreed with Flick's statements that the new Riga International Airport terminal is no longer needed. The ministry's representative pointed out that the airport has excellent business ideas, which will be developed in the future. The terminal is also important due to Latvia's 2015 EU presidency, when the number of passengers will increase.

Matiss pointed out that the government is now more certain about the actual beneficiaries of the airline's minority shareholder – Baltijas aviacijas sistemas.

The government must be sure that the actual beneficiaries have the necessary funding to invest in the airline's share capital so that the state would not have to invest the entire LVL 100 million on its own.

As reported, during a closed Cabinet meeting yesterday, the government agreed to allocate LVL 57.6 million to increase the share capital of airBaltic.

If airBaltic's minority shareholder fulfills its conditions, Transport Minister Uldis Augulis (Union of Greens and Farmers) has been given the authority to sign such an agreement.

On September 29, an airBaltic shareholders meeting is to be held, during which decisions on increasing the airline's share capital will most likely be made, as well as changes to the airline's board and council, as well as to the shareholders' agreement.