Žiemelis: the opportunity to be the first is very attractive

Dublin-based Avia Solutions Group is the world’s largest ACMI (aircraft, crew, maintenance and insurance) services provider. The Group operates in more than 70 countries and has offices in Lithuania, Dubai, Dublin and other cities around the world. The Group consists of more than 200 companies that provide a broad range of aviation services, including aircraft maintenance and repair (MRO), pilot and crew training, ground handling and other services.

The company is currently planning to open a sustainable aviation fuel (SAF) production plant, NorSAF, in the Liepāja Special Economic Zone in Latvia. Once it starts operating, it will become the largest plant of this kind in Northern Europe, producing and exporting 100,000 tons of SAF and eSAF – synthetic, sustainable fuel – as well as 20,000 tons of other renewable and e-fuels (diesel and gasoline). It will be the only plant of this kind in Europe capable of producing both SAF and eSAF. The Group’s founder and chairman Gediminas Žemelis shared his vision of the aviation industry, why SAF production in Europe will be critically important for the region, and his views on entrepreneurship.

Could you tell us a little more about Avia Solutions Group as a company?

Airlines have three options for building their fleet. They can either own aircraft, lease them long term – roughly 5 to 7 years – or use full-service leasing (in aviation this is called wet leasing), i.e. ACMI, for a shorter period – usually about six months.
Our business is mainly based on ACMI and essentially means providing short-term capacity to airlines during peak seasons, which are usually in summer.
Such arrangements are beneficial for airlines because they only pay for assets when they actually use them, thereby maximizing their revenues. Overall, we estimate that by choosing ACMI for up to a maximum of 6 months for about 10% of their total fleet, airlines can increase profitability by around 2–3%. We are also an aviation services group. For example, in the MRO field we are represented by our subsidiary FL Technics, which recently opened a new facility at Punta Cana Airport in the Dominican Republic. Through our more than 100 subsidiaries, we also provide pilot training, airport handling, fuel supply, charter services, animal transportation and other services.

You recently placed an order with Boeing. Why?

I am extremely proud that as a company we have reached a stage of business development where we can order 80 Boeing 737 MAX aircraft. Once delivered, these aircraft will enhance our airlines’ fleets, providing our customers with both operational flexibility and greater fuel efficiency.
It is also proof that Avia Solutions Group is an attractive partner for solid businesses. In 2021 the US private equity group Certares invested 300 million dollars for a 20% equity stake in ASG Group, and at the beginning of 2024 former US Secretary of State and CIA Director Mike Pompeo agreed to become our strategic advisor. All these events have been important turning points, but we are already looking ahead and working to achieve the next ones. LSEZ SIA “NorSAF” will certainly be one of them.

At the end of last year you visited the US with Latvia’s Minister of Economics and signed a memorandum of understanding to start a new aviation fuel plant project in Liepāja. Why did you choose Latvia and specifically Liepāja? You already have a business at Riga Airport – why expand in Liepāja?

Avia Solutions Group owns 51% of the company BGS/Aviator, which provides aircraft refuelling services at Riga Airport. This is one of 25 BGS/Aviator fuel supply and airport handling points located at airports in Northern Europe.
Norsaf – the SAF and eSAF fuel production plant – is a separate project, and we see it as a very important part of our ESG (Environmental, Social, and Governance) strategy. In the aviation industry, ESG factors are becoming increasingly significant. Stakeholders such as customers, investors and governments expect companies to follow ESG principles in their corporate strategy and operations throughout the sector. This is particularly important for large global companies like ours. To put it into context, we operate in more than 70 countries, have a fleet of more than 200 aircraft, and employ more than 15,000 people worldwide.
Our M&A (Mergers and Acquisition) team is constantly looking for opportunities to expand the company, and when we received a good offer to acquire a controlling stake in an oil storage company that would allow us to expand SAF and eSAF capabilities more quickly than with other potential projects available in the region, we decided to move forward. It is especially important that the Norsaf project will use the latest technologies, thus ensuring the long-term sustainability of such an investment.

You are Lithuanian, and Lithuania has the largest port in the Baltics – Klaipėda. The second largest port is in Riga, followed by Tallinn. Why did you choose Liepāja, where even the infrastructure is still considered underdeveloped?

My mother was born in Siberia in 1948, after my grandparents were deported for supporting national partisans under Stalin. As the son of a deportee, under Lithuanian law I have the right to be a citizen of other countries. Therefore, I am a citizen of several countries and currently live in Dubai, United Arab Emirates (UAE). All of this shows that I see myself as a citizen of the world who is open to the opportunities the world has to offer. This philosophy is also reflected in our business, which spans six continents and more than 70 countries and is still actively expanding its global presence. For example, every quarter we acquire companies or expand organically in various countries.
As for Liepāja – we acquired an oil products storage company that had a positive cash flow as well as infrastructure, land and buildings that can be adapted to a much larger business, in this case for SAF and eSAF production. The project’s existing infrastructure is suitable for our plans to produce and export 100,000 tons of SAF and eSAF and 20,000 tons of other renewable e-fuels (diesel and gasoline) per year.

Please tell us more about the project. I read that it could become the largest sustainable aviation fuel plant in Northern Europe. What will you do with such volumes? Do you already have potential customers besides your own companies?

Avia Solutions Group already serves 25 BGS/Aviator fuel supply and ground handling stations at airports in Northern Europe. We plan to produce and export 100,000 tons of SAF and eSAF and 20,000 tons of other renewable and e-fuels per year, and part of this production will most likely be shipped to those BGS/Aviator fuel supply stations that we own. Currently, there is no eSAF producer in Europe because the technology is very new. One of the main conditions set by our company’s board and the banks’ credit committees for approving financing and investment for the project was to demonstrate that we will have customers. Before starting construction, we will look for opportunities to sign contracts with customers.

How did you choose your partner in Latvia – Raimonds Kisiels? When and how did you meet?

I have known Mr. Kisiels for more than 20 years. We both played basketball in our teenage years, and it remains one of our shared hobbies even today, when we probably watch basketball more than we play it. In fact, our first meeting took place during a game.

What is the role of the Liepāja Special Economic Zone and the Liepāja municipality in this project? Have you been granted land or received any other incentives to support such a large investment – around 500 to 600 million euros?

The Liepāja municipality is not actively involved in the project, but it is using it to showcase the potential of the Special Economic Zone. It is pleasant to see this, because the region has great growth potential. As for securing financing, we are taking the necessary steps with our lenders and partners. But again, given that European Union regulation will drive demand for SAF and eSAF over the next couple of decades, the opportunity to be the first in this field is very attractive. Europe is highly dependent on imported energy. Strengthening local SAF and eSAF production will be important for achieving energy sovereignty.

It is known that 20% of Avia Solutions Group belongs to US investors. Your company was also contracted to support the NATO summit in Vilnius in 2023. What are your current and future business plans in the US?

On 16 December 2021, the US travel industry investment company Certares acquired 20% of Avia Solutions Group shares for 300 million euros. This is so far the largest foreign investment in a private company in the Baltics. However, it should be noted that Avia Solutions Group is now a company based in Ireland. We operate in many countries and serve many governments and their institutions, but due to confidentiality clauses we cannot provide more detailed information.

Do your growing business relations with the US help you get closer to your goal of acquiring an NBA team, which you spoke about publicly five years ago? At that time, you said you planned to achieve this goal within five years.

During a friendly breakfast with journalists, we discussed several topics, and among other things I mentioned that I was looking for an opportunity to acquire a controlling stake in an NBA team. I can now say that the potential deal was for a 60% controlling stake, valued at 700 million dollars (200 million dollars equity and 500 million dollars loan). During the negotiations I was told that the NBA is unlikely to allow me to be the buyer because I am a foreigner and have no experience in managing basketball teams. Therefore, I decided to become the owner of a European basketball club in order to build this experience in managing basketball teams. By the way, all NBA basketball teams make a profit, while all European basketball teams lose money. In November 2024 the NBA signed a new record-breaking media deal worth 6.9 billion dollars per year (for comparison, the EuroLeague’s media value is 50 million dollars). The previous NBA media deal was worth 2.6 billion dollars. In addition, the NBA has since opened the door for institutional investors to invest in teams, which is driving up NBA team valuations.