What was that?! The ruling party tries to distance itself from the airBaltic loan story The news about the new loan that airBaltic plans to obtain from private investors has literally exploded on social media! As already reported: the new loan in the form of bonds for the amount of 275 million will be taken at astronomical interest rates - 25% per annum! The most surprising thing is that Prime Minister Andris Kulbergs (United List) reacted positively to this news, concluding that since private investors are willing to invest such money, it means they believe in the strategic development plan of the enterprise! Political scientist Jurgis Liepnieks immediately reminded that Kulbergs said two years ago, when he was an opposition deputy, reacting to the first issue of airBaltic bonds at 14.5% per annum. "From today, airBaltic should start flights to Colombia and back (a hint at drug trafficking - ed.), so that it could pay 14.5% on the loan - that’s 50 million a year! These expenses will eat up all the earnings this year and next," Kulbergs stated in 2024. What has changed? Why is 14.5% bad, but 25% good? The answer is that this time the money will come from private investors, not Latvian taxpayers. The head of the Prime Minister's office, Mareks Gruškevičs, concluded on social media X: "Today, Latvia does not determine anything in this company. The creditors do." Apparently, the head of the Prime Minister's office forgot that the state also invested 50 million in bonds, not counting interest, and also issued 30 million in the form of a loan, of which about 18 million has not been returned, not counting interest. Thus, Latvia is also a creditor of the company. Moreover, the state is a holder of equity shares, so it cannot be said that its voice is worthless. One way or another, the partners in the ruling coalition were quick to distance themselves from this story with the new bonds. "Regarding the 257 million new loan for airBaltic. The Cabinet of Ministers did not consider or support it. The responsibility is legally established for the Prime Minister. The New Conservative Party sees a completely different direction for the development of airBaltic - to strengthen the enterprise in strategic cooperation with Lufthansa," wrote Minister of Economics Viktor Valainis on social media X. In turn, the head of the Riga City Council committee, Girts Lapins (National Alliance), reminded that the same argument is being voiced now as in April when the government lent airBaltic 30 million at interest. "That was exactly the comment when the government lent - let the company have time to develop a new business model. A consultant (‘Seabury’) was engaged and a new business model (business plan) was developed and, as far as I understand, presented in closed formats. All of this was logical and understandable. And now a quick loan type is being sought, which they do not plan to repay. They do not plan to, because it is physically impossible to do..." the deputy noted. Why is it impossible? Economist Andris Cinis explained this on social media: "25% in the financial world is the last signal before a crash. 64 million a year in interest, 176,000 a day. 70 million in losses per quarter. What’s the plan? To pay interest with losses?"
