December 2, 2015 / 7:09 PM / 2 years ago

Bombardier's CSeries relaunch rides on AirBaltic bailout vote

3 Min Read

Bombardier's CS300 Aircraft, showing its' Pratt & Whitney engine in the foreground, sits in the hangar prior to its' test flight in Mirabel February 27, 2015.Christinne Muschi

RIGA/PARIS (Reuters) - Sleek in blue and white livery under a hangar spotlight at Riga airport, a single Bombardier (BBDb.TO) CSeries jet symbolizes a rebirth for both the Latvian flag carrier and the planemaker.

Both companies are looking for a relaunch based on the economics of lightweight jets, whose lower emissions appeal to a country with Europe's first Green head of state.

But the airline's growth hangs in the balance as Latvia's parliament prepares to vote on an 80-million-euro lifeline needed to pay for the jets, with implications for Bombardier and the last Baltic flag carrier.

Bombardier can ill afford to lose its third-largest airline customer for the 110-130 seater as it recovers from delays with the help of its own Quebec lifeline.

But a recent visit to Riga to display the plane has been swamped by a political row, as the country debates whether it can afford to recapitalize the airline.

"We really need to try ways to strengthen our national company, so that it can expand its market in the region," Latvian President Raimonds Vejonis told Reuters.

"I hope parliament will vote (in favor)."

On the eve of Thursday's vote, prospects for approval rose after the government blocked proposals for AirBaltic to invest separately in Superjet regional planes from Russia's Sukhoi, whose parent is covered by EU sanctions.

Vejonis, who has taken a hawkish stand against Russia following the Ukraine crisis, earlier told Reuters such a purchase would be "a very bad signal for society, for the aircraft industry and also for the whole of Europe."

AirBaltic aims to use 13 CSeries and around 5 regional jets to make Riga an East-West hub. But under EU rules it can only get the necessary state funds alongside a private investment.

Last month, German banker Ralf Dieter Montag-Girmes agreed to invest 52 million euros for a 20 percent stake.

The arrival of an investor with lengthy experience in Russia raised political and media concerns that Latvia could import Russian jets, putting the overall refinancing at risk.

Montag-Girmes has denied any pro-Russian bias.

"Of course I do have a relationship with certain manufacturers of aircraft because that is part of my business, but I am not linked to anyone one particular manufacturer," he told Latvian news service lsm.lv.

Chief Executive Martin Gauss, who returned AirBaltic to profit through restructuring, told Reuters it would decide any regional aircraft purchases after the refinancing.

Editing by David Evans

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