A/S Air Baltic Corporation - Weathering Change in the Late 1990s

Weathering Change in the Late 1990s

The company replaced its Saab 340 aircraft with Fokker 50 turboprops in the late 1990s. The Fokkers were a bit larger, with 46 seats each. There were also changes to management personnel. SAS veteran Rudi Schwab was named head of airBaltic in 1997. He succeeded Kjell Fredheim, another Scandinavian executive.

In late 1998, airBaltic's capitalization was boosted from LVL 2.4 million ($4.2 million) to LVL 15.5 million. airBaltic became a joint stock company on January 25, 1999. By this time, the airline had begun direct service to Moscow, and Russia's Transaero Airlines had acquired a 0.35 percent shareholding. SAS had boosted its holdings to 38 percent. This was increased to 49 percent in late 2001 as SAS bought out the other Danish and Swedish investors for a reported SEK 80 million ($9 million).

Russia underwent a major economic crisis in the late 1990s, prompting airBaltic to suspend unprofitable routes such as Minsk, Warsaw, Prague, and Moscow. A couple of joint marketing agreements in 1999 helped airBaltic extend its reach. Hungary's Malev partnered on a Riga-Budapest route, while Estonian Air and airBaltic teamed up to develop Tallinn and Riga as gateways from Scandinavia.

airBaltic posted a net loss of LVL 1.4 million ($2.4 million) on sales of LVL 25 million in 2000, but it made its first operating profit and was showing other signs of progress. The company had a 39 percent market share, and had boosted its load factor (the ratio of seats sold to available seats) from 37 percent to 52 percent.