airBaltic Petitions for Legal Protection, but is Denied

Despite a steady increase in passengers since the beginning of the year, airBaltic  filed for legal protection (similar but not identical to bankruptcy protection) in an attempt to influence infighting between the company’s two biggest shareholders.  In response, the Court denied their request for legal protection.

In April 2010, Baltic Aviation Systems (BAS), 47.2% private shareholders in airBaltic, decided to increase their capital share in the airline. The Latvian government, which owns 52.6% of airBaltic, felt the only way to keep the airline from facing bankruptcy was by getting aid from the state, which Latvia’s Prime Minister, Valdis Dombrovskis, indicated would not happen if Bertolt Flick, President and CEO of airBaltic, remained at his position.

Over the months since, the two shareholders have been in a stalemate.

According to Flick, the Latvian government has “neglectfully and repeatedly delayed any decisions regarding the capital increase.”  He claimed that after BAS agreed to all government conditions on September 16, the government delayed decision-making once again by “suddenly and surprisingly” announcing the “potential sale of its shares in the airline”.

The plan for airBaltic’s continued operations would have included a nominated administrator, akin to a bankruptcy trustee, to be “responsible for the legal protection plan that all parties have to follow, including the shareholders, the management, and the Supervisory Board.”   airBaltic claimed this would have prevented the Latvian government from having any say in future decision-making while keeping the management of the airline the same.  The Court appears to have rejected airBaltic’s petition because airBaltic is having a conflict among its owners but does not appear to be insolvent and therefore does not need this legal protection.

The airBaltic fleet currently consists of 34 aircraft:

  • 2 Boeing 757-200,
  • 6 Boeing 737-500s,
  • 8 Boeing 737-300,
  • 10 Fokker-50s and
  • 8 Bombardier Q400 NextGen
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