RIGA - Latvia's government decided not to sell its stake in airBaltic on recommendation from Transport Minister Ainars Slesers, who argued that in a strategic sense the Baltics' largest airline is at odds with its minority shareholder, Scandina-vian SAS.
The Cabinet of Ministers decided not to support any sell-off deal since airBaltic, which is 52.6 percent state-owned, is developing successfully and in accordance with the public's interests.
Speaking in an interview with the Baltic News Service, Slesers reversed his earlier opinion and said that the company should not be privatized. "We believe that the state, as its major shareholder, has successfully developed the company," he said.
AirBaltic has grown rapidly during recent years, at a time when many European airlines are experiencing financial problems, he explained.
What's more, though Scandinavian SAS is relatively sound financially, airBaltic could just as easily get along without it, Slesers said.
"AirBaltic would develop more successfully without SAS as the big brother, as we have opposing interests. SAS needs to earn a profit to cover expenses in the Scandinavian market, while opening new routes without considering profits is our priority now," Slesers said.
As he explained, "We are interested in profit inasmuch as to cover the leasing of all the planes and for salaries of the employees."
Three years ago, however, Slesers had the direct opposite viewpoint. He said in March 2005 that the government had lost control over airBaltic and would never gain it back. "I think the only real solution is to negotiate the buy-out of the state-owned stake with SAS," he was quoted as saying at the time.
But much has changed in three years. For Slesers and the Transport Ministry, the goal is to transform Riga International Airport into the largest hub in the region, which contradicts SAS' interests, since it envisions Copenhagen and Stockholm as regional passenger centers.
"I don't exclude the possibility that we will have to discuss how to develop further, yet while there is a crisis in the aviation business, especially due to high fuel prices, airBaltic could develop better with the current composition of the owners than together with SAS," he said.
"We have a conflict of interests with SAS," Slesers summed up.
The minister said that after deciding against a sell-off, any privatization would be forbidden by law for the next three years.
"So during my time at the helm, during the current parliament, there will be no privatization. What happens afterwards? The next parliament will decide. During my time airBaltic shares will not be privatized," Slesers said.
He said that Latvia has informed SAS that the government would not sell its stake in airBaltic. The decision was not contestable.
"They are displeased about [the decision], but I have to care about Latvia's interests, not Scandinavian interests. My position is strict 's SAS will not gain control over airBaltic," Slesers, who is co-chairman of the Latvia's Way/Latvia's First Party Union.
SAS has repeatedly expressed its wish to acquire additional shares of airBaltic. At present the Latvian state holds 52.6 percent, and SAS the remaining 47.2 percent.
* * *
Slesers said that if a visa-free regimen with the United States is introduced in 2009, airBaltic would commence direct flights between Riga and New York. In his words, the flight between Riga and New York could last 7.5 hours, and airBaltic would use an upgraded Boeing 757 aircraft for the route so as to provide more comfort during the long flight.
"U.S. dollar prices are very attractive at present, which is why a flight to New York, living and shopping there could be even cheaper than going to London. I believe many people would like to use this opportunity," he said.
AirBaltic also plans to launch new regular flights to several Asian states, according to information from the Transport Ministry. Countries such as Armenia, Tajikistan, Turkmenistan, Kyrgyzstan, Iran, Syria, Lebanon, Saudi Arabia, Japan and South Korea have been listed as possible destinations.
At present talks and preparatory works are being performed to initial agreements on opening air traffic with these countries, the ministry said.
