RIGA - Scandinavian airline giant SAS has announced that it will sell its nearly 50-percent stake in the state-run Latvian airline company airBaltic.
The airline said it wanted to pull out of airBaltic because of a decision by the Latvian government not to privatize the company. SAS had previously set its sights on obtaining a majority share in the carrier.
"As a result of the Latvian government's decision not to privatize airBaltic, SAS is no longer interested in owning shares in the company," SAS Press Officer Elisabeth Manzi told The Baltic Times in an e-mail.
"SAS wants to be a majority owner, not a minority owner," she said.
At present, SAS owns approximately a 47.2-percent share in airBaltic. The bulk of the rest of the shares 's some 52.6 percent in total 's is owned by the state of Latvia. SAS CEO Mats Jansson announced the plan to sell the shares at an Aug. 14 press conference in Stockholm.
During the press conference, Jansson said SAS was pulling out of airBaltic because the company no longer has the possibility to take majority control of the state-owned airline. An aide to Transport Minister Ainars Slesers, Girts Dripe, told the Baltic News Service, however, that the main reason for the sale was disagreements over the future development of the company.
The minister reportedly said that the main goal for SAS was to maximize airBaltic's profits, while the state was interested in opening new routes and developing the Riga airport.
The sale will represent a significant change in the minority ownership of the company, but airBaltic President and Executive Director Bertolt Flick said that the company's future plans and development strategy would not be affected.
"[The] SAS announcement on sales of its shares in airBaltic does not change the growth and development strategy of airBaltic," Flick said in an Aug. 14 press release.
The Latvian government now has the preemptive right to purchase the shares before they go on the open market. Transport Ministry representatives have reportedly said, however, that the ministry does not plan to tighten its hold on the company by taking control of a greater share.
The Transport Ministry is currently preparing a written proposal for the Cabinet outlining how it wants to deal with the company following the sale. The Latvian government will only be able to take action on the company's future after reviewing the proposal.
Earlier this year, Oskars Galanders, working in conjunction with Alto and Impero Investments, submitted an offer to privatize the state-owned shares of airBaltic.
The Latvian government shot down the proposal in mid-June, citing aviation as a strategically important industry for the state and saying that the airline company helps the government ensure the implementation of public interests.
SAS has faced sinking profits this year as jet fuel prices continue to rise and world economic growth continues to slow. Between January and June of this year, SAS posted losses of 411 million Swedish kronors (43.95 million euros).
AirBaltic, meanwhile, saw one of its best months in July 2008, with the total number of passengers up by 38 percent over a 12-month period.
