AirBaltic agreement published

RIGA - The Internet site pietiek.com on Oct. 1 posted a document which, according to the authors of the site, is the airBaltic shareholders’ agreement between the Latvian state and airBaltic President Bertolt Flick’s company Baltijas aviacijas sistemas (BAS), reports Nozare.lv. The agreement was concluded on March 4, 2009, and is signed by BAS representative Alnis Vitols and then-Transport Minister Ainars Slesers (Latvia’s First Party/Latvia’s Way). There is a place indicated for the signature of Transport Ministry State Secretary Nils Freivalds, but Freivalds’ signature is missing from the document.

The authors of the Web site indicate that this could be the reason why there has been dispute over the validity of the agreement, or at least over the power of Slesers to sign it at that time, in the final days before the ending of his powers as minister (Ivars Godmanis’ government fell on Feb. 20, 2009, and Valdis Dombrovskis’ government came to power on March 12), without endorsement by the signature of the state secretary. Such confirmation is required by the procedures for the signing of commercial agreements in the name of the state.

The only current way for the state to exert influence over airBaltic is through the airline’s council, where the state has three seats, while BAS has two. However, the agreement signed by Slesers appears to weaken the state’s powers in favor of Flick’s company. The previous airBaltic shareholders’ agreement with Scandinavian Airlines (SAS), the former joint shareholder, foresaw that the state should appoint the chairman of the council, while the private shareholder appointed a deputy; however, the new agreement indicates that the opposite is also possible. This effectively means that Flick’s company can not only control the entire management and board of airBaltic, but can also be in charge of the supervision of the board.

The new agreement broadens the powers of the airline’s board, and control of all major aspects of the airline’s business is put into Flick’s hands, even though the Latvian state is the majority shareholder.

Flick is able to conclude, amend or terminate major agreements worth up to 10 million euros without the agreement of the state, while the previous agreement with SAS allowed independent decisions by the board in this regard only for agreements worth up to 1 million dollars. Moreover, the agreement with SAS limited the power of the board to decide on loans and investments greater than 3 million dollars without the approval of the council; however, this point is not included in the new agreement.

With this, the board appointed by Flick also has the power to independently take decisions on matters related to the airline’s fleet, not only with relation to the acquisition of new aircraft, but also relating to the sale or leasing of aircraft.