Latvian government takes over airBaltic

01.12.2011, 11:50

On 30 November, the Latvian government bought a 47.2% share in the Latvian national carrier airBaltic. In addition to the 52.6% share Latvia already held, this now makes the Latvian government a 99.8% shareholder in the airline, reports news2biz.com

The shares were previously owned by Baltijas Aviacijas sistemas, the business venture of the airline's former CEO Bertolt Flick. Flick had purchased the shares with a loan from Latvijas Krajbanka, which has now closed its doors and is heading for insolvency. Latvijas Krajbanka's new administrators – appointed by the Latvian financial watchdog – offered the state to purchase the shares for their nominal worth, LVL 224,453. The Latvian government agreed.

The government decided to take over the shares because there are serious doubts whether BAS can provide the necessary investments in airBaltic. This means that the Latvian government now has to fund all the investments itself. They could reach about LVL 77m. In order to raise money, the government is planning to issue new airBaltic shares on 22 December, worth the necessary LVL 77m, and offering them either to BAS or any new strategic investors.