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Government seeks investors for airBaltic

  • 2012-08-28

RIGA – On Aug. 27, Latvian government announced plans to sell half of troubled flag carrier airBaltic, which was taken over by the state in January after a bitter ownership battle, reports LETA, referring to AFP.

An advertisement placed in the European and British editions of the Financial Times by the Transport Ministry invited non-binding expressions of interest by Nov. 1 for a stake of up to 50 percent minus one share.

Transport Ministry’s representative Elina Balgalve informed business portal Nozare.lv that “Prudentia,” the government’s consultant in search of a strategic investor for airBaltic and the one responsible for the advertisement, will provide its answers later.

Balgalve also admitted that the government will discuss the attraction of a potential investor for the airline when the situation and interest from potential investors will become clear.

An injection of cash would be welcome for the Riga-based airline which on August 8 announced losses of 32 million euros for the first six months of the year.

Despite the losses, airBaltic’s German chief executive Martin Gauss said that results represented a big improvement on 2011’s performance, when it lost more than 100 million euros.

Gauss came on board after the acrimonious departure of fellow countryman Bertolt Flick, a controversial figure who remains the subject of legal action by the Latvian government over claims of mismanagement, which he denies.

The Latvian state owns 99 percent of the company after months of blame-trading ended with its November 2011 take-over of the 47-percent share controlled by Flick's offshore company Baltic Aviation Systems.

Flick had left the company in October 2011 under the terms of a salvage deal.

Gauss, who launched a turnaround plan in March, has said that airBaltic is on track to make a profit by 2014.

He has made no secret about seeking investors, telling the AFP news agency earlier this month: "For sure investors are looking at us... I can assure you there is a lot happening in the back and discussions are going on."

On July 10, airBaltic announced plans to buy up to 20 aircraft from Canadian manufacturer Bombardier in a deal worth potentially $1.5 billion.

The airline currently operates 34 aircraft from the three Baltic States’ capital cities - Riga, Vilnius and Tallinn.

It was created in 1995, four years after the Baltic states won independence from the crumbling Soviet Union, and over recent years has carved out a reputation as a low-cost regional force.