Andrzej Jeziorski/MUNICH
LATVIAN FLAG CARRIER Latvian Airlines (Latavio) is mounting a last-ditch attempt to sink the proposed joint venture between Baltic International USA (BIUSA) and Scandinavian Airline System (SAS).
Latavio is now being backed by the privately owned Banka Baltija - the largest bank in the Baltic States. The bank is said to have taken on the stricken airline's debts, believed by Government officials to be "at least" $10 million, and possibly several times higher.
It is "very influential" in Government circles, says director of the Latvian transport ministry's Aviation Department, Arnis Muiznieks.
BIUSA and SAS are planning to establish a new flag carrier with Scandinavian backing, taking over Latavio's scheduled routes and leaving the latter as a pure charter operator.
Although, the BIUSA/SAS proposal, has now been approved by the Government committee, established to examine it, approval is still awaited from the cabinet of ministers, which was expected to discuss the deal on 14 March.
The BIUSA/SAS plan envisages the founding of a company with $11.5 million of equity and an additional $14.5 million invested on financing loans.
The Latvian Government is to provide 51% of the equity, with 18% each from BIUSA and SAS, and 6.5% each from Sweden's Swedfund and Denmark's ten investment banks, says SAS senior vice-president of special projects, Kjell Fredheim.
Fredheim is president and chief executive officer of LATSABIA, a temporary company founded to prepare the new airline. He hopes to start operations in July.
The company is to begin operations with four McDonnell Douglas DC-9-10s - which will have to be hushkitted by the new company - but is expected to acquire three or four 110- to 120-seat aircraft in about 1998.
While load factors in the first year of operation are expected to be below 50%, Fredheim says that he expects to make a profit with the new airline in the second year.
Source: Flight International
