Latvian national airline “airBaltic” needs new management, said Latvian Minister of Economics Viktors Valainis in his interview to Latvijas Radio on Friday, the 3rd of January.
“For the company to continue operating successfully from now on and accomplish established strategic objectives, the company needs new management,” said the minister.
In his interview to LTV programme “Rīta panorāma”, the minister said on Friday the decision to cancel flights does not inspire confidence about sufficient planning and risk management.
“Such behaviour hurts not only the company’s reputation but also negatively impacts Latvia’s economic development,” said the minister. At the same time, Valainis also reminded that airBaltic has even leased some of its aircraft to another airline.
Valainis also said the CEO of airBaltic should take responsibility for this situation.
“I believe the company itself is very good, but society lost trust in the company’s management some time ago,” said Valainis, adding that the only way to restore public trust in the company is by appointing new management.
He also said that the operational management of the airline is in the hands of the board and the decisions on the leasing out of aircraft and the cancellation of flights are operational decisions. “This situation did not appear on its own. These are decisions made by the board. This is the board’s business plan, their business model,” said Valainis.
The minister also said he plans to discuss this topic with his colleague [Minister of Transport] Kaspars Briškens. The situation will also be discussed at the meeting of the board of the Union of Greens and Farmers.
As previously reported, on the 2nd of January, airBaltic announced the cancellation of flights on 19 of its destination routes and reduction of the number of flights on 21 routes for the summer season. This decision, according to the airline, came as a result of slow engine maintenance performed by “Pratt & Whitney”. A total of 4 670 flights were cancelled.
After this announcement, Latvian Minister of Transport Kaspars Briškens took it to X to announce his decision to order the management of airBaltic to immediately explain the reasoning behind the cancellation of flights and the effect this decision will have on Latvia’s international connectivity.
At the same time, Briškens also mentioned that the management of airBaltic, including CEO Martin Gauss and Council Chairman Klāvs Vasks, have the duty to realise their promises on the attraction of EUR 300 million for the company’s business plan and ensure airBaltic meets the interests of the Latvian state and passengers.
On the 30th of August 2024, the Latvian government agreed at a closed meeting to lower airBaltic capital by EUR 571.292 million in preparation for the initial public offering (IPO). The government also agreed to simplify the company’s existing share structure. Data from Firmas.lv, however, suggests these changes still haven’t been implemented.
Regulations on the lowering of the base capital mention that airBaltic’s capital is to be lowered to EUR 25.179 million.
At present, the airline’s share capital consists of 25 647 282 Class A shares, each of which has a nominal value of ten euros; 74 323 152 class B shares, each of which has a nominal value of three euros; 113 164 518 class C shares, each of which has a nominal value of one euro; and 38,660,300 class D shares with a nominal value of ten cents.
It is expected that the nominal value of all shares of categories A, B and C will be reduced to ten cents and EUR 571.293 million will go to cover the accumulated losses of previous years.
It was also reported that on the 30th August, the Latvian government agreed in the closed part of the meeting that the state should retain at least 25% plus one share in the company’s capital after the IPO of airBaltic shares.
Briškens previously explained that negotiations with airBaltic’s strategic investors do not include the sale of the controlling package of shares, rather it includes the acquisition of the minority package of shares.
Business news agency Bloomberg, citing informed sources, previously reported that the German national airline Lufthansa was considering buying shares of airBaltic.
LTV programme “De Facto” reported in September 2024 that, according to available information, there were plans to sell 10% of shares to airBaltic’s strategic investor.
So far, Briškens has not officially said anything as to the identity of the potential strategic investor and whether or not it is Germany’s Lufthansa. “The work is ongoing, there must be mutual agreement to disclose such information. As soon as the transaction documents are closed, both parties will comment on it,” the minister previously said.
At the same time, the Minister previously emphasized that the responsibility for raising capital lies with the CEO and Chairman of the Board of airBaltic Martin Gauss and the Chairman of the Board of airBaltic Klāvs Vasks. “The work of the company’s management will be evaluated according to the results achieved,” the minister said.
airBaltic carried a total of 4.536 million passengers in 2023, an increase of 35.7% compared to 2022, and 44 100 flights, an increase of 18.3% compared to the year before.
The audited turnover of airBaltic in 2023 was EUR 664.289 million, which is an increase of 33.2% compared to 2022. The company made a profit of EUR 33.852 million as opposed to losses a year earlier.
The Latvian state owns 97.97% of airBaltic shares, while financial investor, Danish entrepreneur Lars Tussen’s Aircraft Leasing 1 owns 2.03%.