Latvia has approved a €90 million cash injection for state-owned carrier airBaltic. The investment will help offset losses incurred due to the COVID-19 pandemic and support the carrier’s operations. airBaltic intends to pay back the money in the form of share sales from an upcoming IPO. The European Commission has yet to grant its approval.
Latvian government approves €90 million package
After posting considerable losses of $317 million over 2020, airBaltic is set to receive a €90 million cash injection from the Latvian government. The Latvian flag carrier, owned almost entirely by the state, will receive the cash package to help it maintain operations.
To compensate the losses caused by the ongoing Covid-19 pandemic and support overcoming of the economic crisis, the Cabinet of Ministers of the Republic of Latvia has approved the investment of EUR 90 million into the equity of airBaltic: https://t.co/pLrpWNPXxr pic.twitter.com/LX0k8IqCHi
— airBaltic (@airBaltic) August 17, 2021
Martin Gauss, Chief Executive Officer of airBaltic, said,
“The support of our majority shareholder to overcome the crisis reflects the recognition of the positive impact airBaltic has on the economy.”
The Cabinet of Ministers of the Republic of Latvia approved the aid package yesterday. However, the aid is still subject to the approval of the European Commission. Given the importance of airBaltic to the Latvian economy, this decision would appear to be a formality.
The airline brings in around 2.5% of the country’s GDP but suffered a huge 72% drop in turnover over 2020. airBaltic last received COVID-related aid from the Latvian government in the form of a €250 million investment in May 2020.
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The aid will be returned to the Latvian state
The €90 million investment in airBaltic will eventually be paid back to the Latvian state in full. The airline plans to raise the money “in the form of proceeds from selling shares during a planned initial public offering of airBaltic in the future.”
According to the Latvian Minister of Transport, Tālis Linkaits, the listing of airBaltic shares in international markets is planned for the next two to three years.
The Latvian government pumped around €250 million into airBaltic in May 2020, increasing its share in the airline from 80% to 96.14%. The government intends to recover this investment within five to seven years. Interestingly, the State Audit Office of Latvia concluded that, even without the impact of the COVID pandemic, airBaltic might have required state investment anyway.
airBaltic takes its 28th A220-300
On August 15th, airBaltic took delivery of its 28th A220-300 at Riga Airport. The new aircraft (registration: YL-ABB) is the third A220-300 delivered to airBaltic in 2021, with another four jets expected this year. According to ch-aviation, the carrier is expecting another 22 A220-300s in the coming years. The airline also has an option with Airbus for another 30 of the type.
Accepting a brand new aircraft is always a thrilling experience! On August 15, our crew delivered a new addition to our fleet directly from Canada to @riga_airport. Our 28th @Airbus A220-300 welcomes passengers with registration YL-ABB
pic.twitter.com/3U3haQjukV
— airBaltic (@airBaltic) August 16, 2021
In the spring of 2020, airBaltic retired all of its aircraft types except for its A220-300s, becoming an all-Airbus airline. As we reported last month, the airline sold off its Boeing 737 simulator, which it no longer needs after retiring its final Boeing 737 in December.
Are you happy to see airlines receiving investment from state governments? Let us know what you think in the comments.
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