LV: airBaltic capital injection to increase needed budget consolidation-FinMin.

By bne IntelliNews August 29, 2011
FinMin press service came up with an statement in which it called to recognise that increasing capital of the national air carrier airBalti could increase budget deficit and thus also budget consolidation for 2012. FinMin stresses that any decisions in this regard should be taken only after thorough evaluation and analysis. Indeed, private shareholder of airBaltic Baltijas Aviacijas Sistemas that announced last week that it is ready to sell its stake in the airline giving the government the right of first refuse, reportedly values its stake in the company at about EUR 130mn. To remind, the announcement came after last week the government decided to support the national air carrier airBaltic, either by taking the company over or injecting additional capital. However, the condition is that current CEO of airBaltic Bertold Flik (controlling BAS) is out of his chair. Other necessary conditions for government support include re-drafting the shareholders agreement and leaving Riga International Airport as the basis airport for airBaltic. As reported, national air carrier airBaltic posted unaudited loss of LVL 34.2mn (EUR 48.7mn) in 2010. Companys financial performance this year was not yet officially announced, but according to previous reports by the ministry a government-ordered audit of airBaltic showed losses of about LVL 13mn in Jan-May 2011. airBaltics supervisory board proposes the government to increase the capital of the company by LVL 63.68mn. The Communication Ministyr admitted that the financial situation of the company was poor, with its own capital being the lowest among other European carriers. At the same time PM Valdis Dombrovskis warned the minister against rushing to increasing airBaltics capital, reminding that many demands posed by the governments to its private shareholder Baltijas Aviacijas Sistemas, mainly considering the transparency of managing the airline, were not met. Air carriers second shareholder Baltijas Aviacijas Sistemas (BAS) controlled by airBaltic CEO Bertold Flik (owning 47.2% of airBaltic shares, the rest owned by the state) is constantly in tension with governments representatives over transparency of airBaltics management.

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