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  • Air Baltic expects 2016 profit of near-double-digit euro millions

Air Baltic expects 2016 profit of near-double-digit euro millions

Air Baltic chief executive Martin Gauss has predicted that the Latvian carrier will achieve an almost "double digit" euro-million profit for the full year.

Speaking to FlightGlobal at the Airlines for Europe (A4E) summit in Brussels on 8 February, Gauss cited reduced costs of financing, lower-than-expected operational costs associated with the introduction of the Bombardier CS300, and passenger growth as reasons that the airline foresaw posting a third consecutive year of profit.

Air Baltic made a €10.7 million ($11.4 million) net profit in 2014 and almost doubled that to €19.5 million in 2015.

Gauss says the Latvian carrier had expected profits to be "not so good" this year as a consequence of "one-off costs" associated with the CS300 introduction.

"But it went better than expected for two reasons," he says. "Firstly, we lowered the prices significantly, which helped produce high passenger numbers; and lower fuel prices helped."

Guass adds that Air Baltic's positive financial situation has helped it gain good ratings with bodies such as Export Development Canada, which means the airline "qualifies now like other airlines for proper financing". That, he says, has been a "tremendous help in maintaining profitable [growth]".

Air Baltic also grew operationally last year for the first time since it restructured, Gauss says, and managed to regain market share in its home base of Riga from Norwegian, Ryanair and Wizz Air. "Which is interesting: that means we did the right thing, or their focus was not so much on Riga," he says.

The airline has also shrugged off "strong competition" in Lithuania from Kaunas-based low-cost carriers, and has not been impacted by LOT Polish Airlines' acquisition of a share in Estonian carrier Nordica as they "seem to be taking the traffic to Russia, which is not really a Baltic solution", Gauss argues.

He adds: "We are more and more becoming the carrier that offers the connectivity, same as we do in Riga."

Regarding the state-owned airline's hunt for a new strategic partner, Gauss says Lazard is in the "final stages" of producing the "teaser document to send out to selected strategic partners which are major airlines globally".

He notes that the Latvian government has set itself the target of completing the privatisation by the year-end, "so should have the first leads coming in in late spring". He adds: "That is my expectation, but there is no deadline for this."

This story has been updated to specify that the profit figures in the third paragraph are on a net basis

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