Tuesday, November 4, 2008

From Riga to the moon?

Today Latvian megalomaniac transport supremo in the TV morning program announced that the Latvian flag carrier air Baltic would start direct flights to New York and would fly to Big Apple four times a week! As a typical Latvian politician he did not specify when the flights would actually start but only reminded that the visa freedom with the US, that starts from November 17, 2008, is the first prerequisite for such regular flights to start. The president of the airliner Mr Bertold Flick was close to the earth in his pronouncements saying that it is too early to plan such an expansion to the North American market, particularly taking the global economic recession in
consideration.

The Latvian Minister of Transport is long known for his colourful announcements, and he could have simply announced that Latvian planes would start direct flights to the moon... . He was talking also on the Latvian Public Radio this morning, where he reemphasized his achievements in road building sector. It just sounded a bit silly that his only emphasis was on the upgrade of the Riga - Moscow highway. It is long known that transport supremo has his business colleagues in Russia. Thus starting to upgrade potholed highway to Moscow sounds normal from the business point of view. However, the Moscow direction is not the only one, and there are other priorities for the Ministry of Transportation and Communications as well.

Too much focus on his business partners is not good because it blurs the vision of a servant of the state (ministere in Latin-to serve). Hastily announcing plans about the expansion of the Airbaltic to the North American market, or building the Skyscraper city in RIX vicinity without real costs & benefits analysis is nonsense. Also transport supremo so far was used to have ´´relatively loose´´ resources of taxpayers monies, but the reawakening of civil society and ´´seven fat years´´ are fast drying up now, and it is expensive to borrow outside Latvia due to global financial crisis. That explains Mr Slesers announcement about his plans to run for the Maire of Riga office, thus another cow to milk? Continuation of his boastful image and disregard for the previously agreed rules of the game could appear ruinous not only for him but also for his political party. Next year´s municipal elections will be the real test for him and other members of the Latvian governing clique, unless the MP´s would not opt for change of the government and consequent muddling of the waters.


Text in Latvian: ´´Minister of Transport during the ornithologist days sneers - winged weaklings´´!


Cartoon: Gatis Sluka

6 comments:

Magnus said...

Even if this is an answer to an earlier issue, I will post it here under your new entry.

SAS, the owner of 47,8% of airBaltic, are themselves very close to bankrupcy these days - and most investors believe that Lufthansa will buy that company just as they have done with Austrian, Swiss and Brussels air.

SAS on their side are intending to sell their shares in airBaltic since Latvian government didn't want to sell them their part. The question is if Latvia has the money needed for this purchase (and the desire, since they anyways are the major shareholders), and if not, who would like to buy these shares.

I have not been able to find airBaltic finance information for
Q3. Since SAS wants to sell them, airBaltic are not included in their recent report, and airBaltic themselves are not giving any new information on their web-site (which is kind of worrying).

However, SAS reported that airBaltic was creating a net loss in Q2 (http://www.sasgroup.net/SASGROUP_IR/CMSForeignContent/2q08eng.pdf page7) and recent statistics shows that their cabin factor in September this year was just 68 %, down 2 % from the same month last year. I am therefore strongly doubting that this company currently is making a profit.

In these rough times for aviation it is important to have sound financial support and liquidity to suffer short-term losses, which surely will be the case over the winter. If the possibillity of using the SAS-groups money to cover losses disappear, it will be very interesting to see if Slesers will be able to gather enough support in the government for spending money on a loss-making aircompany rather than on other, more vote-winning issues.
And of course, there is, as you say, always Brussels...

Baltic said...

Thank you for the links and details!

Yes, news about SAS lossmaking have been around for months now in EST and LAT media. Months ago, when first news came about the SAS plan to sell its stake in airbaltic, I thought that Slesers simply did not agree to sell the rest of the state ownership to SAS, thus SAS simply gave up.
Later serious rumours were spreading in Riga about Aeroflot being the new suitor - and even joke was spreading: "hej Latvian - Eurobonus is over and be ready for the Russian bonus!´´

Did not have time to meddle into the official financial data - also in transport supremo &Co realm there is very little transparency... .

as soon there will be more time will keep an eye on the developments in RIX, cause according to official Slesers announcement after Vilnius fallout it should be flyLAL who should bancrupt first...

After November 11-18 celebrations in Latvia there could be many nasty news popping up. Lets wait:)

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