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Feud Flares As Air Baltic Hits The Rocks

by Lorys Charalambous, Tax-News.com, Cyprus

18 September 2011


Relations between the Latvian government and the management team of AirBaltic are deteriorating significantly as the company financial situation worsens.

Continued losses in 2011, following a loss of USD67.2m in 2010, have prompted the minority shareholders, Baltic Aviation System, who run the airline, to pressure the government to finalise a preliminary agreement reached on September 6 for a bailout of USD136.1m, double that received a year prior.

The government has refused to provide financial backing as yet on the grounds that it had received incomplete financial reports and has opened an investigation into transactions between BAS and AirBaltic.

Management had threatened that failure to provide the bailout funds would lead to flights being grounded, and on September 16, AirBaltic announced proposals to slash the workforce in half, from 1,000 to 500, and reduce the airline's operational capacity by cutting monthly flights by 700 starting November 2011.

TAGS: aviation

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