Financial turmoil surrounding Latvian low-cost carrier Air Baltic may be resolved today with the apparent departure of chief executive Bertolt Flick.
The Riga-based carrier has made major losses in the past year, despite a cash injection last year of Ls30 million ($57.8 million) - split between the Latvian government, which owns 52.6% of the airline, and private company Baltijas Aviacijas Sistemas (BAS), of which Flick is the owner, which holds 47.2%.
The airline has requested a further Ls60 million bailout to allow it to continue with operations and, according to local press reports, has said it will have no option but to fire around half of its 1,000 employees if this is not forthcoming. It has even cast doubts on the future existence of the company if it does not receive more cash.
However, the Latvian government has said it is unwilling to extend more financial aid unless Flick stands down.
A meeting of the Latvian government today is due to discuss the matter, but the press secretary for Latvia's prime minister told ATI that BAS "has agreed to change the management of the airlineand it appears Flick is leaving".
The spokesman said the government is unwilling to step in until Flick leaves because "he hasn't been able to provide the results he had promised. In the last year the government agreed to invest Ls15 million in Air Baltic after he presented a business plan that promised multi-million profits last year and this year". Instead, the airline had suffered "terrible losses" estimated at Ls34 million, he said.
For the government to support the airline further, it had demanded several changes.
Although BAS was the minority shareholder, he said, it had virtually complete control over the carrier. Following its poor results, the government wanted to regain control over the national carrier.
Although the government is prepared to provide more funding if the chief executive departs, the spokesman said his understanding was that Air Baltic would still have to make around 200 staff redundant to help resolve its financial problems. These would involve crews and support staff of the carrier's fleet of 10 Fokker 50s. The airline said in July it intended to dispose of the twin turboprops over the coming winter season.
Nobody was available from Air Baltic to comment.
Source: Air Transport Intelligence news
