The financial situation of the national airline is increasingly discussed in the context of possible restructuring — a scenario that other Northern European carriers have already gone through, public media report.
After the decision of the Saeima to allocate a €30 million loan to airBaltic, public discussion around the company has quieted down. However, new signals from the market indicate more serious processes: according to Bloomberg, bondholders have engaged lawyers to prepare for possible debt negotiations.
This concerns restructuring — a standard procedure in the aviation industry that allows companies to cope with high debt loads. Carriers such as SAS, Norwegian, and Finnair have already undergone this process.
The financial picture of airBaltic makes this scenario increasingly likely. Over the past two years, the company has incurred losses of €118 million and €44 million, while negative equity has reached €183 million. At the same time, the total liabilities are approaching €1.7 billion — more than double the annual turnover.
Additional pressure is created by the cost of borrowing: for the €380 million bonds issued in 2024, the interest rate is 14.5% per annum. This means interest payments exceeding €55 million annually.
Rating agencies are already signaling risks. Both Standard & Poor’s and Fitch have downgraded the company’s credit rating and expect debt restructuring within the next year.
In practice, this may mean negotiations with creditors — possibly involving changes to payment terms, raising new capital, or even altering the ownership structure. This is indirectly indicated by the choice of consultants: the same firms previously participated in the restructuring of Norwegian and SAS.
The experience of these airlines shows that the process is painful but workable. SAS raised about €1.2 billion and changed its shareholder composition — international investors entered the company. Finnair, while maintaining state control, managed to reduce debts, raise over €500 million, and return to profitability — last year it amounted to €18.4 million.
The context for Latvia is not only economic but also political. In such cases, the government has to choose between supporting a strategic enterprise and the risks to the budget.
It is noteworthy that the current head of airBaltic, Erno Hilden, previously worked at Finnair and SAS during their restructuring periods. However, he has not yet commented on the lessons learned.
The key question now is whether it will be possible to reach an agreement with creditors without radical measures and what the role of the state will be in this process.
The path chosen by airBaltic will determine not only the fate of the company but also Latvia's approach to managing strategic assets.
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