Airport, Latvia, Transport

In the third quarter of this year, SAS operated with SEK 2 billion (LVL 142.2 million) net losses, compared with SEK 701 million (LVL 49.8 million) profit in the respective period last year, according to the company's announcement on Wednesday.

The losses of the airline are mostly due to the crisis in the financial and aviation sectors, as well as the impact of the plane crash of Spanair, a structural unit of the SAS.

In September information surfaced about negotiations between SAS and Lufthansa on a possible takeover deal.

SAS owns 47.2% of shares of the Latvian national airline airBaltic.

Head of Deloitte Latvija Financial Advisory Department Martins Zutis pointed out in an interview to Biznes&Baltija that the price for airBaltic shares that belong to SAS directly depends on whether there will be any other buyers interested in this deal.

"In case there are more companies interested to buy these shares, then they will not be very inexpensive; SAS bankruptcy will not mean liquidation and sale of its properties for low prices. The question is how SAS restructuring will be organized," the expert explained.

He also pointed out that SAS owns not only airBaltic shares but also bonds, which may be redeemed against shares and thus it increase SAS control over airBaltic. "In case Latvia wants to escape this Sword of Damocles, it should buy the SAS shares. On the other hand, in my opinion, business activity is not a government function, therefore it would be more logical if the state was not among airBaltic shareholders at all. Under the circumstances, it would be better not to buy the shares from SAS, furthermore, the state does not have the money for it anyway," Zutis pointed out.

Girts Rungainis, council member at the IBS Prudentia investment banking company, explains that airBaltic shares could be bought at a relatively low price. However, if the airline becomes one 100% state-owned, a number of "subjective factors" may emerge.

Although the total sum of money needed for buying the airBaltic shares from SAS is not that high, Latvia is currently not in a position to make such purchases at all, Rungainis added.