Key facts
- Latvia is in discussions with a strategic investor for its state-controlled airline, airBaltic.
- Prime Minister Andris Kulbergs stated that the government must prepare the company for a strategic investor.
- AirBaltic is seeking short-term financing from bondholders on August 3.
- The airline failed to replenish a reserve account required by its 2029 senior secured notes.
- Rising costs and market access issues have strained some airlines, including airBaltic.
The Latvian government is actively seeking a strategic investor for its struggling airline, airBaltic, according to Prime Minister Andris Kulbergs. The airline is facing financial difficulties and is scheduled to meet with bondholders on August 3 to discuss short-term financing needs. Kulbergs indicated that negotiations are underway with a 'serious partner' and that the government aims to execute a deal this summer, provided the company is prepared for such an investment. A key condition for any investor would be maintaining airBaltic's hub at Riga airport.
AirBaltic's financial strain is highlighted by a €30 million short-term loan from the Latvian government due in August and its failure to replenish a reserve account for its 2029 senior secured notes. The airline's ambitious growth targets, including nearly doubling its fleet by 2030, have been hampered by engine delivery delays and market access issues following Russia's war in Ukraine, as well as the COVID-19 pandemic and Middle East crisis. Management is expected to present a new business plan next week that includes restructuring measures and the securing of a strategic investor and necessary cash.
Separately, Latvia has heightened security at a hydroelectric dam and its Incukalns underground gas storage facility due to intelligence indicating a threat from Russia. Prime Minister Kulbergs has requested additional air defense systems and troops from NATO and is collaborating with Ukraine on an anti-drone system.