Airport, Banks, Financial Services, Latvia, Pensioners, Transport

Valdis Dombrovskis.

"The situation is unpleasant. If the government ignored airBaltic, it would have much more negative impact on Latvia's economy and budget in the future," explained Dombrovskis.

The prime minister pointed out that the government's decision on state funding for airBaltic share capital increase should not be affected by the coming 11th Saeima elections, writes LETA.

The airline's private shareholder – Baltijas Aviacijas sistema (BAS), which owns 47.2% of its shares, has agreed to participate in the airline's share capital increase with an equal funding. Each shareholder could potentially invest around 50-70 million in the airline's share capital.

According to the second possible scenario, the state could take over BAS shares, however, it is not the government's primary goal, since their value is not known. "BAS previously offered the state to buy its shares for a large amount of money, whilst, at the same time, the state's shares are valued less," said Dombrovskis.

Dombrovskis could not provide a clear answer when the government will make its final decision about airBaltic. "If the agreement with BAS and lenders is swift, the decision could be made this year," added the prime minister.

As reported, amendments to the national budget are being prepared so to ensure the necessary financing to invest in the national airline airBaltic, government members confirmed to members of the press yesterday.

The exact sum has not been announced yet, however, according to calculations by consultant firm Prudentia, both of the airline's shareholders must each invest proportionately LVL 50 to 70 million.

Transport Minister Uldis Augulis (Union of Greens and Farmers) admitted to members of the press that an agreement has been reached between the airline's shareholders, and that an agreement on replacing the company's management could be made sometime this week.

The minister admitted that a possible candidate to replace current airBaltic President Bertolt Flick has been approached.

According to Augulis, airBaltic shareholders will be prepared to discuss replacement of the airline's management if there is progress in increasing the airline's share capital. Flick is not the only airBaltic shareholder, added Augulis.