## Confused in Testimonies After a two-hour discussion, the Prime Minister and ministers decided... to postpone the matter. At the same time, it seems that Prime Minister Andris Kulbergs (United List) and Minister of Transport Rihards Kozlovskis (New Unity) "got confused in their testimonies". Judge for yourself. Initially, these two politicians assured that today the government would consider a new business plan for airBaltic. At the last moment, a document titled "Information Report on the Situation at airBaltic" appeared on the agenda of Tuesday's government meeting. As you can understand, this is not a business plan, but apparently, the information report, which is marked "confidential," discusses the main elements of the business plan. However, on the evening of the same day at a press conference, Andris Kulbergs and Rihards Kozlovskis first stated that the business plan was not discussed, but they would do so this week, as on August 3, there is a meeting of bondholders, and the state intends to delegate its representative, for which a mandate from the government is necessary. Then, however, the Prime Minister let slip that there was a discussion about the situation at airBaltic during the government meeting, but no decisions were made. "The state plays two roles here – both as a creditor and as a shareholder. But these roles need to be separated," the Prime Minister said mysteriously. So what actually happened at Tuesday's secret government meeting? Let’s venture to assume that, firstly, the discussion of the business plan did take place. Secondly, coalition partners surely quarreled while discussing the possibility of injecting state funds into the airline again. ## We Forgive All That We Must And what happened again behind closed doors at yesterday's meeting? Since everything is classified, we can only express our assumptions once more. Firstly, the government issued a mandate to the representative of the Ministry of Transport to participate in the mentioned meeting of the airline's bondholders. Secondly, it was certainly discussed... the latest history of the airline, taking into account the substantial state aid it received in the past, primarily during the COVID-19 pandemic. Probably, this is why a member of the State Audit Office, Mārtiņš Aboliņš, was invited to yesterday's Cabinet meeting. It was under his leadership that a large-scale audit was conducted a year ago on how the state controlled (or rather, did not control) the process of providing financial assistance and the return of taxpayer money. Let’s recall: Latvia's total contribution to airBaltic's equity capital is 545 million euros. Of this amount, to mitigate the effects of the COVID-19 crisis, the state invested a total of 340 million euros from 2020 to 2022, thereby increasing the state's stake in the company from 80.05% to 97.97%. As is known, from this half a billion, airBaltic returned to the treasury... exactly 0 euros and 0 cents. This money has already been written off from the equity capital. In May, after lengthy discussions, the parliament gave the green light for the national airline to receive an urgent loan of 30 million euros for fuel purchases — the money was disbursed in separate tranches and must be returned to the State Treasury by the end of August. However, it is still unclear what the government will do if the entire amount with interest is not returned? There is no capital, no collateral, and the government will only be able to throw up its hands, just as it did with the write-off of 545 million euros! ## Handed Over for Consumption During the audit by the State Audit Office, it was noted that the state (read — the Ministry of Transport, as the holder of the controlling stake in the company) practically did not control either the process of spending state aid or the process of returning the money. In simple terms — half a billion euros were simply handed over for consumption. Since no good solutions regarding the airline are in sight, perhaps Kulbergs, to maintain a positive image in the eyes of voters, decided to "shift the blame" to law enforcement agencies — let them figure out how state subsidies were provided to the airline, how they were spent, whether there were any violations of the law... For this purpose, the Prime Minister has already submitted a corresponding request to the Prosecutor General's Office. Moreover, Kulbergs can easily blame his predecessors — both former Prime Ministers and former Ministers of Transport, who, figuratively speaking, allowed the situation to develop and did not respond in time to the worsening financial crisis at airBaltic. ## It Won't Take Off Without Subsidies However, an investigation does not replace (does not cancel) the need to decide what to do with the airline moving forward? After all, even if a miracle happens and investors are found or bondholders are persuaded to invest more money in the airline under new bonds, this will not relieve the state of providing airBaltic with financial resources. The only question is how much money will ultimately be needed (at least 150 million euros) and how this financial assistance will be structured (loan, grant, subsidy, purchase of 25% of shares, etc.). In general, the question of the fate of airBaltic is the most unpleasant for Kulbergs' government, and the Prime Minister risks being politically "blown up" on this issue. Even despite attempts to reduce everything to a criminal investigation and the search for culprits. ## They Don’t Need Such “Solidarity” It is noteworthy that the "Green Farmers" and the National Alliance, which are formally not responsible for airBaltic, are not at all eager to collectively bear political responsibility for the Prime Minister and Minister of Transport's intention, that is, the United List and New Unity, to once again dip into the taxpayers' pockets. Especially considering that the rating of the National Alliance is quite modest (5.5%), and the "Green Farmers" risk being left out of the next Saeima altogether!