This week in Latvia unfolded under the sign of airBaltic. The question—whether to grant or deny a 30 million euros short-term loan to the national airline—not only triggered loud political turbulence but nearly became the cause of the government’s collapse. Why exactly airBaltic became the tipping point that almost overturned the government of Evika Siliņa, BNN asked political analyst Filips Rajevskis, co-owner of the company “Mediju tilts”.
“An airBaltic bankruptcy would not just be the end of this government and its coalition parties—it would be a massive blow at the state level,” the analyst explains. “If we imagine airBaltic going bankrupt and the associated costs, the collapse of Parex Bank would look like child’s play in comparison. The government—and also Jaunā Vienotība—understands quite well that it cannot afford another Parex-type bailout, or more precisely, a failure to bail out. airBaltic forms a very significant part of our economy, and the domino effect would immediately hit Riga International Airport, which would also instantly be unable to meet its obligations. It would be one problem after another. Not to mention ‘small things’ like people who have already bought tickets for summer holidays and would not be able to fly—and in such a situation, no one would compensate them. That is why it is strange that all this noise is being made over just 30 million euros, because in reality much more money will be needed,” says Rajevskis.
He adds that 30 million euros is insignificant for such a company: “Its daily turnover is significantly higher than that, and more funding will be needed. I think we can largely forget the hope that anything will be repaid in August. More likely, additional investment will be required, because the objective reality is that fuel prices will not fall in the near future.”
Asked whether there is a scenario in which the national airline could become self-sustaining, or whether it will always depend on state financial injections, the political analyst admits that governance and spending efficiency appear problematic. As an example,
he points to the initial public offering (IPO), which has been repeatedly started and halted.
“You cannot simply announce: we are stopping the IPO. The IPO process involves consultants and significant costs. Now the question is how much it has cost, whether it has truly been stopped, who is paying the bills if the process continues, and so on. There are many consultant contracts involved, which is quite typical for state-funded entities. Aviation is a complex business, and from an economic perspective, having a national airline is beneficial. airBaltic contributes to Riga being a Baltic hub. Connectivity is extremely important for investment and business—if people cannot fly here, we can immediately say goodbye to many investments. Therefore, even if we have to subsidize it somewhat, it is absolutely justified given the economic contribution,” Rajevskis explains.
When asked whether the potential dismissal of Transport Minister Atis Švinka (from Progresīvie) could be seen as a victory for the Zaļo un Zemnieku savienība (ZZS), the analyst responds:
“ZZS’s victory is that ‘Jaunā Vienotība,’ through Siliņa, has taken responsibility for practically everything happening in the transport sector. And that’s not just airBaltic—it’s also Rail Baltica, and all the issues with road transport, including reduced bus services due to high fuel prices. They have taken on a very broad responsibility. If they had said they were only taking responsibility for airBaltic, that would be one thing, but as I understand from the statements, they have assumed responsibility for the entire sector.
It will be very interesting to see how this unfolds.”
Another major issue this week—one the ruling party would prefer not to discuss, yet can no longer ignore—is the statement by former State Chancellery director Jānis Citskovskis regarding Siliņa and two other individuals using a VIP lounge at Amsterdam airport, costing the state more than 4,000 euros. The prime minister quickly stated that the claims were untrue and that she would consider legal action for defamation. It has since been confirmed that the lounge was indeed used and that the state paid 4,184 euros for two visits in March 2024. Does this mean the prime minister attempted to mislead?
“This is like a micro aviation scandal, a mini version of the Kariņš scandal—there is denial and a very emotional reaction. I’m surprised she didn’t know such documents existed. Either she rushed her response, or her advisers failed to warn her that this would eventually come to light. In any case, it severely damages trust in public administration as transparent, honest, and accountable,” Rajevskis says.
Asked whether this case could have longer-term consequences in the context of upcoming elections, the analyst notes that it will certainly affect the ruling party’s ratings.
“The latest poll numbers were not good, and this will push them even lower. This is not like the airBaltic debate, where the sums involved are so large that 99% of people cannot fully grasp them. Here it’s 4,000 euros, a VIP lounge, two hours—everyone understands that,” concludes Filips Rajevskis.
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