OREANDA-NEWS. September 23, 2011. The legal protection plan, filed by Latvian national airline airBaltic on September 21, has been rejected by the court. airBaltic is firm to continue operations in its network of airports served in Europe, Middle East, and Russia/CIS.

According to the currently effective legislation in Latvia, the legal protection procedure differs from what is known as Chapter 11 procedure. The legal protection procedure in Latvia is essentially a court-approved business plan. If approved, it would allow for capital increase in the company and payments to suppliers and creditors.

The Board of airBaltic filed for legal protection, in order to break the blockage from the Latvian government! For the past six months, the management of airBaltic has informed about the necessity of a capital increase. Baltic Aviation Systems (BAS), the private shareholder of airBaltic, has declared its willingness to cover the capital increase fully, or proportionally together with the government of Latvia. The government of Latvia as a shareholder in the airline has neglectfully and repeatedly delayed any decisions regarding the capital increase. In order to come out of a stalemate, the private shareholder BAS agreed to all government conditions on September 16. On September 20, the government again did not take a decision to participate in the capital increase of the airline, or to allow BAS to increase the capital unilaterally, but suddenly and surprisingly announced potential sale of its shares in the airline. As a result of an extraordinary Cabinet meeting on September 22, the government announced it is interested in continued operations of the airline, and continued negotiations with the private investor on the capital increase in the airline, however, it will also evaluate establishing a new airline. It is now no longer surprising why a solution regarding airBaltic has not been reached for more than six months, while at the same time details of the new airline will be clear within the coming days at the earliest and within two weeks at the latest, according to the government’s consultant. Confidence in Latvia's national airline has been methodically and systematically undermined in the public rhetoric in order to pave the way for a potential new project.

The Board of airBaltic will continue operations of the airline. The Board of airBaltic is currently in negotiations with all the stakeholders of the airline. All of them are ready to support the airline in the future. The legal protection plan, rejected by the court, was a step taken by airBaltic’s Board to break the blockage and go ahead with negotiations, in order to agree on the future of airBaltic.