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Tuesday 24.01.2017 | Name days: Krišs, Eglons, Ksenija
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Matiss and airBaltic: incompetence or helpful gesture for a friend in Ventspils?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUFollowing harsh condemnation and criticism from experts and Prime Minister Laimdota Straujuma in regards to his actions in the airBaltic matter, one would ask – was the former Transport Minister Anrijs Matiss merely incompetent in his work or did he act intentionally in someone else’s interest, not Latvia.

Lembergs’ interests

Ownership of airBaltic stocks has been disputed in countless conflicts ever since Betrold Flick acquired 49% of stocks. It didn’t take long before rumours started circulating regarding Flick potentially receiving support from Andris Skele, Ainars Slesers and even Aivars Lembergs.

«In 2011, the Latvian state took airBaltic away from Flick. A court process followed. Businessmen associated with Skele had tried to secure 46% of ownership over the airline. Flick turned to the government with a complaint regarding breach of foreign investor’s rights. The state managed to reach an agreement with all sides. The deal will be signed in November, when the state will pay EUR nine million to the plaintiffs – businessmen associated with Skele,» – as reported by Nekā personīga programme of TV3 in September. As it is known, attempts to sell off airBaltic have been continuing for the past four years. Efforts to sell the airline have been fruitless largely because the airline is involved in too many litigations, according to Transport Ministry.

Speaking of Lembergs’ interest in airBaltic, it is worth mentioning that Santa Glazniece had been appointed a Council Chairman of airBaltic in February 2011. She is reportedly associated with Lembergs. On top of that, she was proposed for that post by then the Transport Minister Uldis Augulis from the Union of Greens and Farmers. The Council of airBaltic is the only institution with help from which the state is able to realize its interests as the largest airBaltic owner. This is because the state has three representatives in the council and two in Baltic Aviation Systems. Before becoming the head of airBaltic’s Council, Glazniece worked with multiple transit companies of Ventspils Freeport, including LSF Holdings, 50% of stocks of which belong to Lembergs’ children – Liga and Anrijs, as reported by Pietiek.

According to information from the portal, ‘an entry was submitted on 16 December 2010 to the Commercial Pledges Register that stated the volume of Flick’s and BAS’ commercial pledges (formally two) grew from LVL 18.27 million to LVL 31 million to Latvijas Krajbanka and its owner – Lithuanian Snoras Bank, which belongs to Russian billionaire Vladimir Antonov. On that same day 50% of BAS stocks changed hands to a Bahamas-based Taurus Asset Management Fund Limited represented by Russian businessman Stanislav Kovtun. Shortly before this deal, Antonov had visited Latvia and had met with Lembergs and his son.

Pietiek also wrote in 2011 that people loyal to Lembergs had been appointed to multiple commercial structures owned by Transport Ministry. «Classified as Lembergs managers, these people had previously represented the interests of the Mayor of Ventspils in transit companies. Following their entry into Riga’s airport, airBaltic and LDz, these people started to prepare those companies for their inevitable change of hands – in favour of Lembergs,» – informants said. «It is best described like this: he had returned to the right post with the right influence – in his special Transport Ministry. Lembergs always saw Latvia’s transit industry as his personal pocket. He has returned to manage and control it,» – some Ventspils businessman told Pietiek. Using Transport Minister Uldis Augulis’ hands to appoint the right people in the boards of Riga airport, LDz and airBaltic, Lembergs set his pieces on the board, but this does not mean the battle is won, said some Unity politician.

A dream about airBaltic in the hands of Ventspils

Julijs Krumins had mentioned in his interview to BNN a couple of years ago that Latvia had three people solve problems throughout 2003-2009. They are Andris Skele, Ainars Slesers and Aivars Lembergs.

In his interview to Klubs magazine, Krumins expressed concerns about the possibility of Lembergs becoming Prime Minister and Finance Ministry ending up in the hands of UGF. Because of that, the businessman had even sold his company Man – Tess. At the same time, the businessman said if he were in Lembergs’ place, Ventspils would handle 100 million tons of oil.

«Since the beginning of the ‘90s the state has not been received a cent from this industry. The same thing now happens with airBaltic. A handful of deputies receive the money. They then carry this money to Lembergs,» – said Krumins. «Maybe we should let him become Prime Minister just to let everyone see that he cannot possibly do anything in the interest of the state. I was ashamed to listen to arguments of people who voted in favour of Lembergs: how he had cleaned up Ventspils and brought people mana from heaven. In Ventspils he sat on the oil pipeline. If not for it, Lembergs would have nothing. He would not have done anything of the like in Madona or Jekabpils. If some old woman found oil somewhere in Preili, she would become a millionaire in a second,» – said Krumins.

It should be said that Lembergs had dreamed about getting his hands on airBaltic in 2011, promising he would resolve the airlines problems within a week.

Ventspils residents had remarked in response to that promise by recalling Lembergs’ generous offer to sell terminals of Ventspils Freeport whose financial sources he could no longer control. Other ironic opinions included that the best way to get rid of airBaltic would be to sell it to Lembergs. In this case airBaltic would suffer the same fate as Lembergs’ corporate businesses – a arrest by London or Latvian court of justice.

Another prediction stated that Lembergs would manage airBaltic the same way he manages Ventspils Freeport, where much is shrouded in secret and requests of officials regarding the use of financial resources go nowhere. Many were confused as to how Lembergs would resolve the airline’s problems within seven short days if it took him a whole year to resolve the matter regarding the establishment of a pasta production plant on the territory of one of the terminals.

One radical opinion was expressed by some former deputy of Ventspils City Council, who said black holes exist not only in outer space – any business that ends up in Lembergs’ gaze, quickly disappears in his own personal black hole.

What Matiss didn’t do

One would ask – did Matiss, as Transport Minister, intentionally delay multiple other solutions for airBaltic? This would explain Prime Minister Laimdota Straujuma’s actions in requesting Matiss’ resignation and saying that the reason for that is his constant delays, and lack of progress in the development of airBaltic airline, as well as lack of proper supervision and any strategic vision.

It would have been possible to increase the airline’s financial state by increasing the base capital by EUR 22 million, signing a peaceful resolution with Riga International Airport, optimizing the airline’s expenses, reducing the number of unpopular flight destinations or selling one or two of its subsidiaries – Coalition Rewards, Air Baltic Training and Baltijas Kravu Centrs, according to information available to BNN.

Others have since expressed harsh words toward the minister as well. BNN had previously reported that, according to Karlis Krastins – head of Prudentia – Matiss actively used disinformation and lies in this work with airBaltic. Krastins also went as far as saying that Matiss suffers from schizophrenia. Had Matiss remained in this post of Transport Minister, the very existence of airBaltic would have been at risk.

It is worth mentioning that Matiss cannot fully recall his own statements all that accurately. For example, at first Matiss claimed the contract with Montag-Girmes [potential investor for airBaltic] would include the procurement of Russian Sukhoi SuperJet-100 aircraft. Sometime later he said no specific model of aircraft was stated in the contract and that the new investor would have the rights to make decision in relation to any potential changes to matter related to the fleet. Also the now former Transport Minister said the government should speed up it decision-making processes and refuse the offered investor, who happens to be a respectable German citizen. Matiss had also mentioned in the past that the potential investor selected by Prudentia would present certain risks to Latvia’s national security if approved by the government.

Matiss’ public statements, in which he predicts the end for the government, are also confusing, especially considering his own represented party is in the government and even holds the post of Prime Minister.

An alternative to bankruptcy

As it is known, the Cabinet of Ministers has nonetheless decided to support the potential investor found for airBaltic by Prudentia – German businessman Ralf Dieter Montag-Girmes. His offer details an investment of EUR 52 million from his side and EUR 80 million from Latvia’s side.

On Monday, 16 November, the Cabinet of Ministers also decided to support the proposal from the State Treasury to allocate EUR 80 million as a loan to airBaltic.

Although the potential investor may seem like the least optimal solution, it would help save the airline from impending bankruptcy. «It is not planned to use the aforementioned EUR 80 million of state investments on financing aircraft procurements. EUR 45 million of this amount are meant as an advance payment to Bombardier for the supply of the remaining 11 aircraft the contract for which has been signed a long time ago. EUR 20 million would be immediately used to cover lease for the airline’s standing fleet, which is something airBaltic cannot possibly do in its current state. EUR 15 million of state funds would be used to cover maintenance costs. Prudentia’s offered sue of funding also shows what officials do not say: airBaltic is basically insolvent,» – as reported by lsm.lv.

The foundation for the deal was established on 25 August. On that day, the Council of airBaltic had amendment some new business development plan that had only recently been adopted. Horizon 2021 provided that airBaltic’s fleet restoration plan would also include regional aircraft. For that purpose, the business plan included the use of so-called propeller aircraft for close destinations and large Bombardier CS300 series aircraft for long distances.

It was publicly announced that the German investor offers EUR 52 million in order to finance the optimization and restoration of airBaltic’s fleet in accordance with the business plan. Basically Montag-Girmes offers to finance the lease of five regional aircraft and cover advance payment for two Bombardier CS300 series aircraft meant for destinations farther away. It was concluded in Prudentia Advisors’ report in relation to talks with the investor that was prepared on 17 September, as reported by lsm.

Allowing airBaltic to go bankrupt would not be the best outcome, considering that aviation provides Latvia 3% of GDP and approximately 40,000 jobs, according to information from Boston Consulting Group.

airBaltic paid EUR 67 million in tax payments and nearly EUR 75 million in interest to the state budget over the course of 2011-2015, according to information available to BNN.

Ref: 102.109.109.0982


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  1. Bb1233 says:

    Very interesting indeed!

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