The management of the Latvian national airline, airBaltic, will buy out the 47.2-per-cent stake of the company currently owned by Scandinavian airline SAS, the companies said Thursday evening, dpa reported.
An official airBaltic source confirmed the news to Deutsche Presse-Agentur dpa after an SAS company statement said a deal had been reached.
SAS is selling its stake for 14 million lats (28 million dollars), which is less than many aviation industry experts had been predicting. The amount will be paid in cash by January 31. The source of funding being used by airBaltic's management has not been disclosed.
"The airline management, even in these difficult economic circumstances, believes in the company's prospects, so has decided to purchase the shares held by SAS," said airBaltic president and chief executive Bertolt Flick.
"We are very pleased that we have reached a solution for the company's ownership structure so we can continue and develop the company for the best of Baltic region. We are also happy to announce that airBaltic will continue its commercial cooperation with the SAS Group between Riga and Scandinavia," Flick added.
"This divestment is in line with our strategy not to maintain minority holdings in our airlines. We are pleased to have built airBaltic to a strong Baltic airline in SAS ownership and we are confident that the new owners will continue to develop the company in a positive direction", said Mats Jansson, SAS Group president and chief executive.
SAS announced that it would sell its minority stake in airBaltic on August 14 after the Latvian state, which owns 52.6 per cent of the company, refused to let SAS take a controlling interest in the company.
It is currently facing a similar situation with regard to another Baltic national carrier, Estonian Air, of which it also wants to take control instead of maintaining a minority stake.
Soon after SAS announced its intention to sell, Latvian Transport Minister Ainars Slesers said the government would "probably" buy SAS out, but that prospect disappeared as the Baltic nation's economy continued to nosedive.
The Latvian government is attempting to negotiate a loan with the International Monetary Fund (IMF) with a decision expected any day and has also embarked on a round of big spending cuts, making a complete nationalization of the airline financially and politcally untenable.