November 27, 2015 / 6:24 PM / 2 years ago

AirBaltic eyes more CSeries, urges investment approval

RIGA (Reuters) - AirBaltic is looking at expanding its order for 13 new Bombardier CSeries jets, its chief executive said on Friday, as it prepares to plug a gap in its finances with fresh investment.

Latvia's national airline AirBaltic, a launch partner, and Canada's Bombardier present a new CS100 aircraft in Riga international airport, Latvia, November 27, 2015. REUTERS/Ints Kalnins

The Latvian flag carrier has 13 firm orders for the larger of two versions of Canada’s biggest jetliner, known as CS300, and options for a further 7 which could be used either for the same model or for the smaller CS100. Any additional aircraft would come through exercising existing options and would be added to its balance sheet.

“We want to buy them. That’s what the business plan says, because it’s better for AirBaltic in the future if we have the chance to put the aircraft into our equity,” Chief Executive Martin Gauss told Reuters.

Gauss was speaking at a ceremony to present Bombardier’s new passenger jet to more than 1,000 employees of AirBaltic, which is expanding faster than expected after the collapse of Lithuanian and Estonian rivals.

It is the launch customer for the CS300 which will enter service from late 2016, replacing its aging Boeing 737s.

The Latvian government, which owns 99.8 percent of cash-strapped AirBaltic, has agreed to lend it 80 million euros while allowing German investor Ralf-Dieter Montag-Girmes to buy a 20 percent stake in the airline for 52 million euros.

Latvia’s parliament is due to vote on the package next week, following a political row over gaps in the airline’s balance sheet that recently saw the country’s transport minister resign.

Gauss said the government loan alone would not be enough to fund the maximum order for up to 20 of the sleek CSeries jets.

“It comes at the same time with 52 million euros of private equity investment. Both together are enough to finance 20 jets,” he said.

“We have a positive government decision. I hope that the parliament follows that and then we will have the equity to finance all of our future fleet.”

Keeping AirBaltic’s order is important for Bombardier, which is trying to boost flagging sales after getting its own lifeline from Quebec due to cash shortages.

Bombardier executives said they were confident about winning orders and reported rising interest in the plane, developed to challenge Airbus and Boeing for a slice of the main jet market.

Gauss said AirBaltic had picked up traffic after the collapse of Estonian Air, earlier this month, left the Latvian carrier as the last remaining Baltic flag carrier.

“I can recall the first week because this was the peak week, where we tripled the passenger numbers compared to the same time the year before. And we are talking about several thousand additional passengers coming,” he said.

Additional reporting by Victoria Bryan, editing by David Evans

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