Tricky Flick facing cloudy skies

RIGA - AirBaltic CEO and President Bertolt Flick could be heading to jail if he refuses to submit his official state income declaration, as requested by the State Revenue Service (SRS), reports news agency LETA. The SRS has given Flick, and the airline’s board members, until Christmas to submit their income declarations. The SRS has already sent a letter to Flick with the request for him to submit his income declaration.

The airline president reportedly earned approximately 49,000 lats (70,000 euros) before taxes in October alone, making him arguably the best-paid state official in Latvia.
The State Revenue Service claims that, in accordance with a recent ruling by the Administrative Regional Court, Flick can be considered a state official. Revenue Service representative Agnese Grinberga said that since the court had ruled that airBaltic board members are state officials, Flick, a member of the airBaltic board, is also a public servant, which means that Flick must hand in his income declaration.

The Revenue Service says that if a state official does not hand in an income declaration, the person will be given an administrative penalty, and if the income declaration is still not submitted, the person may be sentenced for up to two years in prison or handed a fine of up to 60 minimum monthly wages.
Precise information on Flick’s income has not been revealed. The monthly salary Flick receives as president of the national airline is almost 22,000 lats before tax, or approximately 14,000 lats after tax. In October his income jumped to 49,000 lats before tax. This year it is estimated Flick will earn at least 287,000 lats for his work at airBaltic.

Flick previously claimed that he, as well as all other airBaltic members, do not have to submit income declarations to the Revenue Service and that information about salaries, the company’s contracts and other such information is confidential.
Controversy erupted earlier this year as revelations about Flick’s salary surfaced. In August, Prime Minister Valdis Dombrovskis (New Era) said, after discussions, that the airline’s president was “prepared to reconsider his salary,” when it emerged that Flick’s salary, in 2007, reached an average 29,000 lats per month. This included salary and bonuses based on the previous year’s company performance. Dombrovskis said that the salary ceiling established for other heads at state companies did not apply to airBaltic, since the state owns only “a part of its shares, not 100 percent.”

Dombrovskis said however, that the salary for the company’s chief should depend on the economic situation in Latvia and on the company’s financial results.
Though airBaltic was announced Airline of the Year 2009/2010 Gold Award winner by the European Regions Airline Association, it’s still coming off a bad year, where its 2008 results showed a 27.8 million lats loss. Latvia’s economy contracted 18.4 percent in the latest quarter.

AirBaltic has also decided to outsource ground handling services, away from Riga’s airport, including passenger registration and other services, starting in January. The outsourcing company will be North Hub Services, which indirectly belongs to Flick through his Baltic Aviation Systems. Riga International Airport will therefore be giving up its monopoly on these services.
North Hub Services was established on Aug. 25 this year. The company will service not only airBaltic aircraft, but also other airlines, becoming a competitor to the airport’s ground handling business.

Last year Riga’s airport served 3.7 million passengers, of which 2.3 million passengers flew on airBaltic. AirBaltic is a taxpayer-owned corporation. The Latvian state owns 52.6 percent of the company, and Baltic Aviation Systems SIA, which itself is controlled by Flick, owns 47.2 percent.