State could claim up to 100 million lats from Flick

  • 2012-03-30

Bertolt Flick

RIGA - Latvia could claim that former national airline airBaltic President Bertolt Flick pay up to 100 millionlats (142.789 million euros) in damages, newspaper Dienas Bizness writes today.

It is possible that the actual goal of the state is not to actually receive the money but to improve airBaltic balance sheet, the newspaper reports quoting its sources.

The Transport Ministry and the prime minister's bureau declined to comment the lawsuit against Flick. State attorneys are working on the suit yet, but the circumstances of the case make it possible to analyze several possibilities already now.

One possibility is that Flick, as the head of the airline at the time, could be demanded to cover airBaltic losses sustained in 2010 and 2011, around 100 millionlats altogether.

The other possibility is that Latvia's claim has to be so large as to exceed the amount that Baltijas Aviacijas Sistemas (BAS), a company that formerly belonged to Flick, has loaned to "airBaltic". The exact amount of the loan is unknown, but "Dienas Bizness" writes that it could be around 50 millionlats. In this case, the claim against Flick would signal the potential investors that the amount the government claims from Flick and the amount of "airBaltic" debt to BAS will cancel each other out.

As to the first version, the claim of 100 millionlats would be made up of airBaltic losses of 34.2 millionlats in 2010 and approximately 70 million lats in 2011, however, there are several important factors to be taken into consideration, Dienas Bizness writes.

Flick stepped down on Oct. 4 last year, but the airline's losses kept growing rapidly until the end of 2011. It may be close to impossible to have a private individual pay the state 100 million lats, plus the cost of litigation is likely to even exceed this amount. However, given that the responsibility of airBaltic board had been insured, the amount of the claim could be equal to the insurance claim amount, which could be included in the airBaltic balance sheet as an asset.

Also, it is unclear if the anticipated losses of airBaltic in the years to come, which will also probably amount to dozens of millions of lats, could be used as a reason to hold the current airBaltic CEO Martin Gauss responsible.

airBaltic also had several successful years while run by Flick: in 2007 the airline posted 1.05 million lats in profit, and in 2006 - a profit of 4.6 million lats. Besides, the airline's turnover and passenger turnover have also increased significantly, reminds Dienas Bizness.