airBaltic may require additional financial support - Prime Minister 0 5

The politician emphasized that before the state makes a decision on additional support for the company, it must present a new business strategy by June, partly because the eastern flight direction will remain unavailable for a long time.

The government's decision to provide a loan of 30 million euros is only a short-term solution, noted Silina, adding that the results for the first two months of this year for "airBaltic" were good, however, the war in the Middle East has made the situation very complicated, which is why such a temporary support tool is needed.

As reported, "airBaltic" is set to receive a short-term loan of 30 million euros due to the sharp rise in fuel prices. On Tuesday, the government supported its allocation, but the final decision still needs to be made by the Saeima.

The Prime Minister emphasized that "airBaltic" is critically important for strengthening Latvia's security and improving connectivity, so there are grounds for providing a short-term loan, as aviation fuel prices are rising particularly quickly.

Minister of Transport Aitis Shvinka added that this loan is intended to stabilize the impact of fuel prices and ensure operations, including flight execution. At the same time, this does not absolve the airline of its obligations to develop a strategic plan and business model, as well as to move towards financial stabilization.

Shvinka also confirmed that the short-term loan plan has been developed in accordance with European Union regulations and necessary approvals, and "airBaltic" has presented a cash flow plan showing that the loan could be repaid even faster.

He emphasized that this loan is not a state "injection" or support tool, and the company must continue working on its business plan and capital raising mechanisms, in which the state may also need to participate.

Chairman of the board of "airBaltic" Andrei Martynov told the LETA agency that the loan will help stabilize the situation and reduce negative impacts. According to the company's forecasts, in the absence of "sharp events," the airline will be able to repay the loan.

At the same time, he noted that the company continues to work on a significant overhaul of its organizational structure and business plan.

"The existing plan provides for doubling the airline's fleet, but this is impossible without investments, so the company continues to work on attracting potential private investors, and the possibility of current shareholders participating in capital increase is not excluded, considering that the state intends to maintain its stake in 'airBaltic'," said Martynov.

CFO of "airBaltic" Vitold Yakovlev informed investors in March this year that the total fuel consumption volume for the company for the remainder of the year is about 165,000 tons, of which 17,000 tons are fixed (hedged) at a price of 567 euros per ton.

Earlier, the Ministry of Transport informed that at the end of March, "airBaltic" officially approached the ministry, notifying the shareholder about the impact of external factors on the company's financial and operational activities. The military conflict in the Middle East has caused a significant rise in aviation fuel prices, increasing costs and affecting profitability.

After receiving and evaluating the letter from "airBaltic" regarding the need for a short-term loan as one of the possible preventive stabilization tools, Shvinka proposed to consider this issue at the government meeting on Tuesday.

He also emphasized that it is important to ensure the company's continuous operational activity in conditions where external factors particularly strongly affect the aviation industry.

The ministry pointed out that the company continues to operate flights according to the planned program, and a possible loan, if provided, could help maintain a stable route network, avoiding sharp changes and smoothing the pressure of rising fuel prices.

It is also noted that for security reasons, "airBaltic" was previously forced to suspend flights to Tel Aviv and Dubai, which reduced revenues and affected the efficiency of the route network. At the same time, aviation fuel prices have significantly risen due to the conflict, sometimes nearly doubling.

Work is also underway on a new business plan, which is expected to be completed by the summer of this year. A possible short-term loan could help the company stabilize its operations until the new plan is implemented, the ministry explained.

As reported, the turnover of the "airBaltic" group last year increased by 4.2% compared to 2024, amounting to 779.344 million euros. The group's losses amounted to 44.337 million euros, which is 2.7 times less than the previous year.

In 2025, the airline transported a total of 5.2 million passengers, which is 1% more than in 2024.

Last summer, the German national airline "Lufthansa" became a shareholder of "airBaltic". Currently, the Latvian state owns 88.37% of the shares of "airBaltic", "Lufthansa" owns 10%, the company "Aircraft Leasing 1", owned by Danish investor Lars Tyssen, owns 1.62%, and another 0.01% belongs to other shareholders. The company's authorized capital is 41.819 million euros.

After the initial public offering (IPO), the share of "Lufthansa" will depend on the market price. The deal stipulates that after the IPO, "Lufthansa" will own at least 5% of the capital of "airBaltic". The Latvian government agreed on August 30, 2024, that after the IPO, the state must retain at least 25% plus one share.

In August last year, the government decided that Latvia, like "Lufthansa", would invest 14 million euros in "airBaltic" before a potential IPO.

Considering the financial results of 2025 and the market situation, "airBaltic" has suspended the possible IPO and is currently not considering it as a source of capital in 2026, according to the company's annual report.

The report notes that despite the expected improvement in operational and commercial activities, in 2026 the airline will operate with a negative free cash flow, and according to current forecasts, additional funding of 100 to 150 million euros will be needed to finance operations in the winter season of 2026/2027.

Shvinka pointed out that the IPO is not the only way to attract capital, and the airline's management has been given the broadest mandate to seek funding opportunities using various financial instruments. Thus, the airline's task for 2026 is not only to reduce costs but also to attract capital.