LV: airBaltic shareholder presses for capital increase.

By bne IntelliNews July 28, 2011
Private shareholder of national air carrier airBaltic BAS (Baltijas Aviacijas Sistemas, controlled by airBaltics CEO Bertold Flik) announced that it does not see the point in starting to negotiate the shareholders agreement until the government has a clear position on increased of the carriers capital. Previously Flik estimated that about LVL 100mn capital injection is needed for the company, including for fleet modernisation, which can be either raised from the government or another investor. At the same time PM Valdis Dombrovskis announced that the government has no plans in selling states stake in airBaltic. This is the second attempt on BAS behalf to exercise pressure ahead of the talks with the government: as reported this week, BAS hinted that it wishes to move the main hub of the carrier from Riga to Vilnius, by amending airBaltics shareholders agreement and to remove the clause that forbids changing the location of the main hub. As reported, a government-ordered audit of airBaltic revealed that the air carrier had LVL 13mn (EUR 18.5mn) losses in Jan-May 2011. airBaltic earned LVL 5mn profit in April and May alone and that the LVL 13mn loss in five months of 2011 was much higher than planned by air carrier's management. Transportation Minister Uldis Augulis urged the government to take measures on supporting company's liquidity, which could be injecting more capital, attracting new investors, issuing shares, etc. However, he added that the company did not show any vivid signs of insolvency. To remind, airBaltic is again in the centre of controversy with the government ordering KPMG to hold an audit of the company following announcements of EconMin Artis Kampars on the reportedly poor pre-bankruptcy financial state of the company. 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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