Baltia, a Small, Startup New York Airline, Suing Canadian Imperial Bank of Commerce.

Business Editors

NEW YORK--(BUSINESS WIRE)--March 13, 2001

New York based Baltia Airlines is suing the Canadian Imperial Bank of Commerce (CIBC) and its subsidiary, CIBC Oppenheimer, for $150 million under the Securities Exchange and RICO Acts.

The case will be heard on March 26 at the US Court of Appeals in New York and it is expected to attract wide attention from both American and Canadian legal scholars.

The US Department of Transportation awarded Baltia Airlines the only non-stop flight route from North America to St. Petersburg, Russia, providing five weekly, round-trip flights from JFK airport in New York.

In 1999, a $5 million public offering was underwritten by the New York brokerage firm, Hornblower & Weeks on firm commitment to launch the JFK-St. Petersburg service.

Baltia's public offering was approved by regulators, the SEC and 21 state securities commissions. The stock was listed on Nasdaq Small Cap Market and the Boston Stock Exchange. It was fully subscribed by the public.

Hornblower & Weeks has also brought action against the CIBC at the National Association of Securities Dealers (NASD).

CIBC, the clearing agency for Hornblower & Weeks, informed them a few days before trading was to start that they would not process any orders related to Baltia Airlines.

According to Hornblower's CEO Eric Ellenhorn, CIBC refused to give any reason for their decision.

"This case is about a conspiracy by a major foreign bank to circumvent US government policy, eliminate US airline competition and illegally manipulate the business of a New York brokerage firm," Igor Dmitrowsky, President and CEO of Baltia Airlines, Inc., said. Dmitrowsky also accused CIBC of being "forced into confronting a major conflict of interest issue."

"We have discovered that CIBC is the bank for the Star Alliance of Airlines," he said. "The Alliance's stated purpose is to carry passengers to Eastern Europe and St. Petersburg specifically, from the US via Canada. CIBC is the Alliance's exclusive credit card issuer and controls the Alliance's 'Aeroplan' frequent flier program."

"Baltia's non-stop flights to St. Petersburg are only eight hours and CIBC has investments with other airlines that directly compete with this route," Dmitrowsky said.

"However, because their flights are not non-stop and require three to four connections, it takes them sixteen hours. Obviously they are exactly double Baltia's eight hour flights. This created a major threat to CIBC's other interests and they ruthlessly pulled the rug out from under us," Dmitrowsky stated.

"We believe they actually created this situation to try to put us out of business before we could get started, because we posed a threat to their other airline interests. By waiting until the very last minute to assure that Hornblower didn't have time to replace the CIBC with another clearing house, they severely damaged our company and our plans," he said.

Attorney and General Counsel for Baltia, Steffanie Lewis, said that the company has lost more than $200 million in projected revenues because of the delay caused by the "derailing of Baltia's financing by CIBC."

"Even though Baltia, its staff and management, friends, family and investors have endured a tremendous amount of anguish during the past two years, we are very optimistic about our future. Baltia Airlines is preparing to begin service this summer and we will be extremely successful," Dmitrowsky said.