AIR TRANSPORT
12 | Flight International | 15 December 2015-4 January 2016 flightglobal.com
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ir Baltic is likely to be forbid-
den from ordering the
Sukhoi Superjet under a clause
in the shareholder agreement due
to be signed by the Latvian gov-
ernment and the carrier’s pro-
spective new investor Ralf-Dieter
Montag-Girmes, chief executive
Martin Gauss discloses.
Speaking to Flight Internation-
al, Gauss says the clause, which
was inserted into the agreement
by the Latvian government, pre-
vents the Riga-based carrier from
acquiring or leasing any aircraft
from a company linked to a “mil-
itary-industrial complex” that is
subject to European sanctions.
While the clause does not
name Sukhoi specifically, Gauss
confirms that because the manu-
facturer is owned by Russia’s
United Aircraft – which is cur-
rently subject to EU and US sanc-
tions – Air Baltic would not be
allowed to order the Superjet.The condition was part of a
motion approved by the Latvian
parliament on 3 December giving
the government the green light to
invest €80 million ($85 million)in Air Baltic as part of a deal
under which Montag-Girmes will
invest a further €52 million for a
20% stake in the airline. Gauss
says the shareholder agreement
could be signed shortly and adds
the terms “are more or less
agreed” between the two parties.
Under its “Horizon 2021” busi-
ness plan, Air Baltic has issued a
tender for five 100-seat jets and
confirms it is evaluating the Em-
braer 190, the Sukhoi Superjet
and the Bombardier CRJ1000.
Gauss says “there are other air-
craft out there” and that once the
shareholder agreement is signed
new orders could be placed
“within weeks or months”. He
adds: “we are pretty advanced in
what we are proposing to do”. ■AirTeamImages
Carrier could add Bombardier CRJ1000 regional jets to Q400 fleetSuperjet frozen out by Riga’s Air Baltic rescue plan
politics olIveR ClARk lonDon
S
outh African Airways (SAA)
has been instructed by the
country’s treasury to complete, as
planned, a deal swapping com-
mitments for 10 Airbus A320s for
five A330-300s after judging there
is insufficient time to further
restructure the transaction to
involve local finance.
The struggling carrier had
hoped to amend the deal, struck
earlier this year, in order to carry
out sale-and-leasebacks with
African lessors for the A330s.
This would enable it to secure
savings through having the lease
deals denominated in South Afri-
can rand rather than US dollars.
But with the swap transaction
with Airbus needing to be com-
pleted during December, South
Africa’s finance ministry has
blocked the move, believing the
risk of defaulting on payments if
lease deals are not struck in time
outweighs the possible savings.
SAA decided to switch its
order earlier this year to finally
draw a line under an onerous
commitment for 10 A320s dating
from a wider 2002 deal.
The problem for SAA was that
the acquisition price for the
narrowbodies could have
exceeded their current market
value due to escalation clauses in
the original contract.
To address this, SAA negotiat-
ed a deal to cancel the remaining
10 A320s and acquire five
A330-300s on operating leases, in
turn generating cost savings
through allowing it to phase out
its A340-600 fleet.
SAA will also be reimbursed
for pre-delivery payments that
have already been made on the
10 A320s and will not be liablefor any outstanding payments on
the aircraft.
Despite the deal being con-
firmed in September, SAA subse-
quently informed finance minis-
ter Nhlanhla Nene it was
reviewing the transaction struc-
ture with a view to amending it to
take advantage of leases denomi-
nated in the local currency, rath-
er than US dollars.
Nene agreed to SAA exploring
the possibility, but stipulated any
deal must leave SAA in a better
financial position and mitigate
the risk of not completing the
planned swap transaction in
time. While SAA and treasury as-sessments indicate possible ben-
efits from entering a
rand-denominated lease, Nene
has blocked the application to
amend the swap.
“In the absence of having iden-
tified the financial institution that
would act as the lessor, SAA
would be required to make the
immediate payments [PDPs] that
would become due. SAA has
acknowledged it is not in a finan-
cial position to afford the PDPs,”
the ministry says. “A default by
SAA would have severe negative
consequences for SAA and could
have spillover consequences for
the country as a whole.” ■Airbus
Acquisition costs for 10 A320s were a potential burden for carrierfinance gRAhAm dunn lonDon
saa’s a330 swap
deal to go ahead
despite concerns
nation’s finance ministry insists that Airbus order revision
proceed as planned, despite last-minute rand-deal request