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Latvia approves cash injection for airBaltic
Latvia approves cash injection for airBaltic
The Latvian parliament has agreed to increase the equity of national carrier airBaltic by €80 million ($87 million) as part of a deal to consolidate and increase its operations in the Baltic region.
The parliament authorized the country’s finance minister to increase the appropriation for his department by up to €80 million, which will then be funneled into the airline.
“The appropriation is needed to ensure further development of the national airline,” the parliament said in a statement.
It follows on from an agreement last month for a further €52 million to be provided by German investor Ralf Dieter Montag-Girmes, whose short-term loan will be converted into a 20% share of the airline’s stock. The new infusion of cash from the government will similarly be converted into equity.
The increase in equity will pave the way for airBaltic to start to take delivery of its planned new fleet of Bombardier CS300s, for which the Latvian carrier is the lead customer. If the airline’s previously negative equity had not been resolved, it would not have been allowed to have the CS300s on its balance sheet and would have had to acquire them through a sale-and-leaseback deal.
A rider to the deal from the Latvian parliament specified that airBaltic and its affiliated companies “are prohibited from purchasing, renting or otherwise utilizing equipment produced by military industrial complexes and their affiliates subject to sanctions imposed by the European Union or the international community and ratified by Latvia.”
This is a clear reference to Russia, which at one point was thought to be in the running to supply airBaltic with Sukhoi SSJ100 SuperJet.