Today, the Budget and Finance (Tax) Committee of the Saeima is considering the issue of a short-term loan to the national airline. For the first time, open documents have entered the parliamentary workflow – previously, everything was considered at the government level in a "for official use only" mode.
Two Strikes Against One Company
"The Middle Eastern crisis has caused a sharp and unpredictable external shock to the aviation industry," it is reported to the ministers. "This impact has directly affected airBaltic, causing both a reduction in revenue due to canceled flights and a significant increase in fuel costs. As a result, forecasts... for 2026 have significantly worsened, and in the short term, the liquidity risk has increased.
The impact of the crisis on airBaltic manifests in two main directions:
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First, revenues have decreased, as due to the Middle Eastern conflict, the airline had to cancel flights to Dubai and Tel Aviv, which constitute a significantly large part of the overall planned capacity and whose profitability exceeds the average across the route network.
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Second, fuel costs have risen sharply – the price has increased from the budgeted levels set by airBaltic and the prices observed at the beginning of the year of about $700 per ton to $1,600 per ton. Depending on the further dynamics of fuel prices, the overall potential negative impact on the company could be critical."
Investors Do Not Believe
But already now – "the reaction of the financial market was immediate."
"The price of airBaltic bonds has fallen significantly in just a few days. This signals that investors perceive the company as a high-risk issuer. At the same time, concerns are noted among certain suppliers and creditors regarding the company's ability to meet its obligations on time. As the conflict in the Middle East continued and escalated, the price of airBaltic bonds fell even further. There are significant risks that market sentiment in the bond market will negatively affect the attitude of operational partners towards the company."
The proposed loan of €30 million, it is noted in the document – "is a limited, market-condition-based decision aimed at ensuring the continuity of the company's operations and providing time for the implementation of a long-term market solution."
What Will Brussels Say?
"Without such a decision (without the loan), there is a risk of ending up in a much more difficult and significantly more expensive scenario for the state. Therefore, the state's involvement in this situation is justified not as a rescue measure, but as rational actions of a shareholder to protect the already made investment and prevent significantly greater fiscal impacts in the future."
Assistance, of course, is a good thing – but similar measures are currently being taken only in Brazil, India, and China. But – not in the European Union. For Brussels' legislation may well interpret such funding as... a violation of competition! So today, a truly precedent-setting decision will be made.
Crew Leaving the Ship
The Chief Operating Officer and board member of airBaltic, Pauls Calitis, is leaving his position. As stated by the airline, this is "his personal decision." From May 1, the responsibilities of the Chief Operating Officer will be taken over by the Senior Vice President of Flight Operations at airBaltic, Robbert Strating, who has been with the airline since January 2025 (previously with British Virgin Atlantic). The board will continue to operate with two members.
