The Falcons Have Flown: Three Questions for airBaltic and Its Owner 0 9

However, according to rumors, this time the Union of Greens and Farmers intends to seriously rattle the nerves of its government partners, primarily the sworn comrades in the ruling coalition – the "Progressives," who control the Ministry of Communications.

It’s Not Our Fault – It’s the USA and Iran’s Fault

But let’s take it step by step. Let’s try to reconstruct the chronology of events.

On the morning of Tuesday, March 31, Minister of Communications Aitis Švinka ("Progressives") made a statement that the management of airBaltic had recently approached his ministry with a request for a short-term loan.

The need for the loan was explained by the crisis in the Persian Gulf, which led to a sharp rise in global fuel prices, including aviation fuel. Later, the Minister of Communications stated that if before the war with Iran aviation diesel cost $700 per 1,000 tons on the stock exchange, after the war began, the price rose to $1,500–$1,800, more than doubling.

Švinka Is Ready to Provide 30 Million

"The Latvian national airline airBaltic officially approached the Ministry of Communications at the end of March this year, informing the shareholder (the state) about the impact of external factors on the financial and operational activities of the company. The military conflict in the Middle East has led to a significant increase in aviation fuel prices, which, in turn, increases the company’s costs and affects profitability.

Having received and assessed airBaltic's letter regarding the need for a short-term loan as one of the possible preventive tools for stabilization, I proposed this issue for consideration at today’s Cabinet meeting. It is important to ensure the continuous operational activity of the company during a period when external factors are particularly affecting the aviation industry," stated Minister of Communications Aitis Švinka.

Švinka promised to persuade his government partners to consider the loan request on the same day at the upcoming Cabinet meeting. It is unknown whether the issue of allocating the loan to airBaltic was discussed at the coalition council that took place the day before, on Monday. According to rumors, it was not discussed, and Švinka only informed his coalition partners on Tuesday, before the government meeting.

Revenge Is a Dish Best Served Cold

In any case, on Tuesday, the ministers reviewed A. Švinka’s report in a closed session, and as both the Minister of Communications and the Prime Minister stated after the meeting, the government approved the provision of a short-term loan. However, for the airline to actually receive the requested 30 million, it still needed the approval of the Saeima’s Budget and Finance Committee. And here came a snag!

It turned out that deputies from the Union of Greens and Farmers were not ready to support this loan decision. The opposition, of course, also did not intend to help Prime Minister Siliņa ("New Unity") and the "Progressives." And the votes of these two parties are not enough to grant the aviators another portion of money.

The head of the committee, Anda Čakša ("New Unity"), convened a meeting twice on Wednesday in hopes of "persuading" the majority of committee deputies, but... in vain.

Minister Švinka was very angry with the "Green Farmers" and especially with deputy Uldis Augulis, who, according to Švinka, harbored a grudge against the "Progressives" and was now taking revenge on them.

Three Main Questions

Let’s not waste time analyzing Augulis’s grievances and his relationships with the "Progressives" – this is of little concern to ordinary residents of Latvia. In the context of granting the loan to airBaltic, they are concerned with completely different questions.

• The first – is the loan truly necessary for the airline due to rising fuel costs, or is it merely a convenient excuse to obtain a loan and cover another financial gap?

• The second question – what is the true state of affairs in the airline, and are emergency measures needed to save airBaltic from bankruptcy?

• The third – under what conditions is the loan granted, and where is the guarantee that by August 31 – the deadline for loan repayment – the money will be returned?

The wave of outrage on social media is caused not only by the government’s plan to grant a loan to airBaltic but also by HOW this is all being done – secretly, without disclosing the loan conditions. As if it were not public money (i.e., taxpayer money), but, for example, a bank loan to a private enterprise.

Also alarming are the words of Evika Siliņa, suggesting that it is quite possible that the state will still have to financially assist the airline. However, experts have been warning for the past few weeks about significant financial problems at airBaltic. They all unanimously state that the airline, despite any desire, will not be able to repay the loan...

In any case, the "Green Farmers" fully understand that... they are already deeply mired in the common problems of the government – airBaltic, Rail Baltic, fuel prices... And if they continue to play by others’ rules and agree to all unpopular decisions, they may not even make it into the next Saeima...

To Speak the Bitter Truth

But let’s return to the fate of airBaltic itself. As long as this airline is under state control, the authorities, despite any desire, cannot shake it off and allow the state enterprise to sink, so to speak, to make an emergency landing.

But then these games of secrecy must stop, the lying must cease, and the parliament and the people must be openly informed about the situation and the need to subsidize airBaltic – just as the state already subsidizes the Latvian Railways, and soon, apparently, will subsidize the ports...

Opinion: Goodbye, Millions?

"This is NOT a loan. It will definitely never be repaid. In the short term, it is simply impossible to return any money burned this summer. And they know this," warned economist Guntars Vitols and expressed his version of the further development of events:

"Most likely, the debt will be converted into other financial instruments, such as worthless shares or long-term debts.

The loan is formalized as short-term only so that it can be borrowed cheaper than today’s market rate of about 50%."

"airBaltic has no chance of repaying these 30 million euros from its economic activities. If this money is not allocated, airBaltic will not survive until the elections. That is, most likely, in one form or another, the money will be given," predicts economist Aivars Strakšas.