RIGA - Latvia’s national airline airBaltic “appears to be experiencing financial problems,” claims Riga International Airport board member Andis Damlics in an interview with Latvian State Television program ‘100.pants’ (100th Article) on March 10, reports news agency LETA. According to Damlics, this is “proven” by the fact that the airline is not paying its bills on time. At the moment, airBaltic owes the airport approximately 7 to 8 million lats (10-11.4 million euros).
“The debt is no longer increasing now; the airline is trying to pay for the airport’s services in advance, although these payments are not always made on time. They are experiencing financial problems, we can see that,” said Damlics, adding that the airline was also having trouble paying utility and rent bills.
Damlics also said that the airport continued talks on a settlement with airBaltic, being aware that without the airline, which accounts for about 66 percent of the airport’s passenger turnover, there will be no work for the airport.
Riga Regional Court previously decided to put off a review of an airBaltic claim against the airport until July 19, because both sides said that they were hoping for an out-of-court settlement. The talks between airBaltic and the airport continue.
Last summer Riga International Airport demanded the airline pay a debt of almost 3.4 million lats, whereas the airline filed an almost 6 million lats lawsuit against the airport over unfair competition practices.
In mid-August, the airport and airBaltic announced signing a memorandum of agreement on stopping legal proceedings against each other and on continuing cooperation.
AirBaltic also blames Damlics for signing a discriminatory agreement with the Irish low-fare airline Ryanair and claims that, due to this agreement, airBaltic has overpaid the airport 34 million euros. “The transport minister has admitted that Ryanair’s agreement is disadvantageous to the state and the airport and discriminates against airBaltic,” emphasized the airline.
“We do not expect that the airport will repay this amount; however, this discrimination must end,” said airBaltic.
The government will consider finding investors for the airline, said Transport Minister Uldis Augulis (Union of Greens and Farmers) on March 8. Augulis said that the Transport Ministry had been given certain tasks, and it would have to present the government a report in two months regarding the financial situation at the airline and the preconditions for further development of airBaltic.
It is important to understand what is necessary for successful development of airBaltic in the future, so airBaltic would still be a success story and be “Latvia’s Nokia,” he added.
Augulis also stressed that the state would not be able to invest extra funds into the airline due to the complicated financial situation and ongoing budget consolidated measures.
Prime Minister Valdis Dombrovskis (Unity) said that the Transport Ministry had been ordered to conduct an audit at the airline so the government would have full information about the company’s financial situation, which is rather non-transparent right now.
Baltijas aviacijas sistemas, a shareholder in airBaltic which belongs to airBaltic President Bertolt Flick, and the airBaltic brands owned by Baltijas aviacijas sistemas are at risk of loss as they were used last December as collateral against a 31 million lats loan from Latvijas Krajbanka and Snoras, which belong to Russia’s billionaire Vladimir Antonov.