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Baltia, the airline which has been trying to launch New York-St Petersburg services since 1989, has hit back at accusations that its shareholders are unhappy with progress.
Barry Clare, vice-president finance, has revealed to The Loadstar that the carrier hopes to launch a route by the end of September.
“Our captains, first officers and flight engineers are in training, our dispatchers are in training and our cabin crew has been selected, drug-tested and will be sent to training shortly. The airplane is nearing completion – these are major accomplishments. With any large-scale project there will be delays, but both staff and company continue to grow.
“Baltia’s wholly-owned 747 will be coming out of required maintenance shortly and will be ready for mini-evacuation and proving flights when the time comes.”
Baltia has had an unenviable journey to get to this point. Initially seeking FAA certification in New York, the rules changed during its submission. It moved to Michigan, where the process became less cumbersome, and it anticipates, after the final checks on its 35-year old 747-200 bought from Kalitta, that it will shortly be certified to fly passengers.
The airline is keen to carry cargo, mail and perishables on what will be the only direct service between the two cities. While it appears to have backtracked on initial revenue forecasts, based on it carrying 180,000lbs per trip, with the potential of making $2m per week over the first year, it has said it is now reviewing its cargo revenue prospects.
“Baltia has the ability to carry 80,000lbs of cargo eastbound and 60,000 lbs of cargo westbound. Baltia will have its own courier service which will guarantee same-day delivery for small packages of mail, pre-cleared through customs coming from St Petersburg to New York, and next-day delivery from New York to St Petersburg,” said Mr Clare.
“Baltia has strong interest from major freight forwarders and overnight shippers to utilise our cargo bay in the St Petersburg market. St. Petersburg is the cargo hub of Russia and we have been informed that there will be a high demand for our cargo service.”
Baltia’s first aircraft to St Petersburg is expected to generate over $100m in gross revenue annually, at just a 64% passenger load. At a 40% passenger load, Baltia will break-even on the St Petersburg route. These figures do not include cargo, but Baltia’s management says cargo provides the airline with pure profit – a revenue management strategy that will send shivers down the spine of many in the airfeight industry.
Mr Clare added that Baltia would be able to provide faster,more secure services: “Typically, when cargo is sent from the US to St Petersburg, the cargo is loaded by machine onto a widebody aircraft and then flown over the Atlantic to a connecting city. The cargo is then off-loaded and placed in a warehouse, because there is not enough time to load the cargo by hand onto the connecting flight which is a narrowbody aircraft. Because the cargo is placed in a warehouse, the risk of damage or loss is possible. Baltia’s non-stop flight eliminates time delays and the potential for loss or damage.”
The fuel cost of flying a 747-200 would be offset by the fact it is wholly owned. The aircraft cost $1.1m and the carrier has “spent several million dollars upgrading and maintaining” it. It is the second aircraft Baltia has bought, the first having been sold.
Baltia says it has a competitive advantage, which it has managed to sell to more than 3,000 investors through its listing on the OTCBB, (Over-The-Counter Bulletin Board), a market popular with penny stocks.
Only four carriers have the right to fly directly between the US and Russia – Delta, Transaero, Aeroflot and Baltia – with the latter the only one seeking St Petersburg-New York services rather than Moscow. But, said Mr Clare, the best competitive advantage Baltia has is the Fly America Act.
“By default, Baltia will capture the US mail, military, students and government officials flying to St. Petersburg. It is estimated that there are over 20,000 fares annually stemming from the Fly America Act.”
Based on these assessments, Baltia has raised nearly $30m to date and “we have several larger shareholders who have made commitments to see that Baltia is financially sound to launch”.
After launch, which will initially see it fly once a week to St Petersburg, gradually upping the service to five times a week in its fifth month of operation, Baltia will look at other destinations. It also has plans to increase its fleet with 747s, and add destinations every four to five months.
It has won the right to fly to Moscow, Kiev, Riga and Minsk, and is applying for worldwide charter certification which could see it offer ad hoc services to Eastern Europe and the Baltic, including Athens, Budapest and Prague.
“Baltia’s real niche however, is being part of a limited entry market,” said Mr Clare.
He added that the carrier’s team had plenty of airline experience on the operational side and were ready to get started.
“It’s a very exciting opportunity for people with vision. We have raised the capital – the dream is now reality.”
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Comment on this article
MikeJune 17, 2014 at 6:56 pm
This is complete nonsense. A 35 year old aircraft – routes that are suited by volume to a B737 (some B737MAX will actually be used on Denmark to US Eastcoast routes) and this quote unquote airline claims there is a market?
For some 20 years they tried to get a 121 certificate and DOT authorization – while at the same time other start-up carriers became certified within a year. There is no demand in that market. Large airlines have market research analysts and they would certainly tap a market if there was one.
MaverickJune 18, 2014 at 1:12 am
Large airlines, large banks, large utilities, all parallel federal government-style inefficiencies and fiscal waste. True American dream business is what Baltia represents… determination, grit, hard work, niche service… this equals success in the making and unfolding right before our eyes in a storybook movie like fashion and surely to reward the bold visionaries.
anthony macchiaJune 18, 2014 at 3:54 am
I see you are really wasting your time….commenting on Baltia Airlines, get a life. I’m a shareholder and I am going to find this post one year from now and laugh at you in pity.
DiablosJune 30, 2016 at 2:16 am
LMFAO…… so it’s this Scam flying now? NO…….. stock priced at ZERO….. I guess tha Scam has finally crashed before takeoff…. gee what a surprise!
MikeJune 17, 2014 at 10:42 pm
The niche aspect of Baltia’s business is what could likely make it a huge success story. I have been following Baltia for some time, and I have to say that it’s getting buzz on social media and various news outlets. People are buying shares before they get approval to start selling tickets, it seems like a big day is getting closer!
SeanJune 18, 2014 at 5:35 pm
You do realize that even the B73-MAX only has a 3,600NM range – the B73-9ER goes 3,200NM. Which 73s are you referring to? Buying a 74 Classic saves them from having to buy a newer ETOPS bird which they would pay MUCH more to own. And yes, they OWN the airplane.
TonyJune 23, 2014 at 1:35 am
Baltia – what a joke! It will not be able to move the amount of cargo it says. The engines it owns and are to be hanged in the 35-year old 747 are P & W A engines, which restricts the take-off weight by one hell of a lot. Better sell your stock if you can.
JOHNJuly 03, 2014 at 7:18 pm
Bankruptcy within a year. If there was a market on this route Delta, Fedex and UPS would have saturated it by now.
NickJuly 18, 2014 at 2:27 pm
John’s statement is silly – those carriers don’t fly in every profitable market in the world.
Why does McDonalds keep making $$ in new locations? Because they see where a need is, and fill it. That is called progress – if we didn’t do it, nothing new would ever be done.
CrewZenJuly 18, 2014 at 3:08 pm
Anthony, Don’t worry about all these “experts” who comment here. It’s easy to be a desk chair QB armed with a keyboard, (Insert snoring here) There will be a good time to cash in that stock. They think all big companies have it all thought out. Insert Ford, Honda & GM. It’s a good thing Elon Musk thought differently. Don’t laugh in pity, laugh on the way to the BANK! like I have, buying Tesla and Baltia.Time is always the great equalizer. Cheers!!
NickSeptember 10, 2014 at 4:21 pm
Aside from what passengers and Cargo the airline can and cannot hold, there is a bigger event.
The next world cup is in Russia, specifically Moscow and St. Peterspurg. It doesn’t matter whether the airline industry is saturated or not, huge events like the world cup tend to bring in a lot of money for everyone. If you look at GOL, the Brazillian airline, it started out small and by the time the world cup came around it was selling at nearly $7/share. If Baltia can secure some kind of exclusivity or sponsorship, along with it being the main airline to go to St. P’s, then it could rise to $10 or $13 or more by 2018 world cup. At nearly 2 cents a share, it could be the deal of a lifetime. Heck, these huge airlines such as Delta, AAL, and others may even compete to purchase all or part pf Baltia or invest in it at least. Last year, KLM and Delta purchased part of GOL, if my memory service me correctly, to cash in on revenue leading to the world cup held in Brazil two months ago. They made good money out of that investment. So while the road to success was extremely slow for Baltia, but it is a road to success nonetheless 😉