Today, on September 20, the Cabinet of Ministers deliberated the report by the Ministry of Transport and the financial consultant Prudentia on the progress made in negotiations with the private shareholder of airBaltic – “Baltijas Aviācijas sistēmas” (BAS) since the government sitting of September 13 when the government called on BAS to immediately fulfil the conditions imposed by the government to ensure the state’s participation in the stabilization of the airline.
The Ministry of Transport informed that contrary to the previously expressed consent, BAS has not fully complied with the conditions imposed by the government, therefore Prudentia continues negotiations with BAS on their fulfilment and on separate points which reveal substantial additional risks. Moreover, after hearing of the reporters at the government sitting, it was found out that BAS does not reveal the true beneficiaries and has not submitted a set of necessary evidences, including, the annual report of airBaltic 2010.
At a press conference after the government sitting, Prudentia mentioned that before deciding on investing money in airBaltic, the government should have reasonable assurance that this investment complies with national interests and that BAS really has sufficient financial resources to invest in the fixed capital of airBaltic in proportion to the state’s contribution.
At a press conference after the government sitting, Prime Minister Valdis Dombrovskis stressed: “The state needs documentary evidence of the solvency of BAS - the private shareholder of airBaltic and true beneficiaries who stand behind this company. Without such guarantees the government can not take the risk and invest taxpayers’ money in airBaltic.”
The Head of the Government informed that the government still considers a proportional increase of the fixed capital as a priority option and, therefore, the government has asked the Ministry of Transport and Prudentia to continue negotiations with BAS and Latvijas Krājbanka on signing the Protocol of Intent on the state’s participation in increasing the fixed capital of airBaltic and stabilizing the financial situation of the company.
Taking into account the developments in the situation regarding airBaltic, the government also considers other forms of public participation, because it is important to maintain Latvia’s position in the aviation sector and further develop the Riga Airport as a regional air traffic centre. Therefore the government has assigned the Ministry of Transport and consultant to work on alternative solutions. Selling of the state-owned shares of airBaltic will be considered as one of alternative solutions.
As previously reported, on August 23, the government made a conceptual decision to participate in the stabilization of the financial situation of airBaltic by imposing a set of conditions. The financial consultant Prudentia was given a task to agree with the BAS on changing the management of airBaltic, on the amendments to the company statutes as well as on changes to the shareholders’ agreement, ensuring that the shareholders’ relations shall be regulated by the provisions of the Commercial Law as well as on the preservation of Riga Airport as a base airport of airBaltic.
If these conditions are met, the government expressed its readiness to consider the following scenarios – to take over the BAS owned shares of airBaltic or together with the private shareholder to proportionally increase the fixed capital of the air operator
The state of Latvia as a majority shareholder owns 52.6% shares of the air operator airBaltic while the private shareholder “Baltijas Aviācijas sistēmas” owns 47.2%. The government of Latvia has attracted the financial consultant Prudentia to assess the financial situation of airBaltic and to decide on further activities of the air operator.
Audio file of the press conference:
Information on the chronology of the government’s resolutions:
Press Secretary to the Prime Minister
Phone: 26556965, 67082865