Kučinskis: 'airBaltic' likely to shrink, but not bankrupt
Finance Minister Māris Kučinskis says Latvia's national airline 'airBaltic' will probably have to scale down its operations, though bankruptcy is not in the country's interest. A new business plan is expected, which may include reducing the fleet size.
In an interview with LETA, Latvian Finance Minister Māris Kučinskis shared his views on the future of 'airBaltic'. He stressed that it is important for Latvia to keep its national carrier, but the company will likely need to reduce its operations. According to Kučinskis, the government is currently in a 'hostage situation', waiting for the business plan promised by the new CEO. The decision on 'airBaltic's future depends on the company itself, not the government.
The minister explained that direct subsidies are no longer possible, as they would be considered state aid, which is closely monitored in the aviation sector. Therefore, the new plan must consider abandoning elements that Latvia cannot sustain, such as an excessively large fleet. Kučinskis noted that the 2018 plans were based on a high volume of transit passengers from Ukraine and Russia, which eventually vanished.
Kučinskis also regretted that 'airBaltic' has not secured a strategic partner, mentioning 'Lufthansa' but unsure of their level of commitment. He argued that Latvia does not need to own 98% of the company; the priority is to maintain connectivity to and from Riga. On a positive note, 'airBaltic's market share in Riga has dropped to about 50%, indicating that the airport remains attractive to other airlines. Thus, the reliance on 'airBaltic' alone for connections is no longer valid.
In conclusion, Kučinskis emphasized that aviation depends heavily on market conditions and the company's financial health. The business plan will reveal the necessary solutions.
