The over-expanded Latvian airline filed for bankruptcy protection this week
Should the 62 airports served by airBaltic, most of them in northern Europe, be concerned after the airline filed for bankruptcy protection this week? The airline over-expanded using a unique hub-and-spoke system, mostly linking airports in the EU with those in Russia and the CIS, and carried 31% more passengers in the seven first months of 2011 than it did in the same period two years ago.
What happens next is a political puzzle for Latvia’s new coalition government following snap elections held last week. It is likely that the Latvian state, which owns 52% of the airline, will be forced to continue to bail it out since, on a Latvian scale, it is too big to fail. Some kind of deal will probably have to be made between the government and the most active shareholder Baltijas Aviacijas Sistemas (BAS, or Baltic Aviation System), known to be controlled by Vladimir Antonov, a Russian billionaire and London-based banker, and his Convers Group. As Antonov commented to a Latvian business daily earlier in the summer: “All I can say is: Rest assured, you may safely buy tickets and fly airBaltic. I know for certain that the operations of airBaltic will not come to a halt.”