Higher and Higher: How the National Airline airBaltic's Debts Are Growing 0 19

It is interesting to see what arguments were presented by supporters and opponents of funding airBaltic during the parliamentary debates.

Arguments "for": "Strategic Infrastructure"

The head of the Saeima Budget and Finance (Tax) Commission, Anda Čakša, while presenting the government’s subsidy plan, called it a "targeted step to mitigate the negative impact on the financial situation of the Air Baltic Corporation caused by the conflict in the Middle East region."

– The first of these is the loan term – until August 31, 2026, – noted A. Čakša. Interest rates apply to the loan, and the deputies of her commission "were able to familiarize themselves with all materials, including restricted-access documents, carefully assessing all risks."

– The deputies unequivocally recognized that airBaltic is not just a national airline; it is a state-strategic infrastructure with a significant impact on Latvian exports and the national economy as a whole. We objectively understand that this loan alone will not solve the challenges facing the entire company. However, assessing the situation from the perspective of the common interests of society, it is clear that this funding creates the necessary prerequisites for a favorable development scenario and stability of the enterprise.

"Here, we need to transport cocaine, not people"

But immediately a skeptic arose at the podium – deputy Aiva Viksna. Stating that, of course, airBaltic is the "pride of Latvia," the deputy went on the offensive:

– Stop lying to others and to yourself in search of justifications for your own mistakes, lies, incompetence, and irresponsibility! Let’s remember Latvia’s history – Parex banka, Liepājas metalurgs, and the promise of "Never again!". "I do not understand the terms of the loan repayment, the deadlines, the way it is possible to work it off," said A. Viksna. She believes that if airBaltic performs certain socially significant functions, this should be documented in the strategic documents of the commercial enterprise: "Then there would be no discussion today, and we would be subsidizing some money every year."

Her party mate, well-known transport sector entrepreneur Andris Kulbergs, stated: – Colleagues, airBaltic really needs to be restructured, but there must be a specific plan...

The government was supposed to "adopt a conceptual question in 2023 – are we saving airBaltic or looking at alternatives." Currently, the politician emphasized, the company continues to operate in the style of an indispensable specialist returning home, Herr Gauss. "You cannot come at the last moment."

Recalling the story of the IPO (initial public offering), which was supposedly supposed to bring in 308 million euros, A. Kulbergs emphasized: "The plan no longer works." While the company continues to attract passengers with advertising "cherries," it turns out that "here, we need to transport cocaine, not people, to make it profitable..."

Then A. Kulbergs moved on to analyze the ownership of airBaltic, mentioning that it "no longer owns anything," only a "shell" in the form of a trademark. Everything else is owned by creditors, not shareholders, i.e., the state.

"Flying to London from Tallinn is three times cheaper than from Riga"

Such pricing paradoxes of airBaltic were presented in his speech by deputy Arturs Butans. To him, a representative of the National Alliance, it is unclear why our government is not negotiating with colleagues from Lithuania and Estonia to also invest – "and together solve this problem, as the airline is needed by all three Baltic states."

Edmunds Zivtiņš also continued the topic of price differences: a ticket from Riga to London costs 496.99 euros, while Vilnius to London costs 168.99 euros. "The taxi fare to the Vilnius airport and back will pay for itself. And it will still be cheaper. The difference is 328 euros."

The former head of the Road Police, E. Zivtiņš, compared airBaltic to the permanently subsidized capital public transport enterprise Rīgas satiksme. In this case, the government should have the right to determine the company's pricing policy.

"In fact, all national airlines are unprofitable"

Such a sad statement was voiced by independent deputy from the business community Didzis Šmits.

– No national company – at least in Europe – is essentially profitable. They are all subsidized.

Against the backdrop of falling prices from Ryanair, whose CEO Michael O’Leary stated that ticket prices are decreasing by 4 times, the actions of the Latvian government look like "buying 10 Lexus taxis to try to compete with Bolt." On its part, Ryanair is not afraid to sue even its own government in Ireland and the main airport in Dublin to secure favorable conditions – "there is a global company that has shown that by optimizing costs (one type of aircraft, etc.) you can make a profit in this airline business."

Here, if anything, D. Šmits hit the nail on the head: airBaltic's fleet has long consisted only of the same type of Airbus A220-300. However, the planes assembled in Canada on the former Bombardier facilities, sold to a European aviation concern, clearly lag behind Ryanair's main type – Boeing 737-800 in terms of technology and maintainability. Additionally, the Irish low-cost airline operates 209 Boeing 737 MAX 8-200 and 26 Airbus A320-200. In total, Ryanair has 3 main types and another 3 auxiliary ones.

Jānis Vitenbergs, former Minister of Economics and now a deputy from the National Alliance, also expressed doubts about airBaltic's subsidies, pointing out that "Brussels regulates support for national airlines quite strictly," viewing it as "market distortion!"

– And today, if this is presented as a loan, we all know that it is an investment.

As a result, the National Alliance... did not participate in the vote. This allowed for a quorum reduction, and despite the fact that the loan was supported by a relative minority (49 out of 100) of deputies, it still passed. We await the inevitable continuation!