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TM: the ministry is open for a full disposal of state-owned airBaltic shares

Publicity photo.
Latvian Transport Ministry is currently engaged in reviewing specific offers for attraction of investors for airBaltic. A full privatization of the company is not out of the question, says the ministry’s state secretary Kaspars Ozoliņš.

He says attraction of an investor is the main challenge at the moment. «We have been very productive lately. The ministry has enlisted help from Lazard Freres to evaluate potential strategic partners for airBaltic. There is one major nuance, however. As the largest shareholder, the state has to ensure the company’s development. And for the company to develop there have to be shareholders who would invest in it.»

Ozoliņš also emphasized that it is important to keep in mind EU regulation that states how state investments are considered state support. «This is why state support would not be beneficial for the company’s development. Basically it is hard for the state to serve as shareholder, because laws do not permit investment opportunities available to a private investor,» Ozoliņš explains.

At the same time, he notes that aviation should not be left unattended. «Aviation is a business that goes nowhere when it stands in one place. As we all know, the global aviation market is currently in bad shape, considering that many well-known companies have ended up in difficult situations, except for airBaltic, which continues being successful. This year, without a doubt, was the most successful one in the company’s history. We cautiously predict next year to be better. At the same time, we see what is currently happening in Europe – with Monarch, Air Berlin and Alitalia.»

«We also see what is happening with Etihad Airways, which performed very aggressive investments in the past but no longer does that. We have also noticed the numerous new players that continue entering the market, especially from China. European companies, such as British Airways, KLM and Lufthansa, are also doing their best to enhance their positions on the market. This is why airBaltic’s place is also important,» says the ministry’s state secretary.

The government ordered a strategic partner to be found before 3 November. «We have performed consultations and general talks with nearly 85% of the world’s airlines. Talks have also been performed with different investment funds. There are multiple proposals to be reviewed. Our experts have already begun viewing them. Identifying results of potential synergy, the outlook of our potential partner and the company’s development perspective is what is most important to us now. We have several proposals, specific proposals, not theoretical probability. […] I cannot guarantee, but, it is very likely that we will soon pick an offer to propose for approval,» said Ozoliņš.

When asked if the state still wishes to retail airBaltic’s controlling package of shares, the state secretary said there has never been such an objective. What is most important, he said, is preserving participation in important decision-making processes.

«The objective now is securing the right for the state to have a say in strategic matters. This can be done in different ways – strategically important decisions can be made with 51% with shares, strategically important decisions can be made with golden shares, and strategically important decisions can be made based on agreement of disposal of shares,» said Ozoliņš, adding that the ministry is open for full disposal of airBaltic shares.


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