Fleet modernization to start with Bombardier

  • 2012-07-11
  • From wire reports

RIGA - Latvian national airline airBaltic has chosen to buy its new planes from Canadian aircraft manufacturer Bombardier, airBaltic CEO Martin Gauss announced during a July 10 press conference at the Farnborough Airport in Great Britain, reports Nozare.lv. AirBaltic and Bombardier have signed a protocol of intent on the supply of 20 c-series planes. Gauss also expressed hope that the first planes will arrive in Latvia in 2015.
The new planes will be purchased to modernize the airline’s fleet.

Three-way competition
In April, Transport Minister Aivis Ronis visited Chicago and met with the management of Boeing, another potential supplier of new aircraft. Before this visit, the minister also visited France, meeting with the management of Airbus.
Ronis emphasizes that the decision on the airline’s procurement of new planes is up to its management; however, he adds that it must be financially beneficial and the government does not exclude the possibility to assess its impact on the development of Latvia’s economy and aviation.

Earlier this year airBaltic announced plans for consolidation of 330 million lats (471.4 million euros) by 2016 in attempts to reduce costs and increase revenue, according to the airline’s business plan.
The Transport Ministry’s State Secretary Anrijs Matiss said that increasing revenue will account for the bulk of the amount. The revenue can be increased by improving the passenger load factor, optimizing the network of destinations and pricing policy, and insuring against fuel risks.

According to the business plan, airBaltic plans to operate with a profit already in 2014, added Matiss. The airline hopes to also become more efficient, along with acquiring new planes.
No additional state investment into airBaltic will be necessary in 2012, although in 2013 the state might be requested to provide funds for the down payment necessary for fleet modernization.

Shaping up for the future
“AirBaltic’s business plan ‘ReShape’ is well-thought-out. It takes into account potential fuel price and cost increases, thus rising fuel prices will not affect the airline’s goal - to return to profitability in 2014,” said airBaltic Corporate Communications Vice President Janis Vanags in April.
Aviation expert Talis Linkaits previously pointed out that airBaltic weaknesses are its outdated fleet with inefficient fuel consumption, growing competition on the Baltic market and unclear future plans by the airline. He allowed the possibility that the airline might not be able to fulfill its profitability plan.

Vanags, however, emphasized that the airline’s new business plan outlines its future development, including fleet modernization, cost optimization, improved efficiency, revenue and network of flights.
AirBaltic set its goals to modernize its fleet and to use only two types of planes in the future, allowing the airline to operate much more efficiently and offer reasonable tickets to Europe, the Middle East, Russia and CIS countries and increase flight frequencies to highly popular destinations, explained Vanags.
By increasing flight frequency, airBaltic will improve its service to both local passengers, and those traveling in transit via Riga.

During Transport Minister Ronis’ April trip to Paris, French representatives actively inquired about the modernization of the airBaltic fleet. Ronis emphasized that the Latvian government keeps the right to assess any transaction’s added value for Latvia’s economy, including the creation of new jobs and the potential establishment of aircraft maintenance and a specialist training center in the country.

Ronis met with French Transport Minister Thierry Mariani and discussed the Latvian government’s recently approved vision within the context of EU transport priorities, emphasizing Latvia’s interest in the Rail Baltica 2 project, including the project’s financial preconditions and route. The officials also discussed the inclusion of West-East corridors in the bloc’s priority transport corridors.