RIGA - Latvian national airline airBaltic’s council on Oct. 21 confirmed the former head of Hungarian airline Malev, Martin Gauss, as the airline’s new CEO, replacing Bertolt Flick who was ousted as part of a restructuring plan as the airline veered towards bankruptcy. “I am very much looking forward to being part of the airBaltic team. The airline has a very strong brand and is an energetic and innovative company. It will be my task to set up clear structures which are missing at present. I will introduce corporate governance in order to reach a financially positive airline operation, Gauss said in a statement, reports LETA.
Gauss, who is from Germany, is an experienced airline professional with nearly 20 years in the industry, and in the European Union aviation market. Between April 2009 and May 2011, Gauss was the CEO of the Hungarian carrier Malev, an airline with 22 aircraft and more than three million passengers in 2010. There he simplified the fleet from five different aircraft types to two and established new structures.
The 43-year-old Gauss started his aviation career as a pilot with British Airways subsidiary Deutsche BA in 1992, and gradually moved his way up to management.
He is “the best candidate for the third board member and next CEO of Latvia’s national airline airBaltic,” Transport Minister Uldis Augulis (Union of Greens and Farmers) told the LNT morning show ‘900 sekundes’ on Oct. 21. The minister pointed out that Gauss is the most suited candidate in terms of know-how, his vision of the airline’s development, experience and capabilities.
Augulis explained that Gauss has agreed to become the airline’s new CEO and his monthly salary could amount to 20,000 lats (28,500 euros), even though the airline has reportedly lost 95 million lats over the past 3 years, and operating losses are expected to continue as the shareholders work on a turnaround, and possible exit plan. Flick was paid more - 26,000 lats per month - even as his management team ran the airline into the ground.
Altogether, 30 candidates for the post were assessed, including Latvian citizens.
As part of the restructuring, the State Treasury on Oct. 21 transferred 16 million lats to the Transport Ministry’s account, money which will be invested in the share capital of airBaltic. Augulis, however, could still not say when, exactly, airBaltic’s other shareholders would invest their share in the airline’s share capital.
Augulis explained that consulting company Prudentia is currently working on a report on implementation of the shareholders’ agreement, and after the government approves the report the loan agreements with the airline could be signed and investments made in the airline’s capital.
The Transport Ministry previously said that work continues so a state loan could be provided to the airline. The airBaltic loan agreement is being worked on and harmonized by all parties involved: the Transport Ministry, the State Treasury and airBaltic.
According to the new shareholders’ agreement, the state will proportionately participate in increasing airBaltic share capital. By Oct. 14, the state was to loan the operation 16 million lats and the private shareholder 14 million lats.
Additional difficulties may crop up with the state’s investment of new funds. Business daily Dienas Bizness writes that it is possible that the European Commission will deem the state’s loans as state aid. Attorney Ugis Zeltins of Railda, Lejins & Norcous says that this can then be declared illegal, and the funds would have to be repaid, even if the company is then forced into bankruptcy.
The Treasury last week said it has prepared documents for submission to both the EC and the International Monetary Fund, though the EC says it has not yet received them, confirmed the EC Representation Latvian press secretary John Krastins.
With a new captain at the stick at airBaltic, the airline continues its work to fly out of the clouds. The executive board supervising operations will consist of the following three members - Gauss, Chief Operations Officer Laila Odina and Chief Finance Officer Vitolds Jakovlevs.