airBaltic CEO Bertolt Flick

RIGA — The sizable salary of airBaltic’s chief executive, recently made public in an income declaration, plus doubts about the carrier’s overall financial health after significant losses in 2008, have placed the company in an uncomfortable spotlight as the new year kicks off.

According to the declaration he recently submitted, Flick’s income was some 20,000 lats (€28,500) per month in 2009. In addition, airBaltic paid his rent bill (21,600 lats per annum) and insurance (30,000 lats) last year.

Coming in the midst of the current crisis, the news stunned a crisis-weary public and belt-tightening ministers. Prime Minister Valdis Dombrovskis said on Monday that airBaltic CEO Bertolt Flick’s salary is too high and asked transport minister Kaspars Gerhards to review it.

“We need to think whether such a salary is adequate in the current conditions since, judging by the declaration, it’s very high,” the prime minister was quoted as saying.

An official from the transport ministry told the Tvnet news portal that Gerhards is on holiday and would return on Monday.

For years Flick refused to submit an income declaration since, as he argued, he was a private investor and not a state employee. The State Revenue Service fought him on the issue, and finally in December threatened him with the full extent of the law if he refused to produce a declaration by Dec. 30. Finally the German-born CEO caved in and submitted the paperwork on the final day.

Considering that airBaltic ended 2008 with a 27.8 million lat loss, Flick’s compensation package shocked Latvians. The company has said the red ink was due to disadvantageous fuel purchase deals arranged by SAS, the carrier’s previous minority owner, but this explanation largely fell on deaf ears.

Locked in a seemingly unwinnable public relations battle, airBaltic announced Tuesday that the company would finish 2009 in the black. Flick said in a brief statement that the carrier earned a “record-high profit” and that in order to end speculation about the company’s health – as well as speculation about government subsidies – it would release its financials on Thursday.

Vigo Legzdiņš, chairman of the company’s supervisory board, was reported in the NRA daily as saying that airBaltic would finish 2009 with a profit of approximately 10 million lats (€14.2 million).

The announcement, if true, would bolster Flick’s repute as a strong manager and lend credence to explanations for the previous year’s loss. Many airlines worldwide are struggling in the wake of the global crisis, and those that can show black ink on their annual reports have reason to gloat.

Also to Flick’s credit, the carrier continues to increase passenger numbers. In the January-November period last year airBaltic flew 2.5 million passengers, up 6 percent year-on-year. airBaltic is 526 percent owned by the Latvian government and 47.2 percent by Baltijas Aviacijas Sistemas, whose sole owner is Flick.