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to include a large number of partnering

other associated brands (see above) to

sides have not reached a consensus,

companies in the tourism and retail

BAS for around 12 million euros without

and airBaltic keeps paying the airport in

industries. In October 2010, airBaltic

properly consulting the government

advance by the week, lest it terminate

announced it would become the first

as the major stakeholder. Treating this

service. The Latvian government has

airline in Europe to introduce Apple iPads

deal as decreasing the value of the

expressed resentment over the clash

for its in-flight entertainment.Similarly, it

company, while giving exclusive powers

between

might be the first airline in the world to

to the CEO, the Latvian minister of

companies, and has threatened to fi le

offer flat-screen TVs for sale onboard.

these

two

state-owned

economics got involved, demanding an

a claim against the executive board of

It does not end with flights either.

explanation. Mr. Flick claimed that this

airBaltic if the company has to suff er

The airline has been extremely prolific

deal strengthened the fi nancial indices

fi nancial damage because of its inability

in creating a large number of off-shoots

of

to settle matters outside of court.

associated with its brand. It runs its own

arose over the bill for the use of the

The idea of privatizing airBaltic has kept

online travel agency, AirBalticTravel. The

brand. Although Mr. Flick originally

appearing rather regularly in the Latvian

airline is also a member of the Riga Tourism

stated that airBaltic could use its own

mass media. The state as a stakeholder

Development Bureau, which runs LIVE

brand for free, an investigation revealed

may lack the sufficient control over

RīGA, a brand for promoting Riga as a travel

that, under the conditions of the deal,

decision making in the company, as these

airBaltic,

but

much

controversy

The airline has been extremely proliÀc in creating a large number of off-shoots associated with its brand. destination. Once in Riga, the company, in

airBaltic would have paid 1.4 million

controversial episodes show. Mr. Flick has

partnership with other private and public

euros per year to BAS. By the time of

suggested making an initial public offering

investors, offers two options for ground

the investigation, 130,000 euros had

as a way of attracting new investors.

transportation: BalticTaxi, by now one of the

already been transferred, the fate of

Staving off fears of his takeover of the

leading cab service providers in Riga, and

which has sparked much controversy.

company, the CEO has suggested that

BalticBike, a bicycle rental service with a

Meanwhile, Mr. Flick has taken BAS to

BAS would not make use of preemption

fleet of over 100 bikes in Riga and Jurmala,

the Lithuanian market and founded an

rights. Rumors about Chinese investors

the neighboring seaside town.

airline that will start competing with

have circulated in the Latvian media,

Because of all these efforts, airBaltic

airBaltic, operating from Vilnius, in

but, so far, the government has not

has become Latvia’s leading exporter,

early 2011. Although he has denied any

revealed any plans of selling its stake in

amounting to 350 million euros, or about

confl ict of interest, Mr. Flick’s actions

the near future, claiming that the time is

8% of Latvia’s total export turnover,

do seem confusing at the very least.

not right.That might be true: if airBaltic has

emerges from the crisis even stronger,

Finland’s exports. All of this seems even

strained

between

the government would be able to sell its

more surprising, considering that the

airBaltic and Riga International Airport,

shares more dearly, and the company

Latvian state still owns the majority

also owned by the Latvian state. This

would attract serious investors to expand

of shares (52.6%) in the company. The

year, the airport fi led a lawsuit against

its operations. One thing is sure, however:

other 47.2% are owned by the CEO

airBaltic over the collection of unpaid

even if airBaltic does not need Latvia as

Bertolt Flick, whose company, Baltic

fees amounting to 7 million euros. The

its main stakeholder, Latvia still needs

Aviation Systems, Ltd. (BAS), purchased

airline retaliated by suing the airport for

airBaltic to bring in those tourists and

the stake from SAS last year.

unfair competition practices, claiming

generate the flow of exports, especially

Despite his evident success, Bertolt

that the airport charged the Irish low-

given today’s recession. The two will have

Flick’s reputation has been tarnished

cost carrier, Ryanair, a fee of 1 euro per

to find an agreement. iBR

in Latvia. In December 2009, airBaltic

plane, or 500 times less than what it

sold its brand along with a number of

charged airBaltic. Currently, the two

which is higher than that of Nokia in

Another the

prolonged

confl ict

relationship

FA L L 2 0 1 0

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I N T E R N AT I O N A L B U S I N E S S R E V I E W

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11/27/2010 3:13:16 PM

Profile for Daniel Hellwig

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

International Business Review - Fall 2015  

Fall edition of the IBR magazine at the Wharton School.

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