Government backs airBaltic finance deal

Take note – story published 8 years ago

The Latvian government on Thursday finally committed itself to backing an investment plan for national airline airBaltic after several weeks of prevarication. 

After a special cabinet meeting the government decided it would after all accept the Ministry of Transport (MoT) designated German investor Ralf-Dieter Montag-Girmes' offer to invest in the airline, Prime Minister Laimdota Straujuma.

Straujuma said that 20 controversial points had been removed from an earlier version of the deal from the project removed approximately 20 controversial points, and the insertion of new clauses saying the investor is responsible if it turns out any international sanctions have been broken.

The amended treaty has been accepted by Montag-Girmes, Straujuma said.

Today's decision was based on an audit by PriceWaterhouseCoopers and information provided by the security services. 

"The decision is a short term solution, and the government's aim is to find a longer-term strategic investor," said Straujuma.

Interior Minister and acting Transport Minister Rihards Kozlovskis also expressed the opinion that this is the best available short-term solution for the company obtain positive equity. 

And if the Saeima supports the government's decision - far from guaranteed - the government will move onto the next task of finding a major "strategic investor" to pump in even more money than "financial investor" Montag-Girmes.

Montag-Girmes has agreed to put in €52m for a 20% stake in the company which, along with an €80m loan from the state should satisfy airBaltic's medium-term financing needs.

Currently airBaltic is 99.8% owned by the Latvian state.

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