The Saeima gives the green light to the state’s plan to purchase airBaltic bonds worth up to EUR 136 million / Article

According to the draft decision of the Saeima, the parliament has decided to agree to the fact that the Minister of Finance carries out the purchase of “airBaltic” youth-issued fixed income securities or bonds in the amount of no more than 100 million euros in accordance with the “airBaltic” youth-issued bond prospectus, the instructions of the issuing banks and the internationally accepted practice regarding the bond purchase and settlement.

It is expected that the state participates in the implementation of investments specified in this decision on the same conditions and to an equivalent extent as private investors.

In the case of implementation of the specified investment, the amount of state investment towards “airBaltic” will not exceed 136 million euros.

Hurry to decide

Just a week ago, the Saeima urgently adopted amendments to the law on budget and financial management, which will allow the state to buy fixed income securities of state capital companies.

The government supported these amendments only two days before. They were viewed together with the informative report of the Ministry of Transport on the refinancing of “airBaltic” bonds. AirBaltic’s 200 million euro bond, or to put it simply, the loan, expires in July, and it is not known whether the company itself has the ability to do so. In April, the airline’s CEO, Martin Gauss, admitted that attracting investors was still difficult.

On the other hand, this week the Minister of Transport Kaspars Briškens (“Progressives”) revealed that the government supported the purchase of “airBaltic” bonds worth up to 136 million euros. A day earlier, Finance Minister Arvils Asheradens (“Jaunā Vienotība”) admitted that the state “airBaltic” bonds worth no more than 100 million euros could be purchased.

Deputies criticize

Before the vote of the Saeima, opposition MP Andris Kulbergs (“United List”) criticized that not all MPs were informed about the investment plan in time. “We are the holders of public money at this point and we are going to vote without information,” Kulberg said, adding that he did not want to be used as a “voting machine.”

Meanwhile, Artūrs Butāns (National Union) recalled what the responsible minister Kaspars Briškens (“Progressives”) said a few months ago that “we are not working on options where state support is provided, because there is a whole range of options to refinance these securities on the market.” Also, in his opinion, the first and second points of the draft decision are mutually exclusive.

On the other hand, MP Ainārs Šlesers (“Latvia first”) called on the State Audit Office to start monitoring airBaltic.

57 deputies voted for the draft decision, 17 were against and another 13 abstained.

CONTEXT:

“airBaltic”‘s audited turnover last year amounted to 664.289 million euros, which is 33.2% more than in 2022, and the company also made a profit of 33.852 million euros, as opposed to losses the year before.

The Latvian state owns 97.97% of “airBaltic” shares, while “Aircraft Leasing 1” owned by the financial investor, Danish businessman Lars Tūsen, owns 2.03%.