Lithuania mulling airBaltic buy-in

By bne IntelliNews July 17, 2015

bne IntelliNews -

 

Lithuania is mulling an acquisition of a stake in Latvia's airBaltic, with a decision likely to be made in the autumn, Transport Minister Rimantas Sinkevicius said on July 17. The announcement offers a little momentum to the idea that the three Baltic states could club together to create a regional 'flag carrier'.

"In the autumn, we will start to discuss and consult with the Latvians if (...) we would be able to influence the number of flights if we had a non-controlling stake," Sinkevicius told Verslo Zinios. The Latvian government, which plans to privatise a chunk of airBaltic within the next five years, suggested recently that neighbours Estonia and Lithuania buy into the company to create a regional airline that would act as the main carrier serving all three markets.  

airBaltic, which has battled through some very tough years, needs more passengers to expand its route network and that can only be achieved by tapping the markets of all three countries Latvian Transport Minister Anrijs Matiss said in June. Latvia is reportedly proposing Lithuania and Estonia buy 17% each in the carrier with all three Baltic States controlling a combined 51%. 

"We are not rejecting the proposed option. Let's discuss it, make calculations and negotiate," Sinkevicius said, according to Public Broadcasting of Latvia. 

The idea for a common Baltic region airline is not new. Lithuania has suggested clubbing together several times in recent years. It resurrected the topic in May, after its latest effort to reintroduce its own flag carrier - Air Lituanica - crashed just a couple of years in. 

National airlines across Europe have been struggling in the face of competition from budget airlines and the economic crisis, with EU rules on state aid and ownership not helping. However, tied up in the difficult financials of the industry are the emotive, patriotic issues connected to national airlines. 

On top of that, the history of pan-Baltic undertakings suggests the trio will struggle to get a regional flag carrier off the ground. The neighbours have struggled for years to get vital joint projects, such as the Visaginas nuclear power plant, or regional railway project Rail Baltica, moving as they bicker over costs and locations. 

 

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