Latvia inks controversial airBaltic deal

By bne IntelliNews February 4, 2016

The Latvian government has signed an investment deal with a German investor, who will put in €52mn in the flag carrier airBaltic on top of a government loan of €80mn, the airline announced on February 4. The deal is expected to help the struggling company stabilise and then expand into neighbouring markets with a help of a modernised fleet.

Signing of the deal with Ralf-Dieter Montag-Grimes comes after months of controversy over the plan to invite the German entrepreneur – who has strong business ties with Russia - into the Latvian flag carrier. However, Riga has been struggling to stabilise airBaltic for too long to dismiss the opportunity, while it's also keen to exploit the demise of flag carriers in neighbouring Lithuania and Estonia.

“The new equity will be used for investing into new aircraft rather than leasing them, thus giving airBaltic an advantage on the cost side and improving passenger experience. This will further enhance the connectivity of Latvia, support economic growth and create new jobs,” claimed State Secretary at the transport ministry Kaspars Ozolins.

The government has been seeking an investor for the national carrier for some time. The airline, at risk of being grounded a few years ago, has overcome immediate crisis, but Riga has been warned it needs to move fast to strengthen the company and expand its operations into neighbouring Baltic markets in order to make it more attractive for a major privatisation push.

The push has not been without political repercussions. Transport Minister Anrijss Matiss was sacked by outgoing Prime Minister Laimdota Straujuma late last year due to his apparent lack of enthusisam for the deal. That, in turn, fractured the government, which collapsed in early December. A new cabinet i due to take over shortly.

Related Articles

Lithuania calls for further committments from Gazprom to end EU anti-trust case

Gazprom’s commitments to lessen the impact of its dominant position as a supplier of gas to Lithuania and other CEE countries are not sufficient and the European Commission should ensure they are ... more

Russia offers Latvian port a slice of the Nord Stream pie

The Latvian port of Ventspils has been asked to store and handle delivery of pipes for Nord Stream 2, the controversial Russian gas pipeline project, the chairman of the port said on April 20. The ... more

Latvia opens its gas market as it seizes control from Russia

The Latvian gas market opened up to liberalisation on April 3 following entry into force of a number of legal changes. Riga has fought hard to end control of the gas transmission and storage ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss