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Issue N° 575 - August 1, 2014

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Riga airport, a hub for the Baltic States thanks to Air Baltic

Riga airport continues to be the main gateway to the Baltic States. The airport handled 5.1 million passengers in 2011, up from 3.1 million in 2007. By comparison, Tallinn and Vilnius, the two other international airports serving the capital cities, handled 1.9 and 1.7 million passengers respectively.

Riga’s success is due largely to the presence of the home carrier Air Baltic, which operates some 50 routes out of Riga. The airline ran into financial difficulties and filed for bankruptcy in September last year. This led to something of a saga. The bankruptcy was held up in court while the government and a private company called Baltic Aviation Systems (BAS) stepped in to inject €153.7 million (US$201.9 million) in new capital. Finally, the Latvian Government took over the airline last December by acquiring the 47.2% stake held by BAS (the government now owns 99.8% of the carrier).

Rumours had abounded about BAS’s undeclared shareholders and about the government trying to block the influence of BAS’s real owner, the Russian billionaire and London-based banker, Vladimir Antonov. Russian ownership in Latvian companies remains a sensitive issue for historical reasons, while BAS also probably contravened EU laws over foreign ownership of EU air carriers.

The government finally chose Martin Gauss (the former CEO of Malev Airlines) as Air Baltic’s new CEO and reaffirmed its commitment to help the airline modernise its fleet, which currently consists of 13 Boeing 737, 2 Boeing 757, 8 Bombardier Dash 8 and 8 Fokker F50 (which will be retired during 2012). Two aircraft will be acquired in 2012: a Bombardier Q400 Next Gen turboprop for regional flights, and either an Airbus A320 or a Boeing 737 New Generation for medium-haul flights.

The airline temporarily suspended many flights during the crisis and has largely withdrawn from Tallinn and Vilnius airports. However, it is back up to speed with its operations out of Riga and has introduced new services to Dubai, Dublin and Billund (Denmark). In 2011, Air Baltic transported 3.35 million passengers, up by 5% over 2010, while the number of flights decreased by 1% to 55,300.


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