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Augulis: Latvia cannot afford to continue pumping money into airBaltic

Alla Petrova, BC, Riga, 10.06.2011.Print version
Latvian Transport Minister Uldis Augulis (Union of Greens and Farmers) has sent a letter to the shareholders of Latvian national airline airBaltic, pointing out to the airline's losses in the first quarter of the year and informing them of the state's restricted possibilities in financially supporting the company if it becomes necessary, the business information portal Nozare.lv was informed by the minister's advisor Inara Pomere.

Uldis Augulis.

The transport minister points out that, taking into account the shareholders agreement signed in 2009 according to which the state currently has little influence in the airline's commercial activities, the company is basically being managed by representatives from the airline's private shareholders, and thus the state will not be able to pump additional money into the company if it becomes necessary, writes LETA.

With this, airBaltic will only be able be able to obtain additional financing from the company's private shareholders if necessary, Augulis points out in the letter.

As reported, in an interview with "Rietumu radio" this morning, Economy Minister Artis Kampars (Unity) said that airBaltic operated with a loss of LVL 18 million in the first five months this year and is close to bankruptcy.

The minister believes that the huge loss was created on purpose, to "pump out funds" from the company.

Kampars said that he had received alarming information. "Last year Latvian government invested more than LVL 15 million into the company to make sure that airBaltic can buy new planes on lease and continue development. airBaltic head and co-owner Bertolt Flick was showing the government his business plan that was promising a large profit this year and in 2012 – instead, the company is losing enormous money," said Kampars.

Kampars sees no reason for the losses. "Last year there was the Icelandic volcano, but there have been no volcano eruptions this year to hamper airlines' operations," said Kampars.

Kampars sharply criticized airBaltic management mode, where large part of processes that are important to airBaltic daily operations – financial management, service provision, fuel supplies – have been entrusted with companies that are directly connected with Flick's private company. On the other hand, the actual owners of his private company are unknown as they control it via offshore companies.

"This makes me think that what we are seeing is a premeditated attempt to pump out funds from the company," said Kampars.

Kampars reminded that then-Transport Minister Ainars Slesers (Latvia's First Party/Latvia's Way) had signed an "extremely disadvantageous" shareholders agreement with airBaltic, which continues to cause losses for the state of Latvia. "This person should pay for these losses, or be held responsible in some other manner," said Kampars.

"If it is confirmed that the company is close to bankruptcy, there is such a notion as bankruptcy fraud, and that already carries a criminal penalty," stressed Kampars. The minister hopes that the state will not have to rescue the airline out as it had to bail out Parex banka.

LETA also reported, Slesers has been named as one of Latvia's three so-called oligarchs by President Valdis Zatlers. He is also accused by the Corruption Prevention Bureau of asking Flick to sign fictitious contracts with several mass media companies on advertising airBaltic services, however, the money was instead channeled to promote Slesers and the party Latvia's First Party/Latvia's Way.






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