National airline airBaltic’s share capital will be increased by 57.6 million lats (82.2 million euros), the government decided last week, reports Nozare.lv. The government also approved airBaltic’s ‘optimization’ plan. Transport Ministry State Secretary Anrijs Matiss said on Dec. 13 that if the airline’s private shareholder, Baltijas Aviacijas sistemas fails to contribute its part of the investment, airBaltic will be issued a loan of 25.4 million lats.
Therefore, the total state investment in the airline may reach 83 million lats, of which 25.4 million lats will be retrievable. The state has already provided 16 million lats of this amount to the airline, which will be capitalized. 41.6 million lats yet to be invested in the airline will also be capitalized. Matiss admitted that BAS would probably not be able to make its part of the investment.
He and airBaltic management representatives expect that the current development scenario for the airline, and the government’s decision to invest in it, will ensure stabilization and restructuring of the airline. AirBaltic CEO Martin Gauss said that, according to the airline’s development strategy approved by the government, airBaltic’s fleet would be reduced by ten aircraft, to 24 planes next year. Also, flights on unprofitable routes will be discontinued, but the number of flights on the other routes will be increased. Gauss did not reveal the details of the ‘optimization’ plan, noting that a new business plan would be developed for the airline by February 2012.
A strategic investor for airBaltic is also being searched for, with the Transport Ministry, consulting company Prudentia and the airline’s management leading the project, Prime Minister Valdis Dombrovskis said in an interview with LNT television on Dec. 14, reports LETA. The main task now is to find a strategic investor for the airline, stressed Dombrovskis, whereas the state has to keep enough shares in it so it retains a national airline status.
AirBaltic will conclude this year with major losses that, according to the current estimations, could reach 60 million lats. Turnover will remain similar to that in 2010. The airline will continue to operate with losses next year as well. Gauss declined to predict when the airline could return to profitability, explaining that the current funding will ensure the same passenger turnover in 2012 as this year. Last year, the airline’s consolidated losses totaled 35.9 million lats; turnover 204.4 million lats, which was an 11.6 percent increase on 2009.